MNI US MARKETS ANALYSIS - Copper Hits New 10yr Highs

US TSYS SUMMARY: Weaker Ahead Of Durable Goods And 2-/5-Yr Supply

Tsys are a little lower to start the week, with durable goods data and 2-/5-yr supply coming up, and ahead of the FOMC decision and Pres Biden's address Weds.

• Curve a little steeper: the 2-Yr yield is up 0.2bps at 0.1595%, 5-Yr is up 1.6bps at 0.8327%, 10-Yr is up 2.5bps at 1.5826%, and 30-Yr is up 2.5bps at 2.259%.
• Jun 10-Yr futures (TY) down 5/32 at 132-09 (L: 132-07.5 / H: 132-15), with avg volumes (278k) amid light headline flow in Asia-Pac / Europe.
• Most attention overnight on India COVID crisis, EU opening up to vaccinated US travellers this summer, and anticipation re Biden's address to Congress.
• While Fed meeting this week is seen largely as a placeholder, some see risks of a hawkish tweak of messaging and/or a change in administered rates. Our preview will be out later today.
• Data for the week starts with durable goods at 0830ET. Retail sales revisions out at 1000ET, with Dallas Fed manufacturing at 1030ET.
• In a front-loaded supply week (due to FOMC Weds), we get two note auctions today: 1130ET $60B 2-Yr Note (alongside $54B 26-week bills) and 1300ET $61B 5-Yr Note (alongside $57B 13-week bills).
• NY Fed buys ~$3.625B of 7-20Y Tsys.

EGB/GILT SUMMARY - BTPs Underperform

European sovereign bonds have traded weaker morning with Italian BTPs underperforming.

• Gilts opened lower and have traded sideways through the morning. Cash yields are 1-2bp higher on the day with the short-end/belly underperforming.
• Bunds yields have drifted higher with the curve marginally steeper.
• OATs trade broadly in line with bunds. Yields are 1-2bp higher with the curve 1bp steeper.
• BTPs have led the EGB selloff. Yields are the longer end are 4bp higher.
• The German IFO survey for April came in weaker than consensus with the expectations component reading 99.5 vs 101.2 survey.
• Supply this morning came from Germany (Bubills, EUR3.746bn allotted) and the ESM (10Y, EUR2bn)

EUROPE OPTION FLOW SUMMARY

Eurozone:
RXM1 172c, bought for 27.5 in 3k and 33.5 in 3k (6k total)

UK:
2LZ1 99.00/98.50ps vs 99.62/99.87cs, bought the ps for 1 in 2.5k

US:
TYM1 132/131.25ps 1x2, bought for -2 in 6.5k

EUROPE ISSUANCE UPDATE: ESM Syndication

• Final terms for long 10-year issue:
  
• E2bln WNG Fixed (Oct. 15, 2031) at MS-10
• Books above EU12bln

FOREX: AUD, NZD Buoyed While Copper Strikes Decade High

• Antipodean currencies outperform early Monday, with AUD/USD, NZD/USD nearing last week's best levels as commodity markets - particularly industrial metals - trade well at the start of the week. Copper prices have hit new cycle highs this morning, trading again at the best levels in a decade having cleared the previous top in late February.
• The greenback trades marginally lower, with the USD slipping against most others. This has helped buoy EUR/USD, which continues to defy the bearish signals emanating from last week's gravestone doji candle (Tuesday). Instead, the EUR/USD uptrend remains in tact and is approaching bear channel resistance at 1.2119.
• GBP trades modestly firmer, erasing some of the damage done at the tail-end of last week. Lower crude prices are working against the likes of NOK ahead of this Wednesday's OPEC+ meeting.
• Preliminary US durable goods numbers cross later today, with speeches from ECB's Lane and Panetta also due.

FX OPTIONS: Expiries for Apr26 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.1900(E654mln)
• USD/JPY: Y107.97-108.03($471mln), Y108.15-20($815mln)
• USD/CHF: Chf0.9300($600mln)
• AUD/USD: $0.7945-50(A$732mln)
• AUD/JPY: Y81.50(A$753mln)
• USD/CAD: C$1.2700-10($570mln)
• USD/CNY: Cny6.45($500mln-USD puts)
• USD/MXN: Mxn19.60($650mln)

Price Signal Summary - EURUSD Approaches Its Bear Channel Resistance

• In the equity space, S&P E-minis ended last week on a firm note and a fresh trend high of 4186.75. The outlook remains bullish with attention on 4195.50, 1.618 projection of the Feb 1 - Feb 16 - Mar 4 price swing. Key support is at 4110.50, Apr 21 low.
• In the FX world, EURUSD traded higher Friday to resume the current uptrend. Key near-term resistance is at 1.2119, the bear channel top drawn off the Jan 6 high. A break would strengthen the bullish theme. GBPUSD remains below last week's high of 1.4009 on Apr 20. A bearish risk dominates while 1.4009 remains intact. Support to watch is at 1.3824, Apr 22 low. USDJPY is testing and has probed trendline support drawn off the Jan 6 low. A clear break would signal scope for a deeper pullback and open 106.78, 50.0% retracement of the Jan - Mar rally.
• On the commodity front, Gold maintains a bullish tone. The focus is on $1805.7, Feb 25 high. Brent (M1) remains below last week's high. Key support to watch is $63.42, the 50-day EMA. WTI (M1) found resistance last week at $64.38 on Apr 20. The 50-day EMA at $60.08 is seen as a firm intraday support.
• In the FI space, Bunds (M1) have defined a short-term resistance at 171.18/2, the 20-day EMA and Apr 22 high. On the downside support is at 170.05, 76.4% of the Feb 25 - Mar 25 rally. Support to watch in Gilts (M1) remains 127.81, Apr 14 low. The key resistance is at 129.27, Mar 2 high and the reversal trigger.

EQUITIES: Markets Mixed, Few Fresh Signals

• European markets are trading either side of unchanged early Monday, with the EuroStoxx50 only marginally in the green, but holding just above the 4,000 level. Spain's IBEX-35 outperforms, with the index higher by 0.8% thanks to a strong turnout from Spanish banks' Santander and BBVA.
• In Europe, real estate and financials are the firmest, but weakness in consumer staples and tech names are countering any upside.
• In futures space, indices are similarly unchanged as markets await both the FOMC and Biden's congress speech on Wednesday. The e-mini S&P is in very minor negative territory, sitting just below the fresh all time highs posted late last week.

COMMODITIES: Copper Strikes New Decade High, Counters Oil Weakness

• Copper prices cleared the late February highs early Monday, hitting the best levels since 2011 at $442.00 as markets further price in a swifter economic recovery later in 2021.
• Traders continue to focus on the sizeable infrastructure plans expected to be laid out by President Biden this week, with a focus on clean energy and electric vehicles seen driving demand for industrial metals. Steel and iron ore prices are similarly strong.
• Countering strength in metals, the energy complex is soft, with both WTI and Brent crude futures in negative territory ahead of Monday's open. This week's OPEC+ meeting takes focus, with the JMMC starting Monday, before the full ministerial event on Wednesday.