GILTS: 30-year yields steady as yields across the rest of the curve rise
- Gilt futures have opened lower following the announcement that the Bank of England would press ahead with active gilt sales from 1 November (and following the maringally higher than expected CPI print this morning).
- However, the Bank's confirmation that they would not sell any long-dated (20+ year) gilts in Q4-22 has seen 30-year yields flat on the day, and hence a decent flattening in 10s30s.
- 2y yields up 6.0bp today at 3.586%, 5y yields up 6.8bp at 3.942%, 10y yields up 7.0bp at 4.012% and 30y yields down -0.3bp at 4.296%.
- 2s10s up 1.0bp today at 42.6bp and 10s30s down -7.3bp at 28.4bp.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
OUTLOOK: What to watch
It's all about central banks this week with policy decisions from no fewer than six G10 central banks (and a number of EM central banks in addition).
- Tuesday will see the Riksbank kick off policy announcements for the week with 12/14 of the analyst surveys we have read expecting a 75bp hike but markets pricing in around a 60% probability of a 100bp hike. The MNI Riksbank Preview will be released this morning.
- Wednesday will see the FOMC decision announced with a 75bp hike fully expected and markets pricing in around a 20% probability of a larger 100bp hike. There will be focus on the dots, with views seemingly becoming more dispersed around the next steps in the policy cycle. The MNI Fed Preview will be released later today.
- Thursday will see the BOJ, SNB, Norges Bank and Bank of England all announce policy decisions, with the latter's delayed from last week following the death of Queen Elizabeth II. We will preview all of these decisions with the BOE preview due to be released tomorrow. 21/24 BOE previews that we have read look for a 50bp hike (the remaining three expect a larger 75bp hike) while market pricing is split around 50/50 between these two outcomes.
- Friday will likely see the UK Fiscal Statement (i.e. mini budget) although the date is still unconfirmed. This is expected to announce a number of tax cuts and may give some more details of the energy support plan.
- In terms of the calendar today, we have speeches from ECB's de Guindos, de Cos and Villeroy.
USDCAD TECHS: Clears Key Resistance
- RES 4: 1.3421 High Sep 30 2020
- RES 3: 1.3398 2.0% 10-dma envelope
- RES 2: 1.3338 50.0% retracement of the 2020 - 2021 bear cycle
- RES 1: 1.3308 High Sep 16
- PRICE: 1.3296 @ 07:27 BST Sep 19
- SUP 1: 1.3224 High Jul 14 and recent breakout level
- SUP 2: 1.3092/2954 20-day EMA / Low Sep 13
- SUP 3: 1.2895 Low Aug 25 and key near-term support
- SUP 4: 1.2828 Low Aug 17
A USDCAD bullish theme remains intact and last week’s gains reinforces this theme. The pair is trading at its recent highs. Price has cleared resistance at 1.3209, Sep 7 high and 1.3324, the Jul 14 high and bull trigger. The break of the latter confirms a resumption of the broader uptrend and opens 1.3338 next, a Fibonacci retracement. Note that MA studies remain in a bull mode set-up, highlighting positive market sentiment. Key trend support is at 1.2954.
AUDUSD TECHS: Key Support Pierced
- RES 4: 0.7040 High Aug 16
- RES 3: 0.7009 High Aug 26 and a key short-term resistance
- RES 2: 0.6956 High Aug 30
- RES 1: 0.6814/6916 20-day EMA / High Sep 13 and a key resistance
- PRICE: 0.6698 @ 06:56 BST Sep 19
- SUP 1: 0.6670 Low Sep 16
- SUP 2 0.6647 0.764 proj of the Apr 5 - May 12 - Jun 3 price swing
- SUP 3: 0.6612 Low May 29
- SUP 4: 0.6568 Low May 27 2020
A bearish threat in AUDUSD remains present. The pair traded lower last week and breached support at 0.6699, the Sep 7 low. The focus is on 0.6682, the Jul 14 low, which was pierced Friday A clear break of this chart point would confirm a resumption of the broader downtrend, strengthen bearish conditions and open 0.6647 initially, a Fibonacci projection. The Sep 13 high of 0.6916 marks a key short-term resistance.
