FED: US TSY 10Y TIPS AUCTION: HIGH YLD 1.985%; ALLOTMENT 75.33%

• RES 4: 1.1783 1.764 proj of the Feb 28 - Mar 18 - 27 price swing
• RES 3: 1.1696 1.618 proj of the Feb 28 - Mar 18 - 27 price swing
• RES 2: 1.1685 76.4% retracement of the Jan ‘21 - Sep ‘22 downleg
• RES 1: 1.1641 High Jun 24
• PRICE: 1.1622 @ 16:34 BST Jun 24
• SUP 1: 1.1457 20-day EMA
• SUP 2: 1.1321/1.1210 50-day EMA and a pivot level / Low May 29
• SUP 3: 1.1131 Low May 16 
• SUP 4: 1.1065 Low May 12 and a reversal trigger 

The trend set-up in EURUSD remains bullish, reinforced by Monday’s gains. The recovery highlights the fact that the latest correction has been a shallow one and that support at the 20-day EMA - at 1.1457 - remains intact. Moving average studies continue to highlight a dominant uptrend and the breach of 1.1631 confirms a resumption of the trend. This opens 1.1685, a Fibonacci retracement.      

• The 2Y WI slips to 3.779% from 3.792% earlier, 17.6bp rich to last month's stop (3.955% high yield vs. 3.965% WI).

DOWNLOAD FULL REPORT HERE

Executive Summary:

• Finance minister Klingbeil detailed Germany’s spending surge, broadly confirming figures from media reports yesterday, including federal net issuance plus special funds totalling E847bln through 2029
• DFA (German DMO) announced E19bln higher Q3 issuance on the back of that. 7y segment to be reintroduced, and “conditions being set” for 50y reintroduction (which the DFA had hinted at that previously)
• NATO defence spending target of 3.5% GDP to be met in 2029 (earlier than 2032 previous base case) whilst infrastructure measures are to focus on rail, education, social housing, digitization, and climate transition-related items – broadly as expected, but analysts note risks of slower-than-planned roll-out
• Klingbeil was rather vague around “commissions enacted” on broader structural reform measures. Otherwise, he pointed away from EU EDP issues, and admitted debt servicing costs are to more than double through ‘29