UK: BBG-PM To Hold Presser Later Today On UK Economy
Oct-14 10:07
Bloomberg reports PM Truss to hold presser later today on the likely reversal of measures from the 'fiscal event'. No set time for this yet.
- Steven Swinford at The Times: "It's not yet clear what level corporation tax will rise to. One senior Govt source tells me it won't be to the full 25%, but discussions on level ongoing. Some of the other, smaller measures in mini budget could also be reversed. [...] all bar £13billion of measures in the mini budget - the income tax and stamp duty cuts - could be reversed. That means ***three quarters*** of Kwasi Kwarteng's original £45billion worth of unfunded tax cuts will have been abandoned."
- From MNI's Senior FI Analyst: "[...] very back of the envelope calculations corporation [tax] is about 1/3 of the costs of the "Growth Plan" (when the energy plan is excluded). - The other big measures are the removal of the NIC increase from Nov 2022 - which has a similar cost. - And the decision to bring forward the basic rate income tax cut from 20% to 19% (but that only impacts one year really)"
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GLOBAL: MNI Global Macro Outlook - Sep 2022: No Pivot, No Relief
Sep-14 09:59
MNI's latest Global Macro Outlook meeting focused on how US dollar gains will mean further global financial tightening, exacerbating weak economic conditions.
- PDF analysis has been emailed to subscribers and available on our website
Source: Federal Reserve, MNI
OUTLOOK: Price Signal Summary - Reversal In S&P E-Minis Exposes Key Support
Sep-14 09:57
- In the equity space, a strong reversal in S&P E-Minis Tuesday, threatens the recent recovery. A continuation lower would expose the key short-term support at 3900.00, Sep 7 low and a bear trigger. A break would strengthen a bearish case and signal scope for deeper pullback. Yesterday’s high of 4175.00 represents an important near-term resistance. EUROSTOXX 50 futures traded in a volatile manner yesterday and faced strong resistance. The sharp move lower threatens the recent short-term recovery and signals the end of what has likely been a corrective cycle. A deeper pullback would refocus attention on key short-term support at 3429.00, the Sep 5 low. Yesterday’s high of 3685.00 is the short-term bull trigger.
- In FX, the EURUSD traded sharply lower Tuesday and remains inside its bear channel, drawn from the Feb 10 high. The channel top intersects at 1.0131 and is a key resistance. A close above this level is required to highlight a channel breakout. For bears, a stronger reversal would expose the bear trigger at 0.9864, the Sep 6 low. GBPUSD reversed lower yesterday, reinforcing bearish conditions and signalling the end of the recent corrective bounce. Key support at 1.1412, Mar 20 2020 low, has recently been pierced. A clear break of this level would strengthen bearish conditions. Initial resistance is at Tuesday’s high of 1.1738. USDJPY key short-term resistance is at 144.99, Sep 7 high. A break of 144.99 would confirm a resumption of bullish activity. This would open 145.28 and 146.03, the 2.618 and 2.764 projection of the Aug 2 - 8 - 11 price swing. Initial firm support is at 141.51, Sep 9 low. A strong support also lies at the 20-day EMA, at 140.21.
- On the commodity front, Gold remains in a downtrend and recent short-term gains are considered corrective. The focus is on $1681.0, the Jul 21 low and a key bear trigger. A break would confirm a resumption of the broader downtrend. The next firm resistance is seen at $1751.5, the 50-day EMA. In the Oil space, WTI futures are trading closer to recent highs. Gains are considered corrective and a bearish threat remains present following the sharp sell-off between Aug 30 - Sep 8. Firm resistance is seen at $91.84, the 50-day EMA. A reversal lower would refocus attention on $81.20, the Sep 8 low.
- In the FI space, Bund futures remain in a clear downtrend. A bearish price sequence of lower lows and lower highs remains intact, clearly highlighting current sentiment. The focus is on the 142.00 handle. Gilts remain vulnerable and have touched a fresh trend low of 104.64 today. Attention is on 103.87, 2.00 projection of the Aug 22 - 24 - 26 price swing.
BONDS: Continuing to digest US CPI with US PPI up later
Sep-14 09:50
- Core fixed income has been largely range-bound this morning with USTs underperforming marginally following yesterday's higher-than-expected CPI print. UST yields up between 2-3bp on the day.
- Gilts are largely unch despite the release of UK CPI this morning - with headline a tenth lower than expected and core a tenth higher.
- Focus now turns to US PPI later.
- TY1 futures are down -0-4+ today at 114-26 with 10y UST yields up 2.7bp at 3.436% and 2y yields up 2.1bp at 3.779%.
- Bund futures are down -0.14 today at 143.25 with 10y Bund yields up 0.5bp at 1.731% and Schatz yields down -0.4bp at 1.377%.
- Gilt futures are down -0.26 today at 104.94 with 10y yields unch at 3.168% and 2y yields down -0.1bp at 3.108%.
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