FINLAND T-BILL AUCTION PREVIEW: On offer next week

Bunds rallied on growth worries after U.S. President Trump levied fresh tariffs on China, Canada & Mexico and pointed towards action against the EU.

• China has pledged corresponding action and a challenge at the WTO.
• Initial cross-market reaction to the tariffs has eased a little since a WSJ report pointed to “a sign that China is eager to get trade talks going.”
• Bund futures traded as high as 133.26 overnight, last +35 at 132.87.
• The contract is through resistance at 132.22 and has cleared the 20- and 50-day EMAs.
• The break higher confirms a resumption of the corrective bull cycle that started January 14.
• Bulls now target the January 3 high (133.48).
• Moves in futures point to BTP & OAT widening vs. Bunds at the cash open.
• Eurozone CPI and manufacturing PMIs (final PMIs for the Eurozone, Germany & France) are due this morning.
• The U.S. ISM manufacturing survey and Fedspeak could also provide some impetus.
• ECBspeak will come from Simkus.
• No EGB supply due today, although we remain on the lookout for syndications from Germany, Italy and Belgium (see previous bullet for greater details).
• Fallout from the U.S. tariffs will also be eyed, particularly with EU leaders meeting in Brussels.
• Finally, French PM Bayrou is set to use special constitutional powers as he looks to force through the ‘25 budget. This is set to trigger a no-confidence vote on Wednesday. Bayrou will hope his recent concessions to the socialist party prevent them from voting against him.

• MNI: TURKEY JAN CPI +5.03% M/M

• RES 4: 107.233 76.4% retracement of the Dec 2 - Jan 15 bear leg
• RES 3: 107.170 High Dec 20    
• RES 2: 107.081 61.8% retracement of the Dec 2 - Jan 15 bear leg
• RES 1: 107.045 Intraday high         
• PRICE: 106.925 @ 06:42 GMT Feb 3   
• SUP 1: 106.805 Intraday low              
• SUP 2: 106.676 20-day EMA
• SUP 3: 106.515 Low Jan 30 
• SUP 4: 106.435 Low Jan 15 and key support  

Schatz futures have traded sharply higher today, marking an extension of the bull cycle that started Jan 15. The contract has traded through a number of important resistance points and the latest impulsive gains highlight a stronger reversal. The focus is on 107.081, a Fibonacci retracement point. On the downside, initial firm support to watch lies at 106.676, the 20-day EMA. First support is 106.805, today’s intraday low.