NATGAS: German Gas Demand Rises to 8% Above 2018-21 Average: Bnetza

The earlier session high of 132.15 has capped upside in Bund futures, with the latest extension higher topping out at 132.09. Clearance of the 20-day EMA at 132.41 is still required to cancel a medium-term bearish threat, with the current corrective phase allowing an oversold trend condition to unwind. 

• The German curve has bull flattened, with 2-year yields 1.5bps lower and 30-year yields down 3bps.
• Today’s French and Lithuanian syndications have priced, removing any hedging related pressure in EGBs. The French transaction saw a record deal size (E10bln, at the top end of MNI’s expectations) and order books (in excess of E134bln). This should set the scene for smooth digestion at Thursday’s MT OAT/IL OAT auctions.
• ECB’s Nagel provided characteristically cautious comments in an interview with Bloomberg, but appeared to provide nascent support (or at least, no pushback) for a January cut.
• ECB President Lagarde is scheduled to speak from Davos at 1505GMT/1605GMT tomorrow. Villeroy, Knot, Makhlouf and Nagel are also set to speak. The data calendar is relatively limited, with focus on Friday’s January flash PMIs.
• On the supply front, tomorrow sees syndications from Finland and Spain, alongside a 15-year Bund auction and a Portuguese buyback.

The Senate Finance Committee has voted 16-11 in favour of Scott Bessent, President Donald Trump's nominee to serve as Treasury Secretary. Bessent's nomination will now be scheduled for a full confirmation vote on the Senate floor. 

• In the Committee vote, two Democrats - Senator Mark Warner (D-VA) and Senator Maggie Hassan (D-NH) - voted in favour of Bessent's nomination, signalling that Bessent will be approved in a bipartisan Senate vote. However, Senate Minority Leader Chuck Schumer (D-NY) is unlikely to agree to fast-track Bessent's nomination as he did with Secretary of State Marco Rubio yesterday.
• It is unclear when a full vote will be scheduled, but Senate Majority Leader John Thune (R-SD) will likely tee up a vote this week. Thune has threatened to keep the upper chamber in session through the weekend to confirm key Cabinet officials, so expect Bessest to receive a relatively smooth pathway to confirmation, despite some Democrat concerns over his personal tax history.
• Ranking Democrat on the Finance Committee, Senator Ron Wyden (D-OR), told the panel that it was "troubling" that Bessent would take office while "not in compliance" with Treasury tax rules.
• Wyden: "My view is, you can’t have a Treasury Secretary who doesn’t abide by Treasury policy. That’s what you’d have on day one if Mr. Bessent is confirmed."

• EURUSD has been trading with a supportive tone across the US session and has risen back above 1.0400 in latest dealings. Elevated levels for major equity indices have likely been supportive of the broader dollar offer, while the lack of concrete details on tariffs for Eurozone countries may be bolstering the single currency relief rally.
• We have noted that the bounce so far appears corrective in nature, however, the latest bullish developments are being monitored closely. Most notably, the pair has breached the 20-day EMA, at 1.0346, and pierced trendline resistance at 1.0393, drawn from the Sep 30 ‘24 high.
• A clear breach of the line would expose the 50-day EMA at 1.0461, which closely coincides with the October 2023 low of 1.0448. Clearance of these levels would strengthen a bullish condition and would signal scope for a greater recovery to 1.0568, the Dec 10 high.
• Aside from Trump related risks, the Eurozone data calendar is headlined by the January flash PMIs on Friday. Data will help set the tone for sentiment heading into 2025, with questions still remaining around the likely pace and magnitude of ECB rate cuts later this year.