EUROZONE T-BILL ISSUANCE: W/C 10 November

NBC News reports that polling indicates a blue wave at the 2026 midterm elections is less assured than during the 2018 midterms, which gave Democrats control of the House during President Donald Trump's first term. 

• NBC writes, “By the fall of 2017... Democrats had opened a sizable advantage in the generic congressional ballot. On this day in 2017... the Democratic lead was 7.8 points. It’s a margin that would more or less hold over the ensuing year, culminating in a 40-seat gain in the 2018 midterms that gave Democrats control of the House.
• “Today, by contrast... Democrats [are] up by only 3 points in the generic ballot. This comes even as Trump’s overall job approval rating sits in the low- to mid-40s – similar to his first term – and as he continues to accrue negative ratings for his handling of the economy and inflation.”
• NBC continues, “In the run-up to the 2018 midterms, Democrats fared consistently – and significantly – better than the Republicans on party image. This time around, it’s a different story. Earlier this year, Democrats registered their lowest positive rating in the history of our NBC News poll, which dates back more than three decades. Similar findings have emerged in other surveys.”

Figure 1: How Views of the Two Parties have Changed Since Trump’s First Term

Source: NBC News

European yields mostly fell Wednesday, with periphery/semi-core EGBs outperforming.

• Bonds largely picked up where they left off in the previous session, with Bund and Gilt yields hitting session lows in early afternoon London time.
• Italian and French instruments largely led the way, with some more optimism on the French political front. There were conflicting reports as to whether now ex-PM Lecornu could be reappointed amid efforts to stave off snap elections. We await his appearance on television after the cash close where we may get more clarity on the situation (2000CET).
• German industrial production plummeted much more than expected in August, but the German government upwardly revised its GDP projections.
• In the UK, the ONS detected errors in the PSNB data, meaning that the UK's fiscal situation is marginally less downbeat than was previously envisaged, which probably drove some of the Gilt curve flattening.
• Little new from today's central bank speakers, with BOE's Pill reiterating that monetary policy should be focused on price stability.
• On the day, the German curve bull flattened, with the UK's twist flattening. Periphery/semi-core EGB spreads tightened.
• Thursday's docket includes German trade figures for August, along with speaking appearances by BOE's Mann, and ECB's Villeroy and Escriva. We also get the accounts of the September ECB decision.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.5bps at 1.989%, 5-Yr is down 2.7bps at 2.271%, 10-Yr is down 3bps at 2.679%, and 30-Yr is down 2.9bps at 3.264%.
• UK: The 2-Yr yield is up 1.2bps at 3.995%, 5-Yr is up 0.1bps at 4.149%, 10-Yr is down 1bps at 4.709%, and 30-Yr is down 2.4bps at 5.51%.
• Italian BTP spread down 3bps at 79.7bps / French OAT down 2.6bps at 83.4bps

• RES 4: 1.3789 High Jul 1 and key resistance    
• RES 3: 1.3726 High Sep 17 
• RES 2: 1.3661 High Sep 18
• RES 1: 1.3537 High Sep 23 and a pivot level 
• PRICE: 1.3408 @ 16:19 BST Oct 8
• SUP 1: 1.3324 Low Sep 25 and the bear trigger 
• SUP 2: 1.3282 Low Aug 6
• SUP 3: 1.3254 Low Aug 4
• SUP 4: 1.3144 38.2% retracement of the Jan 13 - Jul 1 bull cycle          

The short-term condition in GBPUSD remains bearish. Initial key resistance to watch is unchanged at 1.3537, the Sep 23 high and a near-term pivot level. Clearance of this hurdle would signal a potential reversal. Attention is on support at 1.3333, the Sep 3 low. It has recently been pierced, a clear breach of this support would strengthen a bearish theme and open 1.3282, the Aug 6 low.