EUROSTOXX50 TECHS: (Z5) Testing Resistance

• Germany will return to the market on Wednesday with E4.5bln of the 10-year 2.60% Aug-35 Bund (ISIN: DE000BU2Z056) on offer.
• On Thursday, Italy will look to hold a 5/10-year BTP / CCTeu auction. Details will be confirmed today. We see a good chance for a new 10-year Feb-36 BTP to be launched at this auction, alongside a first reopening of the 5-year 2.85% Feb-31 BTP (ISIN: IT0005671273). We note that the Apr-34 CCTeu (ISIN: IT0005652828) has been sold at each auction since its May launch.
• Finland will conclude the month’s issuance on Thursday by holding an ORI auction.

NOMINAL FLOWS: This week will see sizeable redemptions of E54.5bln: E27.5bln of a formerly 30-year French OAT and E27.0bln of a formerly 10-year Spanish Obli. Coupon payments for the week total E17.8bln of which E10.1bln are Spanish, E6.5bln French and E1.1bln Italian. This leaves estimated net flows for the week at negative E46.1bln, versus positive E11.4bln last week.

Belgium, Italy, Germany and Finland will all look to come to the market this week. We pencil in issuance of E26.2bln for the week, down from E29.5bln last week. There is also the potential for a Slovakian syndication.

See the full document here for a look ahead to the next two weeks of issuance and a recap of last week.

• In July Slovakia’s ARDAL Director Daniel Bytcanek told the MNI policy team that a syndication in the second half of October was likely with a transaction size of E2bln with a new 12-year SlovGB the most likely candidate (with a possibility of a new 20-year SlovGB). We now pencil this in for this week.
• Belgium will kick off the week’s issuance today with its last conventional auction of the year, with E2.5-3.0bln combined of the 2.60% Oct-30 OLO (ISIN: BE0000365743), the 1.25% Apr-33 Green OLO (ISIN: BE0000346552) and the on-the-run 10-year 3.10% Jun-35 OLO (ISIN: BE0000363722) on offer.
  • Alongside this, the BDA announced that it would cancel the auction scheduled for 24 November (but still planned to conduct the two remaining ORI auctions on 7 November and 19 December). This has led to this auction being a little larger than we expected.
• Italy will look to hold a BTP Short Term / BTPei auction tomorrow. On offer will be E1.75-2.00bln of the on-the-run 2.10% Aug-27 BTP Short Term (ISIN: IT0005657330) and E1.0-1.5bln of the 1.80% May-36 BTPei (ISIN: IT0005588881).
• Germany will come to the market tomorrow with E4bln of the 2.20% Oct-30 Bobl (ISIN: DE000BU25059) on offer.

• RES 4: 155.55 2.00% retracement of the Jan 10 - Apr 22 bear leg
• RES 3: 154.39 76.4% retracement of the Jan 10 - Apr 22 bear leg
• RES 2: 153.82 1.618 proj of the Sep 17 - 26 - Oct 1 price swing  
• RES 1: 153.27 High Oct 10 and the bull trigger 
• PRICE: 152.89 @ 06:43 BST Oct 27
• SUP 1: 151.82 Low Oct 23
• SUP 2: 150.90 20-day EMA   
• SUP 3: 149.44 50-day EMA  
• SUP 4: 149.05 Low Oct 6 and a gap high on the daily chart 

A bull cycle USDJPY remains intact. The pair has traded just short of key resistance at 153.27, the Oct 10 high and a bull trigger. Clearance of this hurdle would confirm a resumption of the medium-term uptrend. This would open 153.82, a Fibonacci projection. Note that moving average studies are in a bull-mode position, highlighting a primary uptrend. First important support to watch lies at 150.90, the 20-day EMA.