EUROZONE ISSUANCE: EGB Supply
France has released a mandate for a 30-year OAT syndication while Greece, Germany, Portugal and Italy are all still due to hold auctions this week. The EU and Italy have both already held syndications while the Netherlands and Germany have already held auctions. There are also possible syndications still to come this week from Belgium, Germany, Slovakia or Spain with a possible RFP from the ESM. We look for estimated gross issuance for the week of E62.1bln, up from E26.2bln last week.
- France is likely to hold a syndication today after it announced a mandate for a new 30-year OAT maturing 25 May 2056. We pencil in a E8-10bln transaction size.
- We had noted that we thought this 30-year OAT syndication would come in the W/C 24 February, but there was a big risk it could come as soon as this week.
- Today, Greece will hold a GGB auction selling E250mln of the 10-year 3.625% Jun-35 GGB (ISIN: GR0124041758) that was launched via syndication on 14 January.
- This is broadly in line with our expectations, and we note that this will be the 17th consecutive GGB auction where either a 5-year or 10-year GGB has been reopened.
- Also this morning, Germany will return to the market to hold a 30-year Bund auction. E1.5bln of the 0% Aug-50 Bund (ISIN: DE0001102481) will be on offer alongside E1bln of the 2.50% Aug-54 Bund (ISIN: DE000BU2D004).
- Portugal will hold an OT auction for E1.25-1.5bln, also this morning. On offer will be the 2.25% Apr-34 OT (ISIN: PTOTEWOE0017), the 1.15% Apr-42 OT (ISIN: PTOTEPOE0032) and the 1.00% Apr-52 OT (ISIN: PTOTECOE0037).
- Tomorrow, Italy will hold a 3/7-year BTP auction. On offer will be E2.75-3.25bln of the on-the-run 3-year 2.70% Oct-27 BTP (ISIN: IT0005622128), E1.00-1.25bln of the off-the-run 3.45% Jul-31 BTP (ISIN: IT0005595803) andE1.00-1.25bln of the on-the-run 7-year 3.15% Nov-31 BTP (ISIN: IT0005619546).
- As announced alongside the syndication mandate, the 15+ year BTP line was cancelled to facilitate the Oct-40 BTP syndication.
For more details on issuance this week and next week see the full document here: EZ250212.pdf
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EUROZONE ISSUANCE: EGB Supply - W/C 13 Jan (2/2)
Italy, the Netherlands, Germany, Greece, and Spain look to hold auctions in the upcoming week. We also have a scheduled syndication from the EU and pencil in syndications from Austria, Ireland and France (see prior bullet). We pencil in estimated gross issuance for the week at E45.6bln, down from E61.5bln last week.
- Italy will look to kick issuance off for the week today with a 3/7 year BTP auction which sees both on-the-run issues reopened as expected. Note that the 15+ year portion of the auction has been cancelled due to the dual-tranche syndication on 8 January. On offer will be E2.50-2.75bln of the 2.70% Oct-27 BTP (ISIN: IT0005622128) and E2.75-3.00bln of the 3.15% Nov-31 BTP (ISIN: IT0005619546).
- The EU has a syndication scheduled for the week ahead. We think the most likely new issues are 10-year, 3-year or 20-year (in that order).
- Tomorrow, the Netherlands will sell E1.5-2.0bln of the on-the-run 30-year 2.00% Jan-54 DSL (ISIN: NL00150012X2).
- Also tomorrow, Germany will issue E5bln of the new Apr-30 Bobl (ISIN: DE000BU25042). The coupon will be confirmed later today.
- On Wednesday, Greece will hold a GGB auction. The details will be announced tomorrow.
- On Wednesday, Germany will return to the market to sell E1bln of the 1.80% Aug-53 Bund (ISIN: DE0001102614) alongside E1.5bln of the 30-year 2.50% Aug-54 Bund (ISIN: DE000BU2D004).
- On Thursday, Spain will hold a Bono/Obli auction. On offer will be the on-the-run 5-year 2.70% Jan-30 Bono (ISIN: ES0000012O00), the 0.85% Jul-37 Obli (ISIN: ES0000012I24) and the 1.00% Oct-50 Obli (ISIN: ES0000012G00). We pencil in a E5.5-6.5bln auction size – with the size to be announced later today.
NOMINAL FLOWS: This week sees E10.1bln of redemptions from an Italian CCTeu. Coupon payments for the week total E5.5bln of which E4.1bln are Dutch and E1.3bln Italian. This leaves estimated net flows for the week at positive E30.0bln, vs positive E57.5bln last week.
EUROSTOXX50 TECHS: (H5) Trading Closer To Its Recent Highs
- RES 4: 5097.00 High Oct 14
- RES 3: 5080.00 High Oct 15
- RES 2: 5068.13 0.764 proj of the Nov 21 - Dec 9 - 20 price swing
- RES 1: 5054.00 High Jul 8
- PRICE: 4980.00 @ 06:34 GMT Jan 13
- SUP 1: 4935.7150-day EMA
- SUP 2: 4829.00 Low Dec 20 and key short-term support
- SUP 3: 4800.87 76.4% retracement of the Nov 21 - Dec 9 bull cycle
- SUP 4: 4775.00 Low Nov 29
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.
EURGBP TECHS: Maintains A Firmer Tone
- RES 4: 0.8494 High Aug 26 ‘24
- RES 3: 0.8471 61.8% retracement of the Aug 8 - Dec 19 downleg
- RES 2: 0.8448 High Oct 31 and reversal trigger
- RES 1: 0.8424 50.0% retracement of the Aug 8 - Dec 19 downleg
- PRICE: 0.8409 @ 06:46 GMT Jan 13
- SUP 1: 0.8318/8284 50-day EMA / Low Jan 8
- SUP 2: 0.8263 Low Dec 31
- SUP 3: 0.8223 Low Dec 19
- SUP 4: 0.8203 Low Mar 7 2022 and a major support
EURGBP traded sharply higher last week and remains firm. The cross has breached resistance at the 50-day EMA, and cleared the December highs. This undermines the recent bearish theme and suggests scope for a stronger short-term recovery. Note too that 0.8376, the Nov 19 high and a key resistance, has also been cleared. Sights are on 0.8424, a Fibonacci retracement. Support at the 50-day EMA is at 0.8318.
