STIR: UK short rate upside risk

E5.0-6.0bln of the following nominal bonds on Thursday 7 April:

• the 2.35% Mar-29 Bono (ISIN: ES0000012P90)
• the 3.30% Apr-36 Obli (ISIN: ES0000012Q08)
• the 5.15% Oct-44 Obli (ISIN: ES00000124H4)

E250-750mln of the following index-linked bond on Thursday 7 April:

• the 2.05% Nov-39 Obli-Ei (ISIN: ES0000012M69)

E5-5-6.5bln of 6/12-month letras tomorrow:

• the 6-month Nov 6, 2026 letras
• the new 12-month May 7, 2027 letras

• On the commodity front, Gold maintains a softer near-term tone and continues to trade below its recent highs. A reversal higher and a resumption of gains would resume the correction that started on Mar 23 and open the $5000.0 handle. For bears, a continuation lower would instead highlight a resumption of the M/T bear condition and signal scope for a move towards $4306.4, the Mar 24 low. The key support lies at $4099.2, the Mar 23 low.
• The primary bull cycle in WTI futures remains intact and last week’s gains reinforce current trend conditions. The contract has cleared resistance at $104.34, the Mar 9 high and bull trigger, to confirm a resumption of the uptrend. Sights are on $113.10 next, a 1.236 projection of the Mar 10 - Apr 7 - 17 price swing. Further out, scope is seen for a climb towards the $120.00 handle. Initial firm support lies at $95.31, the 20-day EMA.

US equity and Tsy futures have pared a sizeable part of their recent drop as Axios’s Ravid cited a US senior official denying the claim by Fars headlines that two missiles had hit a US warship. Treasuries had been more wary than equities about the difficulties faced with the Project Freedom plans, having steadily extended lower overnight beforehand whereas equity futures are only slightly slower on the day now. 

• ESM6 has seen a solid ~35 point bounce on the denial, currently at 7250 off a low of 7213.75.
• It remains above support at 7131.25 (Apr 29 low) whilst the primary long-term uptrend remains intact with resistance seen at 7300.75 (May 1 high).
• TYM6 trades at 110-13, off an earlier 110-10+ but still below the 110-15 seen before the late cash open and Fars headlines.
• Support at 110-07+ (Apr 30 low) before the bear trigger at 109-24 (Mar 27 low). It falls away from Friday’s 110-29+ after it came close to resistance at 111-01 (20-day EMA).