AUSTRIA: Far-Right Fail To Find Coalition Partners, ÖVP Called To Start Talks

Oct-22 11:37

President Alexander van der Bellen has asked the conservative Austrian People's Party (ÖVP) to start coalition talks, stating that the far-right Freedom Party of Austria (FPÖ) that won a plurality of seats in the 29 Sep federal election failed to find a willing coalition partner. Van der Bellen says that the ÖVP, which came in second in the election, should hold talks with the third-placed centre-left Social Democrats (SPÖ). 

  • The president also raises the issue of the stability of such a coalition. The ÖVP and SPÖ combined hold 92 seats in the 183-member National Council, directly on the line for a majority. As such, van der Bellen says that it 'needs to be clarified' whether the parties could command a stable majority 'or would need a third party as a coalition partner'.
  • The ÖVP has worked with the Greens since 2020, and continues to do so in a caretaker capacity under Chancellor Karl Nehammer. However, relations between the two parties have deteriorated and the ÖVP may be unwilling to add the SPÖ to the mix for fear of the coalition tilting too far to the left. The liberal NEOS could be a preferred option.
  • In any case, the FPÖ at present appears to be set for another period in opposition. This may not prove too detrimental, allowing the party to claim the political establishment is shutting them out despite winning most seats. 

Chart 1. Austrian National Council, Seats

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Source: bundeswahlen.gv.at, MNI

Historical bullets

US TSYS: Fed Gov Waller Buoys Rates, Inflation Undershoot Concers

Sep-20 19:34
  • Treasuries looked t finish near session highs Friday, bouncing off late morning lows following dovish comments from Fed Gov Waller on CNBC, consistent with the Fed going 50bp at the next meeting in November.
  • Gov Waller expressed concern with inflation undershooting, not overshooting, noting firms' limited pricing power and wage inflation coming down, and that inflation is potentially on a lower path that had previously been expected.
  • Fed Governor Bowman (voter) has issued a statement explaining why she dissented against the FOMC’s decision to cut the Fed Funds target range by 50bps on Wednesday. Her comments are in firm contrast to Governor Waller’s recent CNBC interview which on the flip side seemed concerned with risks of inflation undershooting.
  • Projected rate cuts into early 2025 bounced off early session lows, latest vs. late Thursday levels (*) as follows: Nov'24 cumulative -37.8bp (-35.9bp), Dec'24 -75.0bp (-72.4bp), Jan'25 -108.5bp (-106.5bp).
  • Dec'24 10Y Tsy futures are currently +4 at 114-27.5 vs. 114-17 low, still well off initial technical resistance at 115-23.5 (High Sep 11 and the bull trigger). Curves bull steepened, 2s10s +2.480 at 15.242, 5s30s +2.052 at 58.677.
  • Looking ahead to Monday brings more Fed speak from Bostic, Goolsbee and Kashkari, data includes flash PMI data from S&P Global.

US: Harris To Deliver Remarks In Atlanta Shortly

Sep-20 19:24

Vice President Kamala Harris is shortly due to appear at an event in Atlanta, Georgia to highlight the state’s abortion ban. The event will be Harris’ first speech since she ascended to the top of the Democratic ticket focused primarily on abortion rights. LIVESTREAM

  • AP notes: “About half of voters say abortion is one of the most important issues as they consider their vote – but it’s more important to women who are registered voters than to male voters, according to a new AP-NORC poll. About 6 in 10 women voters say abortion policy is one of the most important issues to their vote in the upcoming election, compared to about 4 in 10 male voters.”

JGB TECHS: (Z4) Bullish Theme 

Sep-20 19:14
  • RES 3: 149.55 - High Mar 22 (cont)
  • RES 2: 147.74 - High Jan 15 and bull trigger (cont)  
  • RES 1: 145.95/146.67 - High Aug 6 / High Mar 6 
  • PRICE: 144.79 @ 18:58 BST Sep 20
  • SUP 1: 143.57 - Jul 17 high
  • SUP 2: 142.23 - Low Jul 02
  • SUP 3: 140.21 - 1.236 proj of Mar 22 - Nov 1 ‘23 - Jan 15 price swing    

A bullish outlook for JGB futures remains intact. Strong impulsive gains in early August reinforce this theme and the pullback between Aug 6 - Sep 3, appears to have been a correction. Moving average studies on the continuation chart are in a bull-mode position, highlighting a clear uptrend. A continuation higher would open 145.95, the Aug 6 high and a bull trigger. A reversal lower would instead expose 143.57, the Jul 17 high.