E-MINI S&P TECHS: (Z6) Sights Are On The Bull Trigger

Overnight upside in crude caps any demand for gilts in early trade today.

• Futures -9 at 84.23.
• The trend condition in the contract remains bearish and last week's breach of support at 84.74, the Sep 2 low and bear trigger, confirms a resumption of the downtrend. Sights are on 83.60, a Fibonacci projection point, with last week’s low (83.86) providing intermediate support. Initial firm resistance is seen 85.81, the 20-day EMA.
• Closure of the Saudi East-West pipeline following attacks underscores ongoing supply risks in the energy markets. That was compounded by news that a planned Monday meeting between Iran and several Gulf States, aiming to create a temporary shipping lane through the Strait of Hormuz, has been postponed. Energy firmed, but oil benchmarks remain shy of last week’s highs.
• This week’s tier 1 UK data comes in the form of labour market data (Tuesday) and CPI (Wednesday), ahead of Thursday’s BoE decision.
• Expect our preview of the data releases later today.
• There is a unanimous expectation amongst the sell-side notes that we have read for Bank Rate to be maintained at 3.75% (more on STIR pricing to come in our usual early morning bullet).
• The annual BoE APF decision is also due this week. We (and the market) look for active sales to broadly continue at their current pace. This would imply a GBP50bln total reduction in the APF stock over the Oct ‘26-Sep ‘27 period (active sales of around GBP19.5bln). There is a risk of GBP55bln in our view - but anything more than that would be unlikely given the BoE's aim to keep this programme predictable. A biggest question is on the maturity breakdown and whether there will be a change to this year's 40/40/20 short/medium/long breakdown - we don't think this likely but if there was a reduction in longs (or even cessation of active sales of longs) this could have a notable impact on the curve.

With ~94% of districts counted, the Swedish election result remains on a knife edge. Opposition parties are currently on track for 176 seats, compared to 173 for the incumbent Tido parties. We will likely have to wait till Wednesday for a more conclusive result, with votes from Swedes living abroad and those counted by municipalities still to be incorporated. 

• The projected result is much closer than that implied by the SVT Valu and TV4/Novus exit polls, which put the opposition on course for just over 180 seats. Relative to those exit polls, outperformance for the Moderate party and underperformance from the Greens stands out the most.
• The Liberals look set to exceed the 4% threshold to re-enter Parliament, with 5.4% of votes at present – validating a late bounce in pre-election polling.
• This could set the stage for protracted, potentially difficult coalition formation. For MNI’s pre-election scenarios, see our preview here
• So far, there’s little market reaction in SEK FX or SGBs to the projected election result. As noted in our preview, primary focus once a coalition is formed will be on the fiscal policy mix, and the impact this could have on the medium-term growth outlook. 

Sovereign rating reviews of note from after hours on Friday include:

• Fitch affirmed Italy at BBB+; Outlook Stable
• Fitch affirmed Slovenia at A+; Outlook Stable
• Morningstar DBRS confirmed Ireland at AA, changes Trend to Positive
• Morningstar DBRS confirmed Norway at AAA, Stable Trend
• Morningstar DBRS confirmed Slovakia at A (low), Stable Trend
• Scope Ratings affirms the European Financial Stability Facility at AA+; Outlook Stable
• Scope Ratings affirmed the European Stability Mechanism at AAA; Outlook Stable
• Scope Ratings affirmed the Netherlands at AAA; Outlook Stable
• Scope Ratings upgraded Spain to A+; Outlook Stable
• Scope Ratings affirmed the United Kingdom at AA; Outlook Stable