FINANCIALS: BBVA/SABSM - Merger update

• MNI: TURKEY JAN CPI +5.03% M/M

• RES 4: 107.233 76.4% retracement of the Dec 2 - Jan 15 bear leg
• RES 3: 107.170 High Dec 20    
• RES 2: 107.081 61.8% retracement of the Dec 2 - Jan 15 bear leg
• RES 1: 107.045 Intraday high         
• PRICE: 106.925 @ 06:42 GMT Feb 3   
• SUP 1: 106.805 Intraday low              
• SUP 2: 106.676 20-day EMA
• SUP 3: 106.515 Low Jan 30 
• SUP 4: 106.435 Low Jan 15 and key support  

Schatz futures have traded sharply higher today, marking an extension of the bull cycle that started Jan 15. The contract has traded through a number of important resistance points and the latest impulsive gains highlight a stronger reversal. The focus is on 107.081, a Fibonacci retracement point. On the downside, initial firm support to watch lies at 106.676, the 20-day EMA. First support is 106.805, today’s intraday low.

Syndications likely in the week:

• Belgium: We pencil in a 30-year Jun-56 OLO in the first half of February. This would likely see the 24 February conventional auction cancelled. We look for a E5bln transaction size (consistent with the last 3 years), with some upside risk.
• Germany: We pencil in a 30-year Bund syndication. We expect a similar size to last year (E6bln with E1bln retained). There is a gap in the auction calendar in the upcoming week – though this coincides with the Winter holidays in some regions, so holding off until later cannot be ruled out.
• Italy: 15-year BTP: We look for a 2040 BTP to be launched via syndication in February. We note that since 2019 a new 15-year BTP has launched in either January or February in 4/6 years (the exceptions being 2022 when it launched in May and 2023 when there was no 15-year launch at all). We look for a launch size of E8-10bln. There is also potential for a new 30-year BTP€I, although we think that is less likely until later in the year.

NOMINAL FLOWS: The upcoming week sees E17.8bln of redemptions from a formerly 8-year Italian CCTEU. Coupon payments for the week total E6.8bln of which E5.2bln are Italian, E1.3bln are from EU-bonds and E0.2bln are Austrian. This leaves estimate net flows for the week at positive E16.3bln, up slightly from positive E14.9bln last week.

For more on last week's issuance and a look ahead to next week see the MNI EGB Issuance, Redemption and Cash Flow Matrix here.