EU CONSUMER STAPLES: Barry Callebaut; the larger concerns we do have
Feb-12 10:33
(BARY 29s; Baa3/BBB-; Stable)
- Unforeseen weather events - 70% of global Cocoa comes from west Africa (Ivory coast 44%, Ghana 14%, Cameroon 6%, Nigeria 6%). Poor weather for crops has been one of the largest drivers already.
- Industry invests more on cocoa-free chocolate alternatives (while Barry has little room for R&D). Hershey CEO last week; "We have been seeing some increased global demand across the market for cocoa alternatives" and re. cellular agriculture "It's something we're watching very closely. I don't think it is necessarily near-term, but I think it can be a game-changer and it's certainly getting a lot of investment right now. So I think it's something to watch."
- Threat of insourcing - i.e. clients like Mondelez process the Cocoa themselves. It says this is happening with some big clients but is being offset by outsourcing from clients who struggle more in this volatility. Net net it sees it balanced.
- Supply does not do its part and demand falls more than the low-single digit volume decrease it has guided to (and is currently experiencing). This could start pressuring the guidance for double digit EBIT growth.
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EURUSD TECHS: Bearish Trend Sequence Intact
Jan-13 10:33
- RES 4: 1.0630 High Dec 06
- RES 3: 1.0513 50-day EMA
- RES 2: 1.0437/58 High Jan 6 / High Dec 30
- RES 1: 1.0374 20-day EMA
- PRICE: 1.0201 @ 10:32 GMT Jan 11
- SUP 1: 1.0178 Intraday low
- SUP 2: 1.0138 1.764 proj of the Sep 25 - Oct 23 - Nov 5 price swing
- SUP 3: 1.0122 2.0% 10-dma envelope
- SUP 4: 1.0031 2.000 proj of the Sep 25 - Oct 23 - Nov 5 price swing
The trend condition in EURUSD remains bearish and recent short-term gains have proved to be a correction. Friday’s move lower resulted in a print below 1.0226, the Jan 2 low. The pair has also traded lower today. The break of 1.0226 confirms a resumption of the downtrend and marks an extension of the price sequence of lower lows and lower highs. Sights are on 1.0138 next, a Fibonacci projection. Resistance to watch is 1.0458, Dec 30 high.
GERMAN T-BILL AUCTION RESULTS: New 12-month Bubill
Jan-13 10:32
| Type | 12-month bubill |
| Maturity | Jan 14, 2026 |
| Allotted | E1.905bln |
| Previous | E2.46bln |
| Total sold | E3bln |
| Target | E3bln |
| Avg yield | 2.402% |
| Previous | 2.392% |
| Bid-to-cover | 3.22x |
| Previous | 2.89x |
| Bid-to-offer | 2.05x |
| Previous | 2.37x |
| Previous date | Nov 18, 2024 |
EGBS: Under Pressure, Spreads Wider
Jan-13 10:30
Core global FI markets remain under pressure.
- Bearish technicals and rallying energy prices weigh early this week.
- Bund futures as low as 130.57 before a recovery to 130.70.
- German yields 2-3bp higher, 5s lead the move.
- 10s near their July high (2.642%), that level equates to 130.50 in futures today.
- Weakness in core global FI & European equities promotes EGB spread widening
- BTP/Bunds ~5bp wider at 122.5bp, eying the early December closing high (123.3bp). 3- & 7-Year BTP supply passed smoothly.
- OATs ~2bp wider vs. Bunds, 85bp caps for now. ’24 cycle closing highs at 88.4bp lie above. Participants eye French PM Bayrou’s inaugural speech to parliament, due Tuesday.
- GGBs widen by ~4.5p vs. Bunds, unwinding some of their early ’25 outperformance.
- No real sign of underperformance for 10-Year RAGBs this morning, despite the negative ratings outlook move from Fitch on Friday as Austrian fiscal & political headwinds are well-documented. Spread to Bunds +1bp.
- Little of note in ECB speak from Lane, Rehn & Vujcic. Vujcic seemingly remains more cautious when it comes to cuts, while Lane & Rehn stuck to the central ECB view.
- ECB-dated OIS price 88bp of cuts through year-end vs. ~92bp late Friday.
- Cross-market cues eyed for the remainder of the day, with little of note on the European calendar.
