US: Biden Administration To Continue High Level Talks To Avert Rail Strike
A White House official has confirmed that the White House will continue high-level negotiations with union leaders to avert a planned rail strike on Friday.
- President Biden personally spoke with union leaders yesterday in a bid to negotiate an end to the dispute which has the potential to further disrupt fragile supply chains.
- Rail accounts for approximately forty percent of long-distance freight, more than any other mode of transportation.
- A nationwide strike could be disastrous for the administration with less than a month until midterm elections.
- Politico: “The president has finally had a couple of big wins recently — the Inflation Reduction Act passed, gas prices are going down, infrastructure dollars are hitting the street — but all those gains could be eclipsed if the railroads shut down and the supply chain collapses.”
- Steven Portnoy at CBS: "A strike or lockout could affect passenger rail service (MARC, VRE) as well as freight rail, since so many commuter railroads run on freight rail lines. The trade association for railroads says a work stoppage could cost the US economy $2 billion/day."
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USDCAD TECHS: Remains Vulnerable
- RES 4: 1.3224 High Jul 14 and key resistance
- RES 3: 1.3135 High Jul 15
- RES 2: 1.3038/56 High Jul 18 / 3.0% Upper Bollinger Band
- RES 1: 1.2863/2985 20-day EMA / High Aug 5
- PRICE: 1.2795 @ 16:08 BST Aug 12
- SUP 1: 1.2744 200-dma
- SUP 2: 1.2728 Low Aug 11
- SUP 3: 1.2685 76.4% retracement of the Jun 8 - Jul 14 upleg
- SUP 4: 1.2587 2.0% 10-dma envelope
USDCAD extended losses Thursday, printing a new multi-month low in the process. This weakness marks an extension of the current bear leg. Support at 1.2767, the Aug 1 low, has been cleared and the move lower paves the way for a continuation lower. Attention is on a clean close below 1.2744, the 200-dma and 1.2685, a Fibonacci retracement. On the upside, a breach of 1.2985, the Aug 5 high is required to reinstate a bullish theme.
AUDUSD TECHS: Trend Needle Points North
- RES 4: 0.7283 High Jun 3 and a key resistance
- RES 3: 0.7246 High Jun 7
- RES 2: 0.7166 3.0% Upper Bollinger Band
- RES 1: 0.7141 76.4% retracement of the Jun 3 - Jul 14 downleg
- PRICE: 0.7102 @ 16:07 BST Aug 12
- SUP 1: 0.6965/6870 20-day EMA / Low Aug 5
- SUP 2: 0.6786 Low Jul 18
- SUP 3: 0.6682 14 and the bear trigger
- SUP 4: 0.6647 0.764 proj of the Apr 5 - May 12 - Jun 3 price swing
AUDUSD rallied further Thursday, extending this week’s bull cycle. The break of 0.7047, Aug 1 high, confirms a resumption of the uptrend that started Jul 14 and sets the scene for a continuation higher. The break has also established a bullish price sequence of higher highs and higher lows. The focus is on a climb toward 0.7141, a Fibonacci retracement. Support to watch is at 0.6870, Aug 5 low.
US TSYS: Bonds Near Highs, Yield Curves Flatter
Bonds finished stronger, near late highs on a quiet second half w/ TYU2 just over 1M well after the bell compared to 815k ahead midday, yield curves unwinding a portion of this week's CPI/PPI induced steepening.
- Muted reaction to early deflationary data: Import (-1.4%)/Export (-13.3%) prices come out weaker than expected. Tsys that were already off highs after the open continued to scale back support, albeit on light volumes, equities turning modest gains.
- Dual react: Tsy support faded after preliminary August reading of consumer sentiment from the University of Michigan climbed to 55.1 vs. 52.5 exp (51.5 in July and all-time low of 50.0 in June for comparison).
- Meanwhile, Richmond Fed Barkin midmorning comments on CNBC deemed mixed with "more rate hikes needed to control inflation" and a "lot of time before Sep meeting, keep an eye on data" weighing. Less hawkish tones in the mix with "TIGHT LABOR MARKET DOESN'T HAVE TO CAUSE INFLATION; DEMAND DEFINITELY SOFTENING, ESP FOR LOW-INCOME CONSUMER; MUST BELIEVE BAL-SHEET SHRINKING HAS TIGHTENING EFFECT."
- Blocks contributed to yield curves paring back from wk's steepening post UofM: -11,421 TUU2 104-20.88, sell through 104-21 post-time bid at 1010:56ET vs. +3,960 UXYU2 128-31.5 buy through 128-28.5 post-time offer; -25,033 FVU2 112-09.5 sell through 112-09.75 post-time bid at 1036:45ET, 112-09.25 last -.25.
- Late curve levels:
- 3M10Y -4.974, 26.663 (L: 25.199 / H: 33.589)
- 2Y10Y -7.618, -41.125 (L: -41.125 / H: -32.494)
- 2Y30Y -9.512, -14.282 (L: -14.364 / H: -5.024)
- 5Y30Y -4.728, 13.923 (L: 13.604 / H: 18.841)
- Cross asset: Stocks trading strong after the bell, SPX eminis +66.0 (1.41%) at 4275.75; Gold +11.30 at 1801.02; Crude weaker (WTI -2.59 at 91.75).
