ISRAEL: PM Repeats Threat Of Seizing Gaza Territory If Hostages Not Freed
Speaking in an ill-tempered debate in the Knesset, PM Benjamin Netanyahu has repeated his gov'ts threat of further retaliatory action in Gaza if Hamas does not release the remaining hostages. Says "The more Hamas persists in its refusal to release our hostages, the more powerful the pressure we will exert. And I say to Hamas: This includes seizing territory, and this includes other things that I will not list here.” Netanyahu's comments come after the largest anti-Hamas protests in Gaza since 7 Oct 2023 took place on 25 March, with hundreds reported to be in attendance.
- On 21 March, Defence Minister Israel Katz said “I have instructed the IDF to seize additional areas in Gaza, while evacuating the population, and to expand the security zones around Gaza for the protection of Israeli communities and IDF soldiers. The more Hamas persists in its refusal to release the hostages, the more territory it will lose, which will be annexed to Israel.”
- Lebanon-based The Cradle reports that ceasefire talks have essentially collapsed, with Israel allegedly rejecting an Egyptian-proposed agreement. The Cradle: "...Cairo has put forward a new proposal [...], which includes the release of five Israeli captives in return for a several-week pause in fighting and the entry of aid into the enclave."
- With Netanyahu under pressure domestically over the 'Qatargate' investigation, and the protests against the (allegedly associated) dismissal of the head of the Shin Bet intelligence service, the prospect of a swift end to the conflict in Gaza appears slim.
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US 10YR FUTURE TECHS: (H5) Key Resistance Remains Exposed
- RES 4: 110-25 High Dec 12
- RES 3: 110-19 76.4% retracement of the Dec 6 - Jan 13 bear leg
- RES 2: 110-14 High Dec 14
- RES 1: 109-24/110-00 High Feb 21 / 7 and the bull trigger
- PRICE: 109-16+ @ 10:55 GMT Feb 24
- SUP 1: 108-21+ Low Feb 19
- SUP 2: 108-04/00 Low Feb 12 / Low Jan 16
- SUP 3: 107-06 Low Jan 13 and the bear trigger
- SUP 4: 107-04 Low Apr 25 ‘24 and a key support
Treasury futures are holding on to the bulk of their most recent gains. A resumption of the move higher would expose the next important resistance and a bull trigger at 110-00, the Feb 7 high. Clearance of this level would strengthen a bullish theme and open 110-19, a Fibonacci retracement. On the downside, key short-term support has been defined at 108-04, the Feb 12 low. Clearance of this support would reinstate a bearish theme.
OUTLOOK: Price Signal Summary - EUROSTOXX50 Trend Needle Points North
- In the equity space, S&P E-Minis faded sharply off their recent highs, last week. The move down appears corrective - for now - and a bullish theme is intact. Attention is on the key resistance at 6178.75, the Dec 6 ‘24 high. A break of this hurdle would resume the primary longer-term uptrend. On the downside, initial key near-term support has been defined at 6014.00, the Feb 10 low. A breach would highlight a bearish development and expose 5935.50, the Feb 3 low.
- The trend direction in EUROSTOXX 50 futures remains up and last week’s climb to a new alltime high on the continuation contract, reinforces a bull theme. Note too that moving average studies are in a bull-mode set-up, highlighting a dominant uptrend and positive market sentiment. Sights are on 5574.57 next, a 2.382 projection of the Nov 21 - Dec 9 - 20 ‘24 price swing. Initial firm support to watch is 5379.97, the 20-day EMA.
BUNDS: /SWAPS: Long ASW Narrow A Touch, Debt Brake Uncertainty Lingers Post-Elex
A tweak to the debt brake cannot be ruled out following the German election, explaining this morning’s ~0.5bpsnarrowing in long-dated German ASWs vs. 3-month Euribor.
- However, concessions that Die Linke may demand to support any debt brake modifications continue to cloud the German fiscal outlook and issuance picture, limiting initial market follow through.
- Ultimately, our political risk team believes that Die Linke's opposition to voting with the AfD and support for broader fiscal loosening is likely to mean its lawmakers do not vote down a debt brake reform amendment.
- As such, fundamentals continue to point towards further long-dated ASW spread tightening, but already short positioning and ongoing fiscal uncertainty may limit tightening moves in the near-term.
- Zooming out, continued restraint when it comes to defence spending risks the scorn of U.S. President Trump, which could place further pressure on Germany, both politically and economically.
Fig. 1: German Bund & Buxl ASWs Vs. 3-Month Euribor
Source: MNI - Market News/Bloomberg
