EQUITY TECHS: E-MINI S&P: (H5) Bear Leg Extends

• RES 4: 0.8474 High Jan 20 and a key resistance    
• RES 3: 0.8421 High Jan 27  
• RES 2: 0.8374 20-day EMA 
• RES 1: 0.8363 High Jan 3  
• PRICE: 0.8314 @ 16:43 GMT Feb 4 
• SUP 1: 0.8248 Low Feb 3
• SUP 2: 0.8223 Low Dec 19 and a key support  
• SUP 3: 0.8203 Low Mar 7 ‘22 and a lowest point of a multi-year range   
• SUP 4: 0.8163 123.6% retracement of the Dec 19 - Jan 20 bull leg 

EURGBP traded in a volatile manner on Monday. The bear cycle that started Jan 20 remains in play and Monday’s initial sell-off has strengthened a bearish threat. A resumption of weakness would pave the way for a move towards the first key support at 0.8223, the Dec 19 low. On the upside, the 20-day EMA is seen as a key short-term resistance - at 0.8374. A breach of the average would highlight a bullish development.  

Elections analytics firm 538 has published its approval rating tracker for President Donald Trump. Trump starts his second term with a slightly stronger approval rating than his first term but below that of all other modern US presidents – a sign of the deeply polarised US electorate. 

• Trump’s approval rating will be a key indicator that could influence administration policy as he seeks to enact his agenda. In the coming weeks, the approval tracker will provide a useful gauge of voter sentiment for first weeks of Trump's presidency, particularly in light of the North American tariff standoff, efforts to restructure the federal government, and hardline rhetoric towards allies.

Figure 1: President Donald Trump Approval Rating

Source: 538

Some analyst expectations for guidance in the February refunding announcement:

• BMO FICC: “If the language is retained, the market will assume that auction size increases will be delayed further into 2025, if not 2026. In the event the language is altered or eliminated, the obvious conclusion would be that auction size increases are coming sooner than previously anticipated.
• Deutsche:  “With the Treasury potentially needing to adjust its previous guidance as the anticipated increases approach, there is a possibility that any strong revision could be negatively perceived by the market.” Most likely to drop “at least” but keep “the next several quarters”, or replace “at least the next several” with “the next few/the next couple of quarters”. Removing guidance altogether would be disruptive to markets.
• Goldman Sachs: “Meaningful risk” that guidance is watered down. “We continue to think that a natural adjustment would be to reword the “next several quarters” portion to something along the lines of “current auction sizes continue to providote sufficient capacity for Treasury to address near-term projected borrowing needs.”
• JPMorgan: No change until May. “Given the large funding gap that exists over the second half of this decade, it’s possible Treasury could remove the guidance next week, but we are unsure it will be ready to change this guidance so soon after Secretary Bessent’s confirmation, given that he may want to take a renewed look at Treasury’s debt management strategy.”
• TD Securities: Treasury “may look to alter or remove” this guidance. “The removal of this guidance is likely to bear steepen the curve as markets pencil in more supply. However, if the statement is left unchanged or Treasury hints that it will lean more on bill issuance in the coming years, yields could move lower.”
• Wells Fargo: No change indicated.
• Wrightson ICAP: "Major changes in cash and debt management policies are likely this year, but it is unclear how quickly any strategic decisions will be finalized.  Moreover, in the short run, the Treasury will have its hands full dealing with the debt limit constraints that will start to become binding over the next several weeks.  The Treasury may have to keep its forward guidance to a minimum in this refunding."