ENERGY: What to Watch: IEA Report, EIA US Gas Stocks and ARA Oil Product Stocks

Gilts track global peers higher, with media reports pointing to the potential for a more gradualist tariff approach from President-elect Trump and Franch political headlines providing support.

• Futures as high as 89.72 before fading back to 89.55.
• Bearish technicals intact, initial support & resistance located at 88.96/90.31.
• Yields 1-3bp lower, curve bull steepens.
• 10s spread to Bunds 2bp tighter, oscillating around 225bp.
• BoE-dated OIS still pricing 44bp of cuts through year-end, SONIA futures flat to +3.0.
• Today’s GBP1.0bln 30-year 1.25% Nov-54 I/L gilt auction will probably get more attention than usual, with the potential for it to be viewed as a litmus test for demand by wider markets given the recent weakness in UK assets.
• Chancellor Reeves’ will appear in the Commons later today, with MPs set to question the UK’s fiscal outlook after the recent increase in market-based fiscal risk premia.
• Don’t expect much of a change in tone, with her focus set to remain on the upholding of fiscal rules and a desire to generate economic growth.

• US Treasuries are getting dragged higher, taking their cue from the price action in EGBs, with both French OAT and the Italian BTP futures leading the early gains, France helped by the Socialist chief hinting that an agreement with the Government could be near.
• Both the Italian BTP and OAT are trading inline, with both Bonds trading by ~1.5bp tighter vs the German 10yr.
• Bund resistance is still seen a little further, up to 131.37 initially, but the German 5yr Supply could limit some of the upside in the Bobl, which equate to 47.3k Bobl.

• 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: $30.661 - High Jan 10                             
• PRICE: $29.631 @ 08:08 GMT Jan 14  
• SUP 1: $28.748 - Low Dec 19        
• 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  

A bear cycle in Silver that started Oct 23 remains in play - for now - and recent gains appear corrective. The metal has recently breached support at $29.642, the Nov 28 low. The break lower opens $28.446, a Fibonacci retracement. Note that moving average studies are in a bear-mode position highlighting a dominant downtrend. Key resistance has been defined at $32.338, the Dec 12 high. A break of this level would signal a reversal.