US 10YR FUTURE TECHS: (Z5) Rallies Off Support
- RES 4: 114-02 High Oct 17 and the bull trigger
- RES 3: 113-29 High Oct 22
- RES 2: 113-18+ High Oct 28
- RES 1: 113-02 High Nov 5 and a key near-term resistance
- PRICE: 112-29+ @ 16:56 GMT Nov 6
- SUP 1: 112-10/09+ Low Nov 6 / 5
- SUP 2: 112-08+ 38.2% retracement of May - Oct Upleg
- SUP 3: 112-06 Low Sep 25 and a reversal trigger & 100-dma
- SUP 4: 112-00 Trendline support drawn from the May 22 low
Prices rallied Thursday, helping erase the weakness posted into the Wednesday close. This stabilisation in prices means support holds into the weekly low at 112-10/09+. Despite the rally, a short-term bearish threat in Treasuries remains intact and Wednesday’s move down reinforces this theme. Sights are on a reversal trigger at 112-06, the Sep 25 low and the 100-DMA. Clearance of this level would expose a trendline support at 112-00 - the trendline is drawn from the May 22 low. Initial key near-term resistance is seen at 113-02, the Nov 5 high.
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FED: US TSY 3Y NOTE AUCTION: HIGH YLD 3.576%; ALLOTMENT 60.65%
- US TSY 3Y NOTE AUCTION: HIGH YLD 3.576%; ALLOTMENT 60.65%
- US TSY 3Y NOTE AUCTION: DEALERS TAKE 10.72% OF COMPETITIVES
- US TSY 3Y NOTE AUCTION: DIRECTS TAKE 26.58% OF COMPETITIVES
- US TSY 3Y NOTE AUCTION: INDIRECTS TAKE 62.70% OF COMPETITIVES
- US TSY 3Y AUCTION: BID/CVR 2.66
EURUSD TECHS: Trend Structure Remains Bullish
- RES 4: 1.2063 2.236 proj of the Feb 28 - Mar 18 - 247 price swing
- RES 3: 1.2000 Round number resistance
- RES 2: 1.1919 High Sep 17 and a bull trigger
- RES 1: 1.1779/1820 High Oct 1 / High Sep 23
- PRICE: 1.1672 @ 16:36 BST Oct 7
- SUP 1: 1.1690/46 50-day EMA / Low Sep 25
- SUP 2: 1.1574 Low Aug 27
- SUP 3: 1.1528 Low Aug 5
- SUP 4: 1.1392 Low Aug 1 and bear trigger.
The primary trend direction in EURUSD is up and recent weakness appears corrective. Support to watch is 1.1690, the 50-day EMA. It has been pierced, raising focus on the level at the Tuesday close. A clear break of the EMA is required to signal scope for a deeper retracement and expose 1.1574, the Aug 27 low. For bulls, a clear resumption of gains would open 1.1919, the Sep 7 high and bull trigger. Note that MA studies are in a bull-mode position highlighting a dominant medium-term uptrend.
EUROPEAN FISCAL: Stability Council Sees German Govt Debt At 80% GDP In 2029
The fiscal projection of the German "Stability Council" finds that "the Maastricht debt ratio could rise to around 80.25% of GDP by the end of the projection period in 2029" in Germany. This compares with a realised debt ratio of 62.5% of GDP in 2024.
- It is difficult to gain a firm view on current consensus on the German Maastricht debt ratio for the years ahead, but 80%+ seems to be towards the higher end of estimates we've seen previously.
- "The members of the Stability Council agreed that such a dynamic development of debt levels relative to economic performance, if it continued, would jeopardise the long-term sustainability of public finances. In order to counteract such a development, the Stability Council therefore considers consistent consolidation measures at all levels of government, comprehensive structural reforms and the investment- and growth-enhancing use of funds from the Special Fund for Infrastructure and Climate Neutrality to be urgently necessary."
- The Stability Council is a joint body of the German federal government and the states, and is enacted to strengthen "institutional conditions for ensuring long-term sustainable budgets at federal and state level".
In addition, the council notes: "By 2026, the general government deficit ratio could rise to 4¾% of gross domestic product (GDP) before falling again and reaching 3¾% of GDP in 2029. Taking into account the NEC, even with an assumed extension for 2029, the deficit ratio is likely to remain within the maximum permissible level of 3% of GDP, with the exception of 2026 and 2027. Exceeding this level in later years could have a negative impact on compliance with European fiscal rules."
Full press release here (in German).
