GERMAN AUCTION PREVIEW: 0% Aug-50 Bund / 2.50% Aug-54 Bund
This morning, Germany will hold its second 30-year Bund auction of the year. On offer will be E1bln of the 0% Aug-50 Bund (ISIN: DE0001102481) and E1.5bln of the on-the-run 2.50% Aug-54 Bund (ISIN: DE000BU2D004).
- The size is a consistent with recent Bund auctions in the 30-year segment.
- Recent auctions in the German 30y segment have passed smoothly, with solid bid-to-covers (in a 1.83x to 4.50x range since July), bid-to-offers (1.48x to 3.69x range since July) and the low prices above the secondary market mid-prices throughout 2024.
- For the last 0% Aug-50 Bund auction on 16 October, the bid-to-cover stood at 2.24x, while the bid-to-offer came in at 1.84x. For the last 2.50% Aug-54 Bund auction on 15 January, the bid-to-cover stood at 2.76x, while the bid-to-offer came in at 2.19x.
- The political situation in Germany is characterized by some uncertainty at the moment amid snap elections being scheduled for February 23. TV debates have passed without material turmoil in the last couple of days and the mainstream parties are expected to be able to form a government together - so we expect no impact from that on today's auction.
- The next German auction will be E4.5bln of the 2.20% Mar-27 Schatz (ISIN: DE000BU22080) on February 18, while further openings of both Bunds on offer are not scheduled yet.
- Note that we are also expecting a German 30-year Bund syndication at some point (likely in Q1). Tomorrow would be very unlikely now given the auction today, but we see a good chance over the next couple of weeks.
- Timing: Results will be available shortly after the bidding window closes at 10:30GMT / 11:30CET.
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EQUITIES: Notable earnings for this Week
Equities will be watched not only for Earnings, but Friday is also Option expiry, although these will be lower in Notional Terms than what we normally see during Quarterly Expiries - Notable Earnings:
- Wednesday:
Blackrock, BoNY, Citi, GS, JPM, Wells.
- Thursday:
TSMC, BoA, MS, United Health, US Bancorp.
- Friday:
State street.
COMMODITIES: WTI Futures Start the Week on the Front Foot, Trend Remains Bullish
The trend structure in WTI futures remains bullish and the contract is again trading higher, today. The stronger reversal to the upside has resulted in a breach of key short-term resistance at $76.41, the Oct 8 high. Clearance of this hurdle strengthens a bull theme and opens $79.59, the Jul 5 ‘24 high. On the downside, a reversal lower would expose the 20-day EMA, at $72.05. This average is seen as a key short-term support. Recent gains in Gold appear corrective - for now. However, the yellow metal is holding on to last week’s gains and scope is seen for a continuation higher near-term. A stronger recovery would open $2726.2, the Dec 12 high and an important short-term resistance. Clearance of this level would be a bullish development. On the downside, a reversal lower would expose $2583.6, the Dec 19 low. Initial support is at $2642.1, the 50-day EMA.
- WTI Crude up $1.14 or +1.49% at $77.67
- Natural Gas up $0.19 or +4.66% at $4.179
- Gold spot down $4.93 or -0.18% at $2685.01
- Copper up $1.7 or +0.4% at $432.1
- Silver down $0.36 or -1.2% at $30.0535
- Platinum down $6.63 or -0.69% at $959.3
EQUITIES: Bear Threat in E-Mini S&P Remains Present, Next Support at $5811.65
A bull cycle in the Eurostoxx 50 futures contract remains intact and price is trading closer to its recent highs. Last week’s rally highlights a reversal of the recent corrective pullback. Resistance at 5040.00, the Dec 9 high, has been pierced. A clear break of this hurdle would confirm a resumption of the bull cycle that started on Nov 21 and open 5068.13, a Fibonacci projection. On the downside, initial firm support lies at 4935.71, the 50-day EMA. A bear threat in the S&P E-Minis contract remains present and the contract is trading lower today. The reversal from the Dec 26 high, confirms the end of the Dec 20 - 26 correction. 5866.00, the Dec 20 low and a key short-term support, has been cleared. This strengthens a bearish theme and opens 5811.65, a Fibonacci retracement. Initial firm resistance is 6107.50, the Dec 26 high. First pivot resistance is seen at 5996.50, the 50-day EMA.
- Elsewhere, in China the SHANGHAI closed lower by 7.769 pts or -0.25% at 3160.755 and the HANG SENG ended 190.15 pts lower or -1% at 18874.14.
- Across Europe, Germany's DAX trades lower by 134.25 pts or -0.66% at 20078.74, FTSE 100 lower by 25.91 pts or -0.31% at 8221.77, CAC 40 down 49.25 pts or -0.66% at 7380.48 and Euro Stoxx 50 down 44.46 pts or -0.89% at 4931.57.
- Dow Jones mini down 138 pts or -0.33% at 42024, S&P 500 mini down 51 pts or -0.87% at 5814.75, NASDAQ mini down 282.5 pts or -1.34% at 20731.75.
