US 10YR FUTURE TECHS: (H5) Bull Cycle Remains In Play

Bank of America forecast “reserves in the Eurozone and UK to fall towards their estimated demand level: excess liquidity in the Eurozone is forecast to fall to €2.4tln by end-2025 vs estimated demand of €1.7-2.8tln; reserves in the UK are forecast to fall to ~£630bn by end-2025 vs the PMRR of £345-£490bn.”

• They go onto to suggest that “reserves are unevenly distributed and we believe stigma will push reserve-scarce banks to the market for funding as much as possible.”
• They believe that “to the extent €STR and SONIA remain close to the depo rate and Bank Rate, respectively, any associated widening in front-end EUR and GBP spreads, such as repo-OIS (and EURIBOR-€STR in EUR), may not necessarily be inconsistent with the ECB's and BoE's floor system.”
• Ultimately, they note that “funding pressures in the Eurozone have increased in secured markets” and they expect unsecured funding pressures to rise, recommending remaining paid 1y1y EURIBOR-€STR.

French Block trade, suggest seller:

• OATH5 ~1.95k at 122.51.

BTP and OAT are slowly starting to underperform Germany (Bund), and all futures contract Hovers near their respective lows.

• US Data/Speaker Calendar (prior, estimate)
• 7-Jan 0800 Richmond Fed Barkin economic outlook, (text, Q&A)
• 7-Jan 0830 Trade Balance (-$73.8B, -$78.3B)
• 7-Jan 1000 JOLTS Job Openings (7.744M, 7.740M)
• 7-Jan 1000 JOLTS Job Openings Rate (4.6%, 4.6%)
• 7-Jan 1000 JOLTS Quits Level (3.326M, --), Rate (2.1%, --)
• 7-Jan 1000 JOLTS Layoffs Level (1.633M, --), Rate (1.0%, --)
• 7-Jan 1000 ISM Services Index (52.1, 53.5)
• 7-Jan 1000 ISM Services Prices Paid (58.2, 57.5)
• 7-Jan 1000 ISM Services Employment (51.5, 51.4)
• 7-Jan 1000 ISM Services New Orders (53.7, 54.2)
• 7-Jan 1130 US Tsy $85B 42D CMB auction
• 7-Jan 1300 US Tsy $39B 10Y Note re-open (91282CLW9)