GILTS: A Little Firmer, Tighter Vs. Bunds
Dec-05 08:36
Gilt futures +12 at 96.13, sticking to a narrow 16-tick range around yesterday’s closing level.
- Initial support and resistance 95.17/96.54.
- A bullish corrective cycle in the contract remains in play and recent gains reinforce current short-term conditions.
- Yields 1.0-1.5bp lower across the curve.
- 10s tighten by ~2.5bp vs. Bunds, spread last 216bp, 220bp continues to cap moves higher.
- Comments from BoE’s Greene (17:00 London) and the DMP survey headline this the UK calendar today.
- On the supply front, the DMO will reopen the 50-year 0.125% Mar-73 linker (ISIN: GB00BM8Z2W66) via tender for GBP350mln nominal following Monday’s consultation.
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FOREX: FOREX: USD Ticks Lower, AUD Outperforms On China Data & Hawkish RBA Hold
Nov-05 08:29
USD edges lower as e-minis firm a little in early London trade.
- BBDXY to fresh session lows, sticking within the upper half of Monday’s range thus far, USD bulls unable to force a move back towards Friday’s multi-month closing high in the index.
- G10 FX pairs generally stick to contained ranges,
- Overnight implied vols have surged to reflect U.S. election risk.
- Firmer-than-expected Chinese Caixin services PMI data supported Antipodean FX & Chinese equities in Asia.
- AUD outperformance vs. G10 peers was further supported by a ‘hawkish hold’ from the RBA.
- Initial resistance in AUD/USD located at the 20-day EMA (0.6648), spot last ~0.6610. Bear cycle intact.
- ISM services data headlines the macro calendar today, with final services & composite PMIs from both the U.S. & UK also due.
- On the central bank front, comments from ECB’s Schnabel & Vujcic are scheduled, while we will also receive the summary of deliberations from the latest BoC decision.
- Last-minute U.S. election set up is also set to play a part, particularly with the race being so tight.
- Our political risk team’s full election viewing guide can be found here: https://media.marketnews.com/MNIPOLITICALRISK_US_Election_Viewing_Guide_aeef486881.pdf
GILTS: Tracking Weakness In Bunds
Nov-05 08:24
Weakness in bonds outlined elsewhere (seemingly driven by a confluence of minor factors) weighs on gilts this morning.
- Futures through yesterday’s low, bearish trend intact.
- Lows of 93.56 seen thus far, initial support at the Oct 31 low (93.18).
- Yields 3bp higher across the curve, in a parallel shift.
- 30+-Year yields register fresh cycle highs.
- Gilts track Bunds on the opening move, with the 10-Year spread steady at 206bp.
- No reaction to lower tier UK data/BBG inflation calculations released overnight, which read dovishly.
- GBP/STIRs roughly in line with levels flagged ahead of the gilt open, see that bullet for greater colour on pricing and some background information heading into Thursday’s BoE decision.
- Final services & composite PMI data due today.
- Supply-wise, the DMO will come to market with GBP3.75bln of the 4.25% July-34 gilt.
- Eyes also on spillover from any potential last minute pre-U.S. election positioning.
SPAIN DATA: Registered Unemployment Rises Less Than Seasonal Norms In October
Nov-05 08:18
Spanish October registered unemployment claims were in line with consensus at 26.8k (vs 27.0k cons, 3.2k prior). The data are not seasonally adjusted, but the rise is less than the 2010-2023 October average of 63.5k.
- Similarly, the 67.8k monthly rise in registered employment was above the 28.5k October average from 2010-2013.
- A key tenet of Spain’s economic outperformance post-covid has been strong population growth, which has fed through into falling unemployment rates.
- In Q2, Spanish LFS unemployment was 11.2%, its lowest since 2008.
