SEK: Underperforming G10 But USDSEK Rally Considered Corrective

• In the FI space, Bund futures are holding on to the bulk of their recent gains. Resistance remains intact and - for now - the latest move higher is considered corrective. The move higher has allowed an oversold trend condition to unwind. Initial firm resistance to watch is seen at 129.41, the Jan 14 low. A recent impulsive sell-off reinforced a bear theme and signals scope for an extension towards 126.28 next, a 2.618 projection of the Feb 5 - 19 - 28 price swing. Further out, 126.00 is also within range.
• The short-term trend outlook in Gilt futures remains bearish and recent gains appear to have been a correction. This week’s move lower reinforces a bear theme. Key short-term resistance has been defined at 93.01, the Mar 20 high. A break of this level is required to highlight a bullish condition. For now, attention is on support at 90.71, the Mar 6 low and bear trigger. A break of this level would resume the downtrend.

SONIA FIX - Source: BBG/ICE

• 1M 4.46560 0.001
• 3M 4.37880 -0.0207
• 6M 4.31290 -0.031
• 12M 4.22620 -0.037

• Medium-dated issuance is expected to see a larger increase, with the median estimate at GBP97bln. This would represent 32.4 % of issuance (30.9% last March, 31.3% outturn when including the upsized syndications). We would once again expect two 10-year syndications in the fiscal year.
• Long-dated issuance is expected to fall back by most with median estimates at GBP51bln which makes up 16.4% of total issuance (down from the 18.5% target a year ago and 20.7% outturn). This bucket has the potential to be upsized through syndications fairly substantially, however. We would pencil in at least 3, potentially 4 long-dated syndications, but see little issuance longer than 30-years.
• Linker issuance is also expected to reduce, to a median of GBO30.5bln (10.0% of total). This would be down from the originally planned 10.9% (11.5% outturn).
• A number of analysts are also arguing for a larger-than-usual unallocated bucket. Estimates here range from GBP10.5bln through to GBP28.0bln with the median expectation at GBP16.6bln. This would be considerably higher than the GBP10bln seen in the 2024/25 fiscal year.
• T-bill estimates range from an unchanged stock to the end 2024/25 level to a GBP11bln increase, with the median at GBP5bln. NS&I funding is expected to remain broadly consistent with 2024/25’s GBP9.5bln level.