EMISSIONS: UK ETS Auction Clears Lower, Higher Participation

J.P.Morgan have recommended tactical shorts in 2s and 10s30 flatteners (the latter is for those that don’t want outright exposure at these yield levels).

• They note that “clear risk to the downside (for the economy) stemming from weaker business and consumer confidence, as well as trade, but the Treasury market has responded in kind, with 2-Year yields trading at the lowest yield levels since late-October”.
• However, they think the “magnitude of the rally has been exaggerated by technicals, with positions now leaning long, and at least for the near term, this week’s data flow should assuage the market’s worst fears about growth”.
• When it comes to the 10s30s flattener play they suggest that most curves look too steep based on Fed pricing and breakevens.

• RES 4: 134.54 61.8% retracement of the Dec 2 - Jan 14 bear leg           
• RES 3: 134.06 High Dec 23 ‘24  
• RES 2: 133.46/71 High Feb 28 / 5 and a reversal trigger
• RES 1: 132.94 Intraday high               
• PRICE: 131.97 @ 12:47 GMT Mar 3 
• SUP 1: 131.83 Low Feb 24  
• SUP 2: 131.26 Low Feb 19 and a bear trigger            
• SUP 3: 131.00 Low Jan 24 and a key short-term support
• SUP 4: 130.28 Low Jan 15 and the bear trigger   

Bund futures have pulled back from their recent highs and the contract is trading sharply lower today. The move down undermines a recent bullish theme. A continuation lower would expose the next important support at 131.26, the Feb 19 low. Clearance of this level would be viewed as an important short-term technical break. Two important resistance points remain intact for now; 133.46, the Feb 28 high, and 133.71, the Feb 5 high

Tesoro Publico has announced it will be looking forward to sell a combined E4.5-5.5bln of the following Oblis at its auction this Thursday, March 6:

• the 3.10% Jul-31 Obli (ISIN: ES0000012N43)
• the 3.15% Apr-35 Obli (ISIN: ES0000012O67)

Additionally, Tesoro Publico has announced it will be looking to sell E0.25-0.75bln of the 0.70% Nov-33 Obli-Ei (ISIN: ES0000012C12) at that auction.

Tesoro Publico has also announced it will be looking forward to sell a combined E5.5-6.5bln of the following letras at its auction tomorrow, March 4:

• the 6-month Sep 5, 2025 letras
• the new 12-month Mar 6, 2026 letras