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Jul-10 10:23

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Jun-10 10:18

The 10-year BTP/Bund spread has widened towards 140bps as a result of the heightened political uncertainty and unexpected election announcement in France, putting the spread at the widest level seen since late April (+5.5bp on the day). Other peripheral spreads are widening in sympathy, with cash curves bear steepening.
In contrast with France, however, domestic political stability in Italy (the election is unlikely to trigger any substantial changes in IT government policy) may help contain further widening in BTP spreads, but their high-beta nature nonetheless keeps them sensitive to broader moves in risk assets.
BTP futures registered fresh year-to-date lows (115.39) before stabilising, currently -65 ticks at 115.57. The bearish move ends the corrective phase seen between May 29 & Jun 5. Fresh weakness would expose the 1.236 projection of the May 16-24-27 price swing (114.88).
The EU-level implications of the results for Italian PM Meloni are not yet clear: Von der Leyen’s EPP is looking to work with the socialists and liberals, avoiding Meloni's ECR group. However, if they can't get a majority together then VdL might need Meloni's backing, potentially giving the Italian PM a bit more influence in Brussels.

Jun-10 10:17

The latest CFTC CoT report showed non-commercial accounts extending net shorts in TU, FV, TY and WN futures.

Overall net shorts in FV futures hit new cycle extremes.
Elsewhere, non-commercial positioning in US futures moved back into net short territory after 3 weeks of fairly limited net long positioning.
UXY futures broke the wider trend and saw net shorts trimmed.
Hedge funds generally added to net short positions across the curve, although TY and WN saw some short cover from that investor cohort. They also flipped to net short positioning in SOFR futures for the first time since May ‘23.
The ‘hawkish cut’ from the ECB and Friday’s NFP report will have been welcomed by that investor group, with the details of this CoT report not capturing those events (cut off date was Tuesday 4 June).
A reminder that basis trades will skew futures positioning metrics.

Source: MNI - Market News/CFTC/Bloomberg

Jun-10 10:12

In the equity space, the uptrend in S&P E-Minis remains intact and last week’s gains reinforce this set-up. The contract has traded above 5368.25, the May 23 high and bull trigger. The move confirms a resumption of the uptrend. A continuation higher would signal scope for a climb towards the 5400.00 handle next. Key short-term support has been defined at 5205.50, the May 31 low.
Current weakness in EUROSTOXX 50 futures appears to be a correction. The recent recovery from 4947.00, the Jun 4 low, signals the end of the corrective cycle and attention is on key resistance and the bull trigger at 5110.00, the May 16 high. Clearance of this level would confirm a resumption of the uptrend. Support to watch lies at 4947.00, a break would be bearish and instead, expose 4894.90, 61.8% retracement of the Apr 19 - May 16 bull cycle.

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