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(Bloomberg) -- OAT generic futures are accumulating fresh buying interest against the colliding medium-term average lines at ~147; recovery rally has the potential to extend to ~149 hurdle, Bloomberg technical analyst Sejul Gokal writes.

• See chart here
• OATU7 (Sept.) +48 ticks to 147.76
  • Generic contract has seen downside momentum weaken against bottom-end of ichimoku cloud and 100/200-DMA’s at ~147
• 9-day RSI at ~35, working off oversold conditions
• Initial resistance at 147.97 (23.6% retrace), 148.22-24 (July 5, 3 lows), 148.61-71 (38.2% Fibo, July 5 high) and then 148.97 (55-DMA)
• As a risk factor, watch out for any consecutive closing breaks below 147; such development would resume the broader short duration theme

• NOTE: Sejul Gokal is a FICC technical strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice

Economic Release Details: {CNLNSFIN Index ECOD} --PENNY PENG

Economic Release Details: {CNLNNEW Index ECOD} --PENNY PENG

(Bloomberg) -- July coupon-paying gilts will go ex-dividend at close of business today, and are skewed to the long-end, boosting the Over-15y index with extensions to take effect tomorrow, RBC strategists including Vatsala Datta write in client note.

• Coupons are worth GBP3.87b, with ~GBP3.17b being returned to investors once BOE holdings are considered; majority of these coupon payments (~GBP2b) are skewed to the 15y+ sector
• Actual coupon payments will be made on 24th July, and as the bonds go ex-dividend seven business days before the payments, associated index extensions will take effect tomorrow
  • Estimate these coupon payments will extend FTSE All Stocks Index by 0.04y and the FTSE Over 15y Index by 0.11yr at close of business today
• On July 24, the UKT 0.5% 2022 gilt will roll sub-5y, which extends the Over-5y FTSE Index by 0.35y, while the UKT 1.25% 2018 gilt will drop below 1y, extending the Over-1y Index by 0.3y
• Given these coupon flows, lack of net supply until the end of August, and recent surge in bond yields which should encourage further de- risking activity in a bid to lock-in long-term rates, this points to outperformance of the long end
  • Prefer to express this view by entering a beta-adjusted 10s30s gilt curve flattener (1x DV01 1.5% 2047 vs. 0.85x DV01 UKT 1.5% 2026), target 80bps on the spread vs current level of 88.5bps

To contact the reporter on this story: Stephen Spratt in London at sspratt3@bloomberg.net To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net Anil Varma