MNI US MARKETS ANALYSIS - Recovery Gaining Ground

US TSYS SUMMARY: A steady session so far

A more steady session for US Treasuries.

• Contract have traded within overnight range with few countries out on holidays.
• Most of the action has been in European Government Bond, which fell, post EU PMI data and countries set to re-open.
• Very little in terms of spillovers into Tnotes from Europe.
• The 5/30 US curve lean bear steeper on the margin, but volumes and volatility have been fairly limited today, ahead of a busy week.
• Looking forward to the session, US PMI and ISM manufacturing are due for release.
• Fed Powell is the scheduled speaker, but he will be speaking on community development, so unlikely to hear about Monetary Policy
• 2y yields unch today at 0.161%- 5y yields unch today at 0.848%
• 10y yields unch today at 1.628%- 30y yields unch today at 2.300%
• 2s10s down -0.1bp today at 146.6bp
• 10s30s unch today at 67.2bp

EGB SUMMARY: Busy in terms of market movements

Bund and EGBs are paring opening losses.

• Volumes have been on the low side, but it has been an early busy session in terms of market movements.
• Bund plummeted, following upbeat PMIs, and countries set to re-open just heading towards the summer.
• Bund are off the low, as Equities give back some of their early gains.
• German 5/30s broke out above the 2021 peak, trending at steepest levels since 25/07/2019.
• All peripherals are trading tighter given the Bund under performance,
• Greece leads at 2.3bps.
• Gilts are closed for Bank Holiday.
• Looking ahead, US PMI and ISM manufacturing.
• Fed Powell is the scheduled speaker, but he will be speaking on community development, so unlikely to hear about Monetary Policy.
• Bund futures are down -0.24 today at 169.76 with 10y Bund yields up 2.0bp at -0.183% and Schatz yields up 0.6bp at -0.684%
• BTP futures are up 0.01 today at 147.10 with 10y yields up 0.9bp at 0.912% and 2y yields up 0.6bp at -0.291%.
• OAT futures are down -0.14 today at 160.35 with 10y yields up 1.5bp at 0.171% and 2y yields up 0.1bp at -0.658%.

EUROPE ISSUANCE UPDATE

Germany Allots E5.793bn of 3-/9-Month Bubills

• E2.941bn of the Aug 25, 2021 Bubill: Average yield -0.6273%, Buba cover 1.6x, bid-to-cover 1.55 x
• E2.852bn of the Feb 23, 2022 Bubill: Average yield -0.6364%%, Buba cover 1.6 x, bid-to-cover 1.54x

The Netherlands Sells E2.9bn of DTCs

• E1.28bn of the Aug 30, 2021 DTC: Average yield -0.625%, bid-to-cover 1.76x
• E1.62bn of the Oct 28, 2021 DTC: Average yield -0.61%, bid-to-cover 1.03x

EUROPE OPTIONS FLOW SUMMARY

3RM1 100.25/100.12/100p fly, bought for 3.75 in 2.5k

3RU1 100.12/100/99.87/99.50 broken p condor, cough for 1 in 2.5k

2RZ1 100/99.75ps vs 100.25c, bought the ps for half in 3.6k

Price Signal Summary - Bunds Under Pressure

• In the equity space, S&P E-minis maintain a bullish tone. The focus is on 4239.26, 1.764 projection of the Feb 1 - Feb 16 - Mar 4 price swing. Key support is unchanged at 4110.50, Apr 21 low.
• In FX, EURUSD last week cleared the bear channel resistance drawn off the Jan 6 high but has failed to remain above it. The warning is a false break and if correct highlights a bearish threat. Watch support at, 1.2009/1984, the 20- and 50-day EMAs. GBPUSD remains below 1.4009, Apr 20 high. The break Friday of support at 1.3824, Apr 22 low strengthens a bearish case. The focus is on 1.3717, Apr 16 low. The USDJPY continues to climb and remains bullish following last week's gains. The focus is on 109.96 next, Apr 9 high.
• On the commodity front, the Gold outlook is bullish and the focus is on $1805.7, Feb 25 high. Watch support at $1756.2, Apr 29 low. Brent (M1) is off recent highs, watch support at $65.38, the 20-day EMA. WTI (M1) support to watch at the 20-day EMA is $62.33. The trend in both contracts remains up.
• In the FI space, Bunds (M1) have breached 170.05, 76.4% of the Feb 25 - Mar 25 rally. This opens 169.24, Feb 25 low.

COMMODITIES: Metals See Further Support, Last Week's Cycle Highs in Sight

• WTI Crude up $0.03 or +0.05% at $63.63
• Natural Gas up $0.03 or +0.92% at $2.955
• Gold spot up $9.3 or +0.53% at $1779.6
• Copper up $2.5 or +0.56% at $449.15
• Silver up $0.23 or +0.9% at $26.1702
• Platinum down $3.82 or -0.32% at $1201.58

EQUITIES: US Futures Point to Higher Monday Open

• Equity futures across both the Eurozone and the US are higher, indicating a positive open on Wall Street Monday:
• Dow Jones mini up 199 pts or +0.59% at 33967, S&P 500 mini up 20.25 pts or +0.49% at 4194.75, NASDAQ mini up 30.75 pts or +0.22% at 13881.