FINANCIALS: Unicredit Increases Stake in Alpha Bank

Goldman Sachs expect “the BOJ to maintain its modest tightening bias at this week’s meeting”, although caution that “a U.S. recession could delay the timing of the next hike”.

• They also note that “long-end rates have generally outperformed their beta to the U.S. by a smaller extent than other maturities during the recent market moves, with JPY 30s the clear underperformer here”.
• They suggest that “some of this effect may be attributed to global term premium spillovers and liquidity drivers (with the long-end especially under pressure in poor liquidity environments), but the underperformance of 30s in Japan and the extent of 10s30s steepening has been especially stark”.
• They think “this has scope to revert as liquidity conditions stabilize, with the 10s30s JGB curve also vulnerable to any flattening pressure from continued BOJ QT plans should those be discussed more explicitly at this week’s meeting (ahead of its review of bond tapering plans in June)”.
• As a result, they recommend adding 10s30s JGB flatteners. 

While gilts initially trade lower, buyers quickly emerge, leaving the space little changed vs. late Friday levels.

• Broader core global FI markets trade weaker after U.S. Treasury Secretary Bessent pointed to trade talks moving in the right direction, particularly with Asia.
• Impending supply in Europe also weighs on EGBs.
• Futures as low as 93.16 before a bounce to 93.33. Contract last ~93.25.
• The recent bullish technical theme remains intact. Initial resistance located at Friday’s high (93.34), follow by a Fibonacci retracement level at 93.44.
• Initial support still located at the 20-day EMA (92.22 today).
• Yields little changed to 1bp lower, modest flattening bias to start the week.
• Initial support in 10s (4.460%) remains untested.
• GBP STIRs still trading around levels we flagged ahead of the gilt open, with just under 90bp of BoE cuts priced in through year-end.
• Final manufacturing PMI data (Thursday) headlines a limited domestic data calendar this week. BoEspeak from Ramsden (Tuesday) & Lombardelli (Wednesday) will also be eyed.
• On the supply front, the DMO will come to market with 30-Year (Tuesday) & 3-Year (Wednesday) paper this week.

• RES 4: $36.000 - Round number resistance 
• RES 3: $34.903 - High Oct 23 ‘24 and the bull trigger
• RES 2: $34.590 - High Mar 28  
• RES 1: $33.686 - High APr 25                                        
• PRICE: $32.916 @ 08:14 BST Apr 28
• SUP 1: $32.087 -  Low Apr 17               
• SUP 2: $30.577/28.351 - Low Apr 10 / 7 and the bear trigger
• SUP 3: $27.686 - Low Sep 6 ‘24   
• SUP 4: $27.180 - Low Aug 14 ‘24   

A strong rally in Silver last Wednesday reinforces the current bullish theme and the metal is holding on to the bulk of its latest gains. Price has cleared $33.117, 76.4% of the Mar 28 - Apr 7 bear leg. This paves the way for a climb towards $34.590, the Mar 28 high. On the downside, initial firm support to watch has been defined at $32.087, the Apr 17 low. A break of this level would undermine the bull cycle and highlight a potential reversal.