USDJPY TECHS: Trend Needle Points South

Syndications likely in the week:

• Belgium: We pencil in a 30-year Jun-56 OLO in the first half of February. This would likely see the 24 February conventional auction cancelled. We look for a E5bln transaction size (consistent with the last 3 years), with some upside risk.
• Germany: We pencil in a 30-year Bund syndication. We expect a similar size to last year (E6bln with E1bln retained). There is a gap in the auction calendar in the upcoming week – though this coincides with the Winter holidays in some regions, so holding off until later cannot be ruled out.
• Italy: 15-year BTP: We look for a 2040 BTP to be launched via syndication in February. We note that since 2019 a new 15-year BTP has launched in either January or February in 4/6 years (the exceptions being 2022 when it launched in May and 2023 when there was no 15-year launch at all). We look for a launch size of E8-10bln. There is also potential for a new 30-year BTP€I, although we think that is less likely until later in the year.

NOMINAL FLOWS: The upcoming week sees E17.8bln of redemptions from a formerly 8-year Italian CCTEU. Coupon payments for the week total E6.8bln of which E5.2bln are Italian, E1.3bln are from EU-bonds and E0.2bln are Austrian. This leaves estimate net flows for the week at positive E16.3bln, up slightly from positive E14.9bln last week.

For more on last week's issuance and a look ahead to next week see the MNI EGB Issuance, Redemption and Cash Flow Matrix here.

• RES 4: 5381.13 1.764 proj of the Nov 21 - Dec 9 - 20 price swing 
• RES 3: 5335.43 1.618 proj of the Nov 21 - Dec 9 - 20 price swing     
• RES 2: 5327.00 High Jan 31 and the bull trigger 
• RES 1: 5185.00 Intraday high and a bull trigger           
• PRICE: 5160.00 @ 06:33 GMT Feb 3   
• SUP 1: 5112.00 Intraday low            
• SUP 2: 5050.12 50-day EMA
• SUP 3: 4991.00 Low Jan 15  
• SUP 4: 4931.00 Low Jan 13 and a key short-term support  

A sharp reversal lower in the Eurostoxx 50 futures contract signals the end of the recent bull run - for now - and the start of a corrective cycle. Price has gapped lower and traded through the 20-day EMA, at 5152.76. A continuation lower would pave the way for a move towards the 50-day EMA, at 5050.12, the 50-day EMA. On the upside, key resistance and the bull trigger has been defined at 5327.00, the Jan 31 high.

Austria, Spain and France are all due to hold auctions in the upcoming week, whilst Finland and Belgium are due to hold ORI auctions. We also pencil in syndications from Belgium, Germany and Italy. We look for estimated gross issuance for the week of E40.9bln, broadly in line with the E40.9bln issued last week.

• Tomorrow, Austria will hold an RAGB auction selling a combined E1.725bln of the 5-year 3.45% Oct-30 RAGB (ISIN: AT0000A38239) and the 15-year 3.20% Jul-39 RAGB (ISIN: AT0000A3D3Q8).
• On Thursday, Spain will hold a Bono/Obli and ObliEi auction to sell the 2.40% May-28 Bono (ISIN: ES0000012O59), the 3.10% Jul-31 Obli (ISIN: ES0000012N43), the 4.00% Oct-54 Obli (ISIN: ES0000012M93) and the 1.15% Nov-36 Obli-Ei (ISIN: ES0000012O18). The size will be announced later today.
• Also on Thursday, France will hold a LT OAT auction. As expected, there is another large target range, with E11-13bln on offer. Also as we expected, France will launch a new 10-year 3.20% May-35 OAT (ISIN: FR001400X8V5) alongside reopening the 30-year on-the-run 3.25% May-55 OAT (ISIN: FR001400OHF4). Two off-the-run issues will also be on offer the 1.25% May-36 OAT (ISIN: FR0013154044) and the 1.25% May-38 OAT (ISIN: FR0014009O62).
• Finally on Thursday, Finland will hold an ORI operation to sell up to E0.4bln. Details will be announced the preceding day.
• Concluding on Friday, Belgium will hold an ORI operation. Details will be announced the preceding day.