GILTS: Weakness Extends
Weakness in broader core global FI markets is enough to drive a clean break of next support in gilt futures, in the form of the April 15 low (91.43), with the move extending to 91.11.
- Next support located at the 76.4% retracement of the April 9-May 2 rally (90.92)
- Yields now 3-4bp higher across the curve, with 2s back above 4.00% as bears look to force a more meaningful break above that level.
- Comments from President Trump re: the potential for news on the Russia-Ukraine conflict at some point today may have factored into the weakness, with wider macro and UK news flow remaining limited.
- Hawkish flow in GBP STIRs seen alongside the move, with December MPC pricing moving to the most hawkish levels seen since 11 April, showing 44bp of cuts through year-end. 1bp of cuts priced for June, 18bp through August, 24bp through September and 38bp through November, contracts 0.5-3.5bp more hawkish on the day.
- SONIA futures also register lowest levels seen in May, last little changed to -7.5.
- This helps the early gilt curve steepening unwind, with more of a parallel shift now seen.
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EQUITIES: US Opening calls
SPX: 5,465.3 (+1.9%); DJIA: 40,789 (+1.4%/+577pts); NDX: 19,120.3 (+2.3%).
EQUITY TECHS: E-MINI S&P: (M5) Corrective Cycle
- RES 4: 5906.75 High Mar 6
- RES 3: 5837.25 High Mar 25 and the reversal trigger
- RES 2: 5724.13 50-day EMA
- RES 1: 5512.18 20-day EMA
- PRICE: 5479.50 @ 14:10 BST Apr 14
- SUP 1: 5098.16 61.8% retracement of the Apr 7 - 10 bounce
- SUP 2: 4832.00 Low Apr 7 and the bear trigger
- SUP 3: 4760.88 1.618 proj of the Feb 19 - Mar 13 - 25 price swing
- SUP 4: 4663.75 1.764 proj of the Feb 19 - Mar 13 - 25 price swing
A short-term reversal in S&P E-Minis last week highlights the start of a corrective cycle. The trend condition has been oversold following recent weakness and the move higher is allowing this set-up to unwind. Initial resistance to watch is 5524.91, the 20-day EMA. Resistance at the 50-day EMA is at 5737.71. On the downside, key support and the bear trigger has been defined at 4832.00, the Apr 7 low.
EQUITIES: EU Bank outright call buyer
SX7E (20th June) 180c, bought for 4.25 in 12k vs 3.84k at 168.00.
