FOMC Minutes & Poor 20-Year JGB Auction Weigh

The spill over from the minutes covering the most recent FOMC meeting and poorly received 20-Year JGB supply weighed on Bund futures overnight, leaving the contract -70.

• Technically, Tuesday’s low protects the psychological 130.00 mark. A break below the latter would open 129.69, a Fibonacci projection. Initial resistance is seen at 131.26.
• Comments from ECB Governing Council member Kazaks pointed to good news re: slowing inflation, while he also suggested that any further rate hikes will be “small” i.e. the Bank is near the end of its tightening cycle. He also noted that he is undecided re: the Sep meeting, stressing the need to see the Bank’s updated economic projections before deciding on the best course of action. This reads a little dovish vs. some of Kazaks previous comments, although he had been edging more towards the central ECB view.
• The wider EGB space will see French & Finnish supply today (see our earlier bullet for further details on lines/sizes).
• Eurozone trade balance data headlines a thin regional docket.