FED: Chair Powell Says His Assessment Hasn't Really Changed
Jan-29 19:41
- Q: Has your confidence changed on policy being "meaningfully restrictive" given market and economic developments?
- A: My assessment hasn't really changed - we've seen rates move up at the long end which could represent a tightening of financial conditions. Policy is meaningfully less restrictive than when we began to cut 100bps. We're going to be focusing on seeing real progress on inflation or turn at least some weakness in the labor market before we before we consider making adjustments.
- Our policy stance is very well calibrated for our dual mandate goals. The last couple of labor market readings have been more positive.
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US TSYS: Late SOFR/Treasury Option Roundup: Fading Underlying Support
Dec-30 19:35
Decent SOFR & Treasury option flow leaned towards low delta put structures Monday, fading the bounce in underlying futures to mid-December levels. Projected rate cuts into early 2025 gain momentum vs. this morning, levels (*) as follows: Jan'25 steady at -2.8bp, Mar'25 -14.6bp (-13.6bp), May'25 -20.6bp (-19.5bp), Jun'25 -30.3bp (-28.8bp).
- SOFR Options
- Update, over +18,000 SFRZ5 95.00 puts 8.0 vs. 96.065/0.10%
- +2,500 SFRJ5/SFRM5 95.50/95.62/95.75 put fly strip, 5.25
- +2,500 SFRF5 95.75 puts 1.25 vs. 95.805/.05%
- Block, 15,000 SFRM5 96.125/96.62 call spds 4.5 over SFRM5 95.56 puts vs. 95.945/0.36%
- +6,000 SFRZ5 95.00 puts, 8.0 vs. 96.065/0.10%
- -3,000 2QG5 95.87/96.00/96.12 put trees 4.0, 2 legs over ref 96.025
- over +34,200 0QM5 96.37/97.00 call spds 6.5 over 95.37/95.62 put spds ref 96.02
- 3,800 SFRK5 96.06/96.25 call spds ref 95.945
- 2,500 SFRF5 95.75/95.87/96.00/96.12 call condors ref 95.825
- 2,500 0QH5 95.62 puts ref 96.015
- Treasury Options
- -10,000 TYH5 109 straddles, 209-211 ref 108-30.5
- 1,000 TYG5 106/107 4x3 put spds ref 108-12
- +10,000 wk2 TY 107/108 put spds, 8
- +5,000 wk3 FV 106.75 calls 2 over FVG5 107 calls vs. 106-11/0.05%
- 1,200 FVH5 105/107.5 strangles ref 106-08
- 3,800 Wednesday wkly 30Y 113/113.5 put spds
- 1,200 TYG5 107/108.25 put spds ref 108-19
USDJPY TECHS: Trading At Its Recent Highs
Dec-30 19:30
- RES 4: 160.00 Round number resistance
- RES 3: 159.45 High Jul 12
- RES 2: 159.26 0.618 proj of the Sep 16 - Nov 15 - Dec 3 price swing
- RES 1: 158.08 High Dec 26
- PRICE: 157.06 @ 16:10 GMT Dec 30
- SUP 1: 155.89/155.01 High Nov 20 / 20-day EMA
- SUP 2: 153.11/150.90 50-day EMA / Low Dec 10
- SUP 3: 149.37 Low Dec 06
- SUP 4: 148.65 Low Dec 03 and the bear trigger
Prices slipped Monday, but an over-arching bullish condition remains. The breach of 156.75, the Nov 15 high and a bull trigger, confirmed a resumption of the uptrend and has paved the way for a move towards 159.45, the Jul 12 high. Moving average studies are in a bull-mode position highlighting a clear dominant uptrend. Initial firm support is 155.01, the 20-day EMA. A pullback would be considered corrective.
US STOCKS: Late Equities Roundup: Still Weaker But Well Off Lows
Dec-30 19:24
- Stocks remain weaker but are trading well off early session lows in late Monday trade - stocks have been gradually paring losses since this mornings better than expected pending home sales (2.2% vs. 0.8% est) and Dallas Fed Mfg (3.4 vs. -3.0 est) data.
- Currently, the DJIA trades down 337.49 points (-0.79%) at 42655.64, S&P E-Minis down 54 points (-0.9%) at 5973, Nasdaq down 165.6 points (-0.8%) at 19557.58.
- Consumer Discretionary and Materials sectors continued to underperform in late trade, auto-related shares weighing on the former: Tractor Supply -2.79%, Tesla -1.98%, LKQ Inc -1.79% and O'Reilly Automotive -1.48%. Metals and mining shares weighed on the Materials sector: Albemarle -2.10%, Newmont Corp and Freeport-McMoRan both -1.5%, FMC Corp -1.49%.
- On the positive side, the Energy sector continued to outperform while Information Technology sector shares gained momentum. Oil $ gas stocks buoyed the Energy sector as crude prices inched higher (WTI +0.33 at 70.95): EQT Corp +5.05%, Coterra Energy +4.22%, Devon Energy +2.76%.
- Meanwhile, semiconductor stocks buoyed the IT sector with Nvidia +1.68%, VeriSign +0.51% while Autodesk and Adobe both gained 0.05%.
- Reminder, the next round of quarterly earnings kicks off mid-January with Blackrock, Bank of NY Melon, Wells Fargo, JP Morgan, Goldman Sachs, Citigroup, US Bancorp, M&T Bank and PNC all reporting between January 13-16.
