BTP: Citi Maintain BTP Widener Bias

Spreads to Bunds within 1bp of yesterday’s closing levels, with weakness in e-mini futures since yesterday’s close and a downtick in European equities probably promoting modest widening against the outright bond rally.

• No tangible widening in RAGBs after media reports pointed “at least a temporary halt” in coalition government discussions between the right-wing FPÖ and conservative ÖVP. Both parties have since noted that discussions are set to continue today, limiting the market fallout.
• Similarly, no meaningful, lasting reaction to the PMI readings, with a mark lower in the French final services PMI providing the most notable takeaway.

• MNI: EUROZONE JAN FINAL SRVCS PMI 51.3 (FLASH: 51.4); DEC 51.6
• EUROZONE JAN FINAL COMP PMI 50.2 (FLASH: 50.2); DEC 49.6

Looking at the German 10yr Yield, as mentioned in the Opening Bund comment, risk remains to the upside in Futures, and further momentum will highlight the 2.30% level, printed a 2.309% low in January.

Today, reference 133.40:

• 2.30% = 134.19.

For support, while Yesterday's low is situated at 132.72, initial area of interest comes at 132.34 (Monday's opening gap).

Watch Tnotes here, testing session high, decent buying interest is going through, and while this Week saw a 109.20 high print, the next area of interest comes at 109.29, not a Tech level, but where it was trading at pre 18th December FOMC Hawkish meeting.

USDJPY lis through 153.00, with next support seen at 152.55 61.8% retracement of the Dec 3 - Jan 10 bull leg.