FED: A Guide To Today’s Fedspeak Deluge

• EUR/USD: Oct08 $1.1700(E1.1bln), $1.1770-80(E1.2bln), $1.1800(E1.4bln), $1.1850-60(E1.0bln); Oct10 $1.1600(E1.3bln), $1.1650(E1.7bln), $1.1700(E1.6bln), $1.1740-50(E2.5bln), $1.1780-00(E2.8bln)
• USD/JPY: Oct08 Y146.50($1.2bln), Y147.00($1.5bln); Oct09 Y150.00-15($1.9bln)

SF Fed’s Daly gave an AI-focused interview to Axios (full report here), her first public comments since she said on Sep 25 that the policy rate remains modestly restrictive with more cuts needed over time to balance risks. 

• Axios has published an interview with SF Fed’s Daly (non-voter) which it summarizes as saying that “Daly doesn't think a potential AI bubble in the stock market would threaten broader financial stability.”
• Some of Daly’s remarks from it: “I do want to caution us against thinking all bubbles are financial […] I don't see many signs that that's the case."
• “Research and economics call it more like a good bubble, where you're getting a ton of investment… Even if the investors don't get all the returns that the early enthusiasts think when they invest, it doesn't leave us with nothing. It leaves us with something productive,"
• Considering her labor market background: “she is not seeing evidence of mass job replacement as a result of AI, but she is seeing the addition of "technology in place of hiring" as the economy slows. Instead, they're leveraging AI, fueling the low-hire, low-fire labor market.”

• In the FI space, the recent climb in Bund futures appears corrective. Key support and the bear trigger lies at 127.61, the Sep 3 low. Clearance of this level would confirm a continuation of the medium-term bear cycle. For bulls, a clear reversal higher would refocus attention on key resistance at 129.44, the Sep 10 high. First resistance is 128.84, 61.8% of the Sep 10 - 25 bear leg.
• Gilt futures continue to trade above the Sep 26 low. Recent weakness strengthens a bearish theme and does suggest the end of the corrective phase between Sep 3 - 11. Note that on the continuation chart, moving average studies are in a bear-mode position, highlighting a dominant downtrend. A resumption of the bear leg would open 89.94, the 76.4% retracement of the Sep 3 - 11 corrective phase. Initial resistance to watch is 91.28, the Sep 24 high.