Halister News

(Bloomberg) -- Japan will release preliminary February Nikkei PMI Manufacturing Index at 9:30am local time.

• The index rose to 52.7 in January, marking the fifth consecutive month of expansion in that sector

(Bloomberg) -- The Reserve Bank of Australia will release minutes from the board’s Feb. 7 policy setting meeting at 11:30am local time. The central bank had left the cash rate target unchanged at 1.5% at that meeting.

(Bloomberg) -- The European Union’s top regulators issue a joint report on the risks of money laundering and terrorist financing to the bloc’s financial sector.

• “Problems exist in key areas such as firms’ understanding of the ML/TF risk to which they are exposed and the effective implementation, by firms, of customer due diligence policies and procedures,” the regulators say.
• The report also “points to difficulties associated with the lack of timely access to intelligence that might help identify and prevent terrorist financing, and considerable differences in the way competent authorities discharge their functions.”
• Link: http://tinyurl.com/h8bnq7r

(Bloomberg) -- No further “meaningful” outperformance seen for EUR-denominated 2023 note and USD-denominated 2019 bonds, UniCredit strategist Stefan Kolek writes in note.

• Continues to see improving credit metrics this year on higher oil and gas prices

(Bloomberg) -- Gilt yields may continue heading south in coming days after breaching medium-term average line at 1.25% last week; the 2/10 curve has also seen an important technical violation arguing for more near-term flattening, Bloomberg technical analyst Sejul Gokal writes.

• See gilt yield chart here; 10y yield at 1.23% now
• Gilt yield broke below the 26-week exponential moving- average at 1.25% on closing basis, which leaves it exposed to a descent toward 1.10%-1.05% support area
  • Interim Fibonacci support at 1.14%
  • More aggressive downside chart objective found at 90bps, the double-top measured target
  • MACD histogram has seen a back-to-back negative print below zero line; latest bar showing build-up in downward momentum
  • A close above 1.33% would negate the bullish gilt stance
• On daily charts, yield has sustained below the ichimoku cloud with latest yield uptick attempt faltering within the thin cloud region around 1.34% in mid-Feb.; MACD on dailies remains firmly negative (see daily chart)

GILT 2/10 CURVE (see chart here)

• Curve has broken below the 100-DMA support, first time since October with shorter-term averages pointing downwardly favoring flattening
• Possible flattening objective seen at 99bps vs. 113bps current
  • 99bps is the 38.2% Fibonacci of Aug.-Dec. steepening phase

• NOTE: Past view expressed Jan. 23 with objective at 1.67% now negated amid latest chart developments

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