USD: Broader USD selling is emerging
- Some broader USD selling is driving the bounce in Cable, taking its cue from the bid in Bond futures, US Tnotes (TYH5) breaks the overnight high, and eye a test to 107.18+, Yesterday's high.
- USDJPY is just finding support at the mentioned 156.92, was Monday's low, so far printed a 156.98 low.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
STIR: SONIA Markets Around Late Friday Levels, ~75bp Of '25 BoE Cuts Priced
SONIA markets little changed, with the recovery in the long end of core global FI markets unconvincing at this stage.
- Futures hover at/around late Friday lows, last flat to -3.0.
- BoE-dated OIS also little changed, showing essentially 0 odds of a movement in rates later this week, followed by 20bp of cuts through February, 27.5bp of easing through March and 76bp of cuts through ’25.
- December '25 pricing hasn't been able to push through 3.5x 25bp cuts (88.75bp) in recent weeks, given the BoE's preference for gradual easing and the still sticky inflation backdrop.
- Labour market (Tuesday) and CPI (Wednesday) data will provide the major domestic inputs ahead of this week's BoE decision.
- Today’s flash PMI data could also impact the short end.
- We still look for BoE cuts in February & May.
- To us, the most realistic dovish outcome at this week’s meeting would probably be 3 dovish dissents voting for a cut (with rates remaining unchanged), although there may be as little as one dovish dissenter (Dhingra). More on that and the tier 1 data to come in our usual run of previews.
- Goldman Sachs recommend closing SFIZ4/Z5 flatteners for profit and moving to an outright long in SFIZ5
- They believe that the case for steady BoE cuts is becoming clearer, pointing to last week’s GDP & manufacturing data.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Dec-24 | 4.695 | -0.5 |
Feb-25 | 4.502 | -19.8 |
Mar-25 | 4.426 | -27.4 |
May-25 | 4.261 | -43.9 |
Jun-25 | 4.179 | -52.1 |
Aug-25 | 4.057 | -64.3 |
Sep-25 | 4.034 | -66.6 |
Nov-25 | 3.967 | -73.3 |
Dec-25 | 3.939 | -76.1 |
STIR: 117.5bps of Easing Priced Through End '25; Flash PMIs Headline Today
ECB-dated OIS price ~116bps of easing through the end of next year, corresponding to a deposit rate of just over 1.8%. That’s over 10bp more hawkish than before the ECB’s December decision, where rates were cut by 25bps and the bank’s pledge to keep policy “sufficiently restrictive” was removed.
- OIS markets more than fully price 25bp cuts at the January and March ECB gatherings, with 100bps of easing priced through June 2025. Meanwhile, Euribor futures are flat to -2.0 ticks through the blues today.
- Over the weekend, the hawkish Holzmann suggested rates to stimulate the economy would not be the right approach. He noted on Friday that neutral rates are “around 2%”.
- Kazaks also expressed caution with the idea of taking rates below neutral (in his view, “closer to 2% than to 3%”), but remains open to the idea of discussing larger (than 25bp) reductions.
- ECB President Lagarde speaks at a conference on “Annual Economics Conference: Pillars of Resilience Amid Global Geopolitical Shifts” today. Her keynote speech is scheduled for 0815GMT/0915CET.
- The December flash PMIs are also due today, with French data due at 0815GMT, followed by German (0830GMT) and Eurozone-wide (0900GMT) prints.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Cut-adjusted Effective ESTR Rate (bp) |
| Jan-25 | 2.631 | -28.6 |
| Mar-25 | 2.321 | -59.6 |
| Apr-25 | 2.085 | -83.2 |
| Jun-25 | 1.922 | -99.5 |
| Jul-25 | 1.844 | -107.4 |
| Sep-25 | 1.793 | -112.4 |
| Oct-25 | 1.773 | -114.4 |
| Dec-25 | 1.757 | -116.1 |
| Source: MNI/Bloomberg. | ||
EQUITY TECHS: E-MINI S&P: (H5) Bullish Trend Structure
- RES 4: 6184.00 1.236 proj of the Aug 5 - Sep 3 - 9 price swing
- RES 3: 6200.00 Round number resistance
- RES 2: 6194.19 1.236 proj of the Aug 5 - Sep 3 - 9 price swing
- RES 1: 6178.75 High Dec 6 and the bull trigger
- PRICE: 6129.75 @ 07:21 GMT Dec 16
- SUP 1: 6097.76 20-day EMA
- SUP 2: 6043.00/6004.31 Low Nov 26 / 50-day EMA
- SUP 3: 5970.25 Low Nov 21
- SUP 4: 5921.00 Low Nov 19
The S&P E-Minis contract remains bullish and the latest shallow pullback is considered corrective. Recent gains confirm a resumption of the uptrend and signal scope for a continuation near-term. Note that moving average studies are in a bull-mode set-up, highlighting a dominant uptrend and positive market sentiment. A resumption of the trend would open 6145.26, a Fibonacci projection. Initial support to watch lies at 6097.76 the 20-day EMA.
