JGBS: Sell Off After Rengo Wage Demands Hit Highest Level Since '93

SFRZ5/Z6 4K given at -0.5.

Gilts sell off at the open, adjusting to Canada’s short-term tariff reprieve that has been covered in detail elsewhere.

• Futures as low as 92.67 before a recovery to 92.80.
• The recent corrective bullish cycle in the contract extended yesterday.
• Initial support and resistance located at the 20-day EMA (92.11) and yesterday’s high (93.54), respectively.
• Yields 1.5-3.0bp higher, curve bear steepens.
• GBP STIRs still operate around pre-gilt open levels, ~80bp of BoE cuts priced through year-end.
• The DMO will come to market with GBP4.25bln of the 4.375 Mar-30 gilt this morning.
• Little else of note on the UK calendar, which will leave focus on cross-asset cues and tariff-related headlines.
• Our BoE preview will be published later today.

• RES 4: $34.903 - High Oct 23 and the bull trigger  
• RES 3: $33.125 - High Nov 1 
• RES 2: $32.338 - High Dec 12 and a key resistance  
• RES 1: $31.737 - High Jan 30                              
• PRICE: $31.479 @ 08:05 GMT Feb 4   
• SUP 1: $29.704/28.748 - Low Jan 27 / Low Dec 19 and bear trigger        
• SUP 2: $28.446 - 76.4% retracement of the Aug 8 - Oct 23 bull cycle 
• SUP 3: $27.686 - Low Sep 6 
• SUP 4: $26.451 - Low Aug 8  

Silver continues to trade at its recent highs. A bear cycle that started on Oct 23 last year remains in play and recent gains are considered corrective. However, the latest move higher does suggest scope for a continuation near-term. An extension would expose key resistance at $32.338, the Dec 12 high. Clearance of this level would highlight a reversal. Support to watch is $29.704, the Jan 27 low, and $28.748, the Dec 19 low and the bear trigger.