BUNDS: Volatile trading
- Bund remains very volatile with very low liquidity, today circa 50 ticks with 8k lots traded, and a massive 349 ticks turnaround from last Friday.
- Small support is at 156.74 initially, and resistance moves down to 157.93.
- There's no Tier 1 data left for the session. ECB publishes Economic bulletin, and out of the US {us} see IJC, but no longer a market mover, with ALL EYES on NFP tomorrow.
- Main focus is on the BoE, with most sell side going for a 50bps hike. This is also widely expected by Economist's estimates.
- 13 out of 43 economists surveyed by Bloomberg are going a 25bps hike, a 50bps hike to 1.75% is the median call.
- SUPPLY: France 2032, 2034, and 2026, 2029, 2032 and 2033.
- SPEAKER; BoE Bailey, US Fed Mester.
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BUNDS: Services PMIs the early focus
- A wide overnight session for Bund, but volumes stays below average.
- A more notable session for US Treasuries, in high Volumes, following the US Bank Holiday yesterday.
- Bund has a small opening gap up to 149.44, and this will be seen as the initial resistance.
- Support is the session low 148.72.
- Today sees Services PMIs, although will be final readings France, Germany, EU, UK, and the US.
- Other notable releases, sees French IP, and out of the US Factory Orders. Durable Goods will be final reading.
- SUPPLY: UK £2bn 2051 (Equates to 35.4k Gilt).
- Austria 2032 and 2038, and German Linkers (won't impact Bund).
- Bank of England financial stability report, and BoE Tenreyro is the scheduled speaker.
USDCAD TECHS: Support Lies At The 50-Day EMA
- RES 4: 1.3192 1.00 proj of the Apr 5 - May 12 - Jun 8 price swing
- RES 3: 1.3113 High Nov 23 2020
- RES 2: 1.3079 High May 17 and a bull trigger
- RES 1: 1.2966/3017 High Jul 1 / High Jun 23
- PRICE: 1.2846 @ 06:56 BST Jul 5
- SUP 1: 1.2819/13 Low Jun 28 / 50-day EMA
- SUP 2: 1.2732 61.8% retracement of the Jun 8 - 17 rally
- SUP 3: 1.2681 Low Jun 10
- SUP 4: 1.2518 Low Jun 8 and key support
The USDCAD outlook remains bullish and the pair is trading above last week’s low - for now. Price action on Jun 28 highlights a potential bullish reversal signal - a Japanese candle pattern known as a doji reversal is still valid. A stronger recovery would refocus attention on resistance at 1.3079 the Jun 17 and a bull trigger. A break would strengthen bullish conditions. Firm support lies at 1.2813, the 50-day EMA. A clear break would alter the picture.
EUROZONE ISSUANCE: EGB Supply For W/C July 4, 2022
Austria, Germany, Spain and France are due to sell bonds this week. We look for estimated gross nominal issuance of E23.6bln, up from the E16.3bln sold last week.
- Austria will kick off issuance for the week this morning with a combined E1.495bln of the 0% Oct-28 RAGB (ISIN: AT0000A2VB47) and 0.90% Feb-32 RAGB (ISIN: AT0000A2WSC8) on offer.
- Germany will also come to the market today to reopen E500mln of the 0.10% Apr-33 ILB (ISIN: DE0001030583).
- Tomorrow, Germany will look to issue E5bln of the new 1.70% Aug-32 Bund (ISIN: DE0001102606).
- Spain will come to the market on Thursday, with E4-5bln of 4/10/30-year Oblis as well as an 8-year Obli-Ei on offer: the off-the-run 5.90% Jul-26 Obli (ISIN: ES00000123C7), the 1.00% Nov-30 Obli-Ei (ISIN: ES00000127C8), the 2.55% Oct-32 Obli (ISIN: ES0000012K61) and the 1.90% Oct-52 Obli (ISIN: ES0000012K46).
- France will then conclude issuance for the week on Thursday, looking to sell E11-12bln of long-term / Green OATs including launching a new 10-year 2.00% Nov-32 OAT (ISIN: FR001400BKZ3). Also on offer: the 0.50% Jun-44 Green OAT (ISIN: FR0014002JM6), the 2.00% May-48 OAT (ISIN: FR0013257524) and the 0.75% May-53 OAT (ISIN: FR0014004J31).
NET NOMINAL FLOWS: There is a formerly 10-year Bund due to mature this week for a total of E26.5bln with a further E6.8bln of coupon payments due (of which E6.3bln are German). Together with estimated gross nominal issuance of E23.6bln, this leaves estimated net flows for the week at negative E9.8bln (down from last week’s positive E15.1bln).
For a calendar of all announced EGB/EU/ESM/EFSF auctions see the MNI EZ/UK Bond Supply Calendar here.
