COMMUNICATIONS: Omnicom Q4 Results

• RES 4: 118.640 Low Dec 6        
• RES 3: 118.520 High Dec 13   
• RES 2: 118.173 20-day EMA 
• RES 1: 117.490/870 Low Dec 30 / High Jan 3                           
• PRICE: 117.190 @ 10:21 GMT Jan 6  
• SUP 1: 117.150 Intraday low              
• SUP 2: 117.000 Round number support     
• SUP 3: 116.700 Low Jul 26 2024 (cont)   
• SUP 4: 116.471 76.4% of the Jun 10 - Oct 1 2024 price swing    

A bear cycle in Bobl futures remains in play and last week’s sell-off plus today’s extension, reinforces the bearish set-up. Price has recently traded through 117.723, the 76.4% retracement of the Nov 6 - Dec 2 bull cycle. Attention is on key support at 117.180, the Nov 6 low. It has been pierced, a clear break would strengthen the current downtrend. Initial resistance is at 117.870, Jan 3 high. Key short-term resistance is 118.173, the 20-day EMA.

Core global FI markets have sold off this morning.

• Firmer-than-expected Hesse CPI data out of Germany (based on comparisons with the national CPI expectations) drove further hawkish repricing on the ECB-dated OIS strip and some weakness in bonds.
• ~100bp of ECB cuts now priced through ’25 vs. 115-120bp seen just before the Christmas break.
• Issuance-related pressure also noted ahead of the data, with EUR & GBP supply swelling, expectations for a brisk start for $IG ’25 issuance noted and Tsy coupon supply due over the next three days (as well as the risk of EGB syndication announcements).
• Bund futures -31 at 132.33, lows of 132.22 printed.
• Initial support at 132.00 untested.
• German yields 1-4bp higher, curve flattens. 2s10s 24.6bp, just over 5bp off December highs.
• EGB spreads to Bunds tighter given the Hesse CPI, equity rally and stronger-than-expected peripheral & French services PMIs.
• BTPs and OATs the outperformers, narrowing by ~2bp vs. Bunds.
• 10-Year gilts little changed vs. Bunds, spread ~216bp after trading either side of 220bp over the holiday period.
• Benchmark UK yields 1-2bp higher, cross-market inputs continue to dominate.
• Gilt futures -26 at 91.97, off lows of 91.78. Initial support at the Dec 19 low/bear trigger (91.64) untested.
• SONIA futures +0.5 to -2.0. BoE-dated OIS pricing 56bp of cuts through ’25, 1.5bp less dovish on the day.
• German national CPI data due this afternoon.
• Final U.S. services PMI and durable goods data also due later today, as is factory orders.
• Elsewhere, Fed Governor Cook will speak.

• While the Pound and the EUR have paired some gains versus the Yen, the Dollar is looking to make an attempt at its earlier overnight high of 157.83.
• Risk On tone could be helping as the Emini extends further highs, and the US Yields are doing very little.
• Nonetheless, initial focus for Market Participants is the 158.08 level, the December high.