OIL PRODUCTS: China to Raise Gasoline & Diesel Prices

• RES 4: 112-31   High Oct 16 and a key short-term resistance 
• RES 3: 111-26   High Oct 22
• RES 2: 111-13   50-day EMA 
• RES 1: 111-09   High Dec 02
• PRICE:‌‌ 111-06+ @ 16:49 GMT Dec 2
• SUP 1: 110-01/109-20 Low Nov 25 / Low Nov 20/21     
• SUP 2: 109-02+ Low Nov 15 and the bear trigger  
• SUP 3: 108-28   1.236 proj of the Oct 1 - 14 - 16 price swing     
• SUP 4: 108-12+ 1.382 proj of the Oct 1 - 14 - 16 price swing

A bull cycle in Treasuries remains in play and the contract is holding on to the bulk of its latest gains. Price has recently cleared the 20-day EMA and sights are on the 50-day EMA, at 111-13. This EMA marks the next important resistance, a clear break of it would signal scope for a stronger recovery near-term. For bears, a reversal lower would highlight the end of a corrective cycle and open the bear trigger at 109-02+, the Nov 15 low.

• Fed Funds implied rates hold most of late yesterday’s Waller-inspired dovish shift – we repeat part of what we wrote yesterday for an important tee-up ahead of today’s JOLTS data.
• Whilst he currently supports a cut in December, the market only sees it as 50/50 decision between cutting or pausing despite the dovish shift.
• Cumulative cuts from 4.58% effective: 18bp Dec, 23bp Jan, 37bp Mar and 56bp June.
• Today sees Daly ('24) at 1215ET, Kugler (voter) at 1235ET and Goolsbee ('25) at 1330ET. We watch Kugler in particular, a usually more dovish FOMC member who two weeks ago surprised with more hawkish remarks including discussing the possibility of a December pause.
• Waller from yesterday: While he sounded open-minded to the arguments for a hold in December, his commentary is about as explicit an indication as we've received that the base case for the FOMC is to cut again, unless incoming data surprises to the strong side: "Based on the economic data in hand today and forecasts that show that inflation will continue on its downward path to 2 percent over the medium term, at present I lean toward supporting a cut to the policy rate at our December meeting. But that decision will depend on whether data that we will receive before then surprises to the upside and alters my forecast for the path of inflation."
• That may include this Friday's nonfarm payrolls data, but Waller basically discounts it, saying "I do expect a rebound in payroll data in the November employment report that is due out later this week, but it may take more time for the full swings in the payroll data to fully wash out. For that reason, I am leaning on other metrics to reveal what is really going on in the labor market." Indeed he says NFPs "may have misleading [] data", and specifically says that in deciding his approach for the December meeting, he will be looking "very closely" at additional data including Tuesday's JOLTS, next   week's CPI / PPI, and retail sales in 2 weeks time.”

SOFR FIX - Source BBG/CME

• 1M 4.52539
• 3M 4.47178
• 6M 4.39344
• 12M 4.26085