NOK: Brent Crude/Natural Gas Pressure Weighs On Krone; NOKSEK Through Support
Aug-08 15:03
Brent crude and natural gas futures have fallen on Bloomberg’s report that the US and Russia are discussing a deal to lock in Russia’s occupation of territory seized during its invasion of Ukraine in order to reach a peace agreement. This in turn has weighed on the Norwegian krone, which now underperforms the G10 today.
- Energy markets remain sensitive to any signs of a peace agreement in Ukraine, which could lead to an easing of sanctions/secondary tariffs on Russia.
- NOKSEK is down 0.4% at typing, pushing through key support at 0.9329 (June 26 low). A clear breach of this level would re-instate a bearish theme in the cross, with 0.9301 the immediate downside target (61.8% retracement of the April – June rally).
- Norwegian July inflation is due on Monday at 0700BST/0800CET. It is the last major macro datapoint before Norges Bank's August 14 decision (next Thursday), but is not expected to shift firm expectations for a hold at 4.25%. Instead, the July report will add to the stock of data ahead of the September decision, where markets expect a 25bp to 4.00% to be delivered.
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GILTS: Flatter, Paring Most Of Yesterday's Curve Steepening
Jul-09 14:55
The bid in U.S. Tsys, weakness in crude and move away from highs in e-minis have provided support for gilts, with futures trading to fresh session highs of 91.92, but ultimately remaining within the confines of yesterday’s range.
- Bulls will want to break yesterday’s high (91.98) before attempting to close yesterday’s opening gap lower.
- Yields 0.5-4bp lower, curve flatter.
- BoE Governor Bailey’s reiteration re: recent curve steepening factoring into the Bank’s QT adjustment decision in September underpinned an early flattening curve bias, with major spreads paring most of yesterday’s bear steepening.
- Still, a lack of fiscal headroom, coupled with tepid economic growth and downside risks to productivity continue to promote heighted odds of tax increases as soon as the Autumn, while underscoring the fiscal fragility narrative.
- GBP STIR pricing slightly more dovish on the day given action further out the curve.
- SONIA futures 0.5-2.0 firmer.
- BoE-dated OIS showing ~52.5bp of cuts through year-end, ~1bp more dovish on the day.
OPTIONS: Expiries for Jul10 NY cut 1000ET (Source DTCC)
Jul-09 14:50
- EUR/USD: $1.1650(E2.5bln), $1.1685-00(E1.5bln), $1.1710-20(E616mln), $1.1735-50(E1.5bln), $1.1800(E1.3bln)
- USD/JPY: Y143.95-15($1.0bln), Y144.70-90($1.3bln), Y146.50-55($681mln), Y147.00($832mln)
- GBP/USD: $1.3490-10(Gbp529mln), $1.3570(Gbp540mln)
- EUR/GBP: Gbp0.8595-00(E815mln)
- AUD/USD: $0.6440-55(A$954mln), $0.6500(A$599mln), $0.6415-25(A$589mln), $0.6600(A$634mln)
- NZD/USD: $0.6000(N$517mln)
- USD/CAD: C$1.3625-35($1.0bln)
US STOCKS: Early Equities Roundup: Bid But Off Highs, IT & Media Outperforming
Jul-09 14:45
- Stocks are trading firmer early Wednesday, apparently tracking a rebound in Treasuries off yesterday's June 20 lows, projected rate cuts into year end gaining slightly ahead of this afternoon's June FOMC minutes release.
- Indexes did pare gains by midmorning, likely profit taking ahead of the minutes and some amount of wariness amid Pres Trump reiterating tariff threats via social media. Currently, the DJIA trades up 69.23 points (0.16%) at 44322.34, S&P E-Minis up 16.75 points (0.27%) at 6290.25, Nasdaq up 119 points (0.6%) at 20542.14.
- Communication Services and Information Technology sectors led gainers in the first half, interactive media and entertainment shares buoyed the former with Alphabet +2.80%, Warner Bros Discovery +2.59%, Meta Platforms +2.16% and Paramount Global +0.83%.
- THe Tech sector was supported by Arista Networks +2.20%, NVIDIA +2.10% (fist company to reach $4T market cap), Broadcom +1.76%, Microsoft +1.66% and Advanced Micro Devices +1.60%.
- On the flipside, Consumer Staples and Energy sectors underperformed in the first half, The Hershey Co -3.41%, Altria Group -2.66%, Monster Beverage -1.93% and Archer-Daniels-Midland -1.15% weighed on Staples while EQT Corp -1.59%, Targa Resources -1.53%, EOG Resources -1.43% and Kinder Morgan -1.39% kept the Energy sector under wraps.
