EMERGING MARKETS: CEEMEA FX Price Signal Summary - EURHUF Trend Needle Points South
May-31 11:10
- The EURHUF outlook remains bearish. The cross recently tested resistance at the 50-day EMA but has so far failed to remain above the average. A clear break of it would expose 380.29, the Apr 20 high and a key resistance. The EMA intersects at 375.60. The primary trend direction remains down, clearance of 368.05, May 16 low and the bear trigger, would confirm a resumption of the trend and open 366.41, the Mar 30 2022 low.
- EURPLN trend conditions remain bearish and the cross traded to a fresh cycle low of 4.4767 last week. This confirms a resumption of the downtrend and maintains the bearish price sequence of lower lows and lower highs. A continuation would open 4.4360, the Jun 7 2021 low. Resistance at the 20-day EMA has been pierced. The 50-day EMA intersects at 4.5846. Short-term gains are considered corrective. A break of the 50-day EMA would alter the picture.
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STIR FUTURES: SOFR Futures Update
May-01 11:03
Front end SOFR futures trading steady to mixed, short end mildly weaker:
- Front month Jun'24 SOFR futures currently -0.015 at 94.90 after 3M SOFR settled +0.00797 to 5.08929. The balance of SOFR Whites through Reds (SFRU3-SFRH5) are currently trading -0.020-0.005 vs. +0.005-0.015 in Greens-Golds.
- Fed funds implied hike for this Wednesday's FOMC currently at 23.1bp, while Jun'23 cumulative climbs to +29.3bp at 5.123%
- Projected rate cuts for late 2023 remain well below last Tuesday's highs: November cumulative currently -7.4bp (-31.1bp Tue) at 4.756, Dec'23 cumulative -28.0bp (-52.1bp Tue) at 4.550, while, Jan'24 cumulative holds at -50.2bs vs. a full three 25bp cuts late Tuesday.
- Fed Terminal currently at 5.115% in Jul'23 this morning.
US: Bear Flattening As Some Banking Sector Uncertainty Abates
May-01 10:41
The Treasury curve has bear flattened in overnight trade, with the entry of US desks accelerating the move a little. 2Y yields sit 7+bp higher on the session, with more modest moves further down the curve (10s up 3.4bp, 30s up 1.7bp).
- The main headline overnight was the FDIC's sale of First Republic Bank to JPMorgan, resulting in a very modest weakening in Treasuries as FRC-related uncertainties abated. JPM will hold a media call at 0800ET.
- 2s10s have now fully retraced the disinversion seen after First Republic Bank concerns resurfaced mid-last week, last at -63.2bp (had hit -48.7bp on Weds.)
- It's a holiday-thinned trading session so far, to be sure, with European markets closed: front TY volumes stand at just 130k.
- The JPM-FRC news hasn't moved the needle much on Fed hike pricing, despite some analysts having seen the uncertainty as a lingering risk to the Fed's communications if not decision going into the 2-day FOMC this week.
- May pricing sits just above 22bp, up 1+bp, implying a near-lock for 25bp. Terminal Funds rate (upper limit) pricing +3.1bp to 5.29% by June, with 55-60bp of cuts by year-end seen after that.
- Attention the rest of the session is on ISM Manufacturing at 1000ET, alongside construction spending. April Manuf PMI at 0945ET is a final reading.
LOOK AHEAD: Monday Data Calendar, S&P Global MFG PMIs, ISMs, Const Spending
May-01 10:12
- US Data/Speaker Calendar (prior, estimate)
- May-01 0945 S&P Global US Manufacturing PMI (50.4, 50.4)
- May-01 1000 Construction Spending MoM (-0.1%, 0.1%)
- May-01 1000 ISM Manufacturing (46.3, 46.8)
- May-01 1000 ISM Prices Paid (49.2, 49.0)
- May-01 1000 ISM Employment (46.9, --)
- May-01 1000 ISM New Orders (44.3, --)
- May-01 1130 US Tsy $57B 13W, $48B 26W bill auctions
