STIR: Vague Reciprocal Tariffs Plan Sees Delay Of Near-Term EU Growth Hit
- European implied yields are modestly higher since the lack of specific details around Trump’s reciprocal tariffs plan and Lutnick’s Commerce Dept conducting studies to report back in April, with the latter confirming a timeline reported by CNBC beforehand.
- The reduction in a very near-term downside growth risk for the EU sees Euribor implied yields some 2-3bp higher since levels around yesterday’s close prior to Trump’s announcement, in contrast to SOFR yields flat to marginally lower.
- It’s helped the Euribor implied terminal yield tick up to 2.00% for some of its highest levels since the Jan 30 ECB meeting.
- Whilst it’s clearly not a direct read on ECB pricing, it sits firmly within the estimated (but regularly downplayed by senior ECB officials) neutral rate range of 1.75-2.25%.
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COMMODITIES: Recent Gains in Gold Appear Technically Corrective, For Now
The trend structure in WTI futures remains bullish and the contract is trading just ahead of its recent highs. The stronger reversal to the upside has resulted in a breach of key short-term resistance at $76.41, the Oct 8 high. Clearance of this hurdle strengthens a bull theme and opens $79.59, the Jul 5 ‘24 high. On the downside, a reversal lower would expose the 20-day EMA, at $73.15. This average is seen as a key short-term support. Recent gains in Gold appear corrective - for now. However, the yellow metal continues to hold on to the bulk of last week’s gains and scope is seen for a continuation higher near-term. A stronger recovery would open $2726.2, the Dec 12 high and an important resistance. Clearance of this level would be a bullish development. On the downside, a reversal lower would expose $2583.6, the Dec 19 low. Initial support is at $2644.3, the 50-day EMA.
- WTI Crude down $0.03 or -0.04% at $77.46
- Natural Gas down $0.01 or -0.2% at $3.96
- Gold spot up $9.39 or +0.35% at $2686.8
- Copper down $0.85 or -0.2% at $433.5
- Silver up $0.21 or +0.72% at $30.1135
- Platinum up $1.49 or +0.16% at $943.78
EQUITIES: Bear Threat in E-Mini S&P Remains Present
A bull cycle in the Eurostoxx 50 futures contract remains intact and the latest pullback appears corrective. Initial support is at 4939.33, the 50-day EMA. It has been pierced, a clear break of this EMA would undermine a bullish theme and signal scope for a deeper retracement. For bulls, resistance at 5040.00, Dec 9 high, has recently been pierced. Clearance of it would resume the bull cycle that started on Nov 21 and open 5068.13, a Fibonacci projection. A bear threat in the S&P E-Minis contract remains present and short-term gains are considered corrective - for now. The reversal from the Dec 26 high, confirmed the end of the Dec 20 - 26 correction. 5866.00, the Dec 20 low and a key short-term support, has been breached. This strengthens a bearish theme and sights are on 5784.00, the Nov 4 low and an important short-term support. Initial pivot resistance is seen at 5987.43, the 50-day EMA.
- Japan's NIKKEI closed lower by 29.72 pts or -0.08% at 38444.58 and the TOPIX ended 8.23 pts higher or +0.31% at 2690.81.
- Elsewhere, in China the SHANGHAI closed lower by 13.823 pts or -0.43% at 3227.117 and the HANG SENG ended 66.29 pts higher or +0.34% at 19286.07.
- Across Europe, Germany's DAX trades higher by 93.14 pts or +0.46% at 20364.47, FTSE 100 higher by 57.16 pts or +0.7% at 8258.33, CAC 40 up 3.61 pts or +0.05% at 7427.28 and Euro Stoxx 50 up 7.78 pts or +0.16% at 4988.25.
- Dow Jones mini up 50 pts or +0.12% at 42802, S&P 500 mini up 5 pts or +0.09% at 5887.25, NASDAQ mini up 32.5 pts or +0.16% at 20951.75.
EGB OPTIONS: Outright Bund call buyer
RXH5 133c, boought for 30.5 in 9k vs 1.62k at 130.65.
