Eurozone Treasury Bill Issuance Update for the Week of June 16, 2025

EUROZONE T-BILL ISSUANCE: WEEK OF JUNE 16

This week, Germany, the Netherlands, France, the European Stability Mechanism (ESM), Portugal, and the European Union have issued treasury bills. We anticipate further developments in the market.

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### Current Market Insights

– **China’s Deficit**: The Chinese government’s deficit has reached CNY 2.6 trillion for the year ending in April, marking one of the largest deficits on record, with a 50% increase year-on-year. Total government expenditure rose by 7.2% to CNY 12 trillion. Tax revenues showed signs of recovery, increasing by 1.9% compared to a year earlier, following a decline of 2.2% in March. However, interest payments surged by 11%, indicating the impact of government bond issuance on the fiscal position. Analysts suggest that the US-China relationship may be improving, potentially marking a turning point for the deficit as economic activity stabilizes.

– **US Trade Actions**: The US Commerce Department has initiated anti-subsidy duties on imports of essential battery components from China, determining these materials have been unfairly subsidized. This preliminary ruling is part of a broader trade investigation into active anode materials critical for electric vehicle batteries, including graphite and silicon.

– **Chinese Market Performance**: Major stock markets in China reported positive movement today, with the CSI 300 leading with a gain of +0.68%. The Hang Seng index increased by +0.53%, Shanghai rose by +0.38%, while Shenzhen saw a modest increase of +0.09%.

### Current Rates and Technical Analysis

– **Yuan Reference Rate**: The reference rate stands at 7.1937 per USD, with an estimate of 7.2181.
– **CGBs Movement**: Chinese Government Bonds (CGBs) remained stable with the 10-year yield currently at 1.67%.

#### Schatz Technical Analysis

– **Resistance Levels**:
– RES 4: 107.775 (High on April 7)
– RES 3: 107.600 (High on April 30)
– RES 2: 107.550 (High on May 7)
– RES 1: 107.335 (High on May 12/20)

– **Current Price**: 107.255 (as of 06:15 BST, May 21)
– **Support Levels**:
– SUP 1: 107.175/070 (Low on May 19/13)
– SUP 2: 106.965 (Low on April 9)
– SUP 3: 106.928 (61.8% retracement of the March 6 – April 7 bull cycle)
– SUP 4: 106.830 (Low on March 27)

Despite recent gains, a bearish trend in Schatz futures persists. A continuation of this bearish sentiment could lead to testing the next key support at 106.965. The bear trigger is established at 107.070 (May 13 low). Conversely, a breakthrough of resistance at 107.335 could signal a potential reversal, opening the path to 107.550 (May 7 high).

#### EURGBP Technical Analysis

– **Resistance Levels**:
– RES 4: 0.8768 (High on November 20, 2023)
– RES 3: 0.8624/0.8738 (Highs on April 21 and April 11)
– RES 2: 0.8541/0.8557 (Highs on May 2 and April 28)
– RES 1: 0.8456 (50-day EMA)

– **Current Price**: 0.8438 (as of 06:27 BST, May 21)
– **Support Levels**:
– SUP 1: 0.8394 (Low on May 16)
– SUP 2: 0.8359 (Fibonacci projection)
– SUP 3: 0.8316 (Low on March 28)
– SUP 4: 0.8277 (Fibonacci projection)

The bearish trend in EURGBP remains intact, with the cross below the 50-day EMA at 0.8456, indicating potential for further declines. The 0.8400 level has been breached, and a continuation of the bearish trend could target 0.8359. Key near-term resistance to watch is 0.8541 (May 2 high), and clearing this level may suggest a possible reversal.

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