RUSSIA: Gas Exports to EU Through TurkStream Rises to New Record High in Feb

Goldman Sachs write “given that the current macro data continues to provide support for Gilts by a lower path for underlying inflation, a weakening labour market and gradual BoE cuts (including at its meeting this week), backstopped by the potential for further fiscal adjustment if needed, we remain positive on gilts and expect further reductions in long-end term premium.”

• They think “10s30s has lagged the rally in UK rates, and recommend 10s30s flatteners.”

• RES 4: $34.903 - High Oct 23 and the bull trigger  
• RES 3: $33.125 - High Nov 1 
• RES 2: $32.338 - High Dec 12 and a key resistance  
• RES 1: $31.737 - High Jan 30                              
• PRICE: $31.248 @ 08:23 GMT Feb 3   
• SUP 1: $29.704/28.748 - Low Jan 27 / Low Dec 19 and bear trigger        
• SUP 2: $28.446 - 76.4% retracement of the Aug 8 - Oct 23 bull cycle 
• SUP 3: $27.686 - Low Sep 6 
• SUP 4: $26.451 - Low Aug 8  

Silver traded higher last week. A bear cycle that started on Oct 23 last year remains in play and recent gains are considered corrective. However, the latest move higher does suggest scope for a continuation near-term. An extension would expose key resistance at $32.338, the Dec 12 high. Clearance of this level would highlight a reversal. Support to watch is $29.704, the Jan 27 low, and $28.748, the Dec 19 low and the bear trigger.

The Spanish manufacturing PMI was notably weaker than consensus at 50.9 (vs 53.5 cons, 53.3 prior). While still in expansionary territory for the 12th consecutive month, this was the lowest reading since August. 

• Uncertainty weighed on demand, especially in export markets, while there was an uptick in input cost and output charge inflation.
• Note that Eurozone flash PMI did note that the pace of growth in the region ex-France and Germany did slow from December.

Highlights from the release:

• “Although demand was reported to have remained positive, some panellists noted a degree of uncertainty amongst clients. This was especially evident in export markets, with foreign sales rising only marginally since December”.
• “Whilst some panellists reported stronger demand from North Africa, there were reports of weaker sales to key European and Latin American markets.”
• “Reflective of slower output and order book gains, panellists reduced their purchasing and employment growth in January”
• “Input price inflation picked up noticeably”… “Inputs like steel were said to have risen in price, whilst higher transport expenses added to cost burdens”.
• “Firms chose to raise their own output charges quite markedly in January, and therefore signalled a return to rising factory gate prices following four months of decline”.