CZECHIA: CNB's Prochazka Says Rates Won't Drop So Fast
Oct-23 07:33
- CNB's Jan Prochazka told Patria.cz that the central bank is unlikely to cut the main policy rate as fast as the market expects. The official noted that current pricing implies reducing the key rate twice already this year and bringing it to around 3.50% at the end of next year - which would be "definitely" too low, too fast. Prochazka explained that while he is optimistic about the inflation outlook, but upside risks remain. He said that the discussion on the strategy for loosening monetary policy also involves the question of where the CNB sees the neutral level of the policy rate today. According to Prochazka, the Bank Board sees it within the 3%-4% interval and he personally thinks that it is in the middle of that band. The Bank Board will announce its next monetary policy meeting on November 2, alongside the release of a new macroeconomic forecast.
- President Petr Pavel will open the second Parliamentary Summit of the International Crimea Platform. The forum was inaugurated in 2021 to help coordinate the international response to the occupation of the peninsula. Czech Chamber of Deputies Speaker Marketa Pekarova Adamova told Radio Liberty that the Western response to the Russian annexation of Crimea in 2014 was "insufficient" and a demonstration of weakness, which entails the need to now show unity on the matter.
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JGB TECHS: (Z3) Trend Needle Points South
Sep-22 19:50
- RES 3: 148.74 - High Jul 24
- RES 2: 147.21 - High Aug 9
- RES 1: 146.41 - High Sep 4
- PRICE: 145.44 @ 20:09 BST Sep 22
- SUP 1: 144.15 - Low Jan 13 and a major support
- SUP 2: 143.95 - 2.00 proj of the Sep 8 - 12 - 15 price swing
- SUP 3: 143.29 - 2.618 proj of the Mar 22 - Apr 18 - May 12 swing
JGBs sold off sharply on Sep 11 and the contract has since traded through support at 145.49, the Aug 17 low. A continuation lower and the clear break of this area confirms a resumption of the medium-term downtrend and paves the way for weakness towards 144.15, theJan 13 low and a major support. On the upside, clearance of 146.41, the Sep 4 high would instead highlight a base and a possible short-term reversal.
AUSSIE 10-YEAR TECHS: AUSSIE 10-YR TECHS: (Z3) Medium-Term Trend Direction Remains Bearish
Sep-22 19:35
- RES 3: 96.160 - High Jul 20
- RES 2: 96.050 - HIgh Sep 4 and a key resistance
- RES 1: 95.923 - High Sep 15
- PRICE: 95.660 @ 20:02 BST Sep 22
- SUP 1: 95.550 - 1.00 proj of the Jul 20 - Aug 17 - Sep 4 price swing
- SUP 2: 95.300 - 1.50 proj of the Jul 20 - Aug 17 - Sep 4 price swing
- SUP 3: 94.868 - 1.0% 10-dma envelope
The Aussie 10 yr futures broader trend direction is down and the key support and bear trigger at 95.660, the Aug 17 low, has been breached. The break of this level reinforces a bearish theme and also confirms the breach of a major support at 95.670, the Jun 17 2022 low, marking a resumption of the medium-term downtrend. Initial key resistance has been defined at 96.050, the Sep 4 high.
US TSYS: Discounting Higher for Longer Policy Messaging
Sep-22 19:31
- Generally quiet end to a hectic week, 10Y Treasury yields off new 16Y high of 4.5064% tapped early overnight to 4.4377% after Friday's close as markets discounted the Fed and BOE "hawkish hold" or higher for longer messaging Friday.
- Federal Reserve Governor Michelle Bowman on Friday called for "further rate hikes" to bring inflation back to target, citing too-high inflation and risk that rising energy prices could reverse past progress.
- Boston Fed President Susan Collins said Friday further tightening is not off the table and emphasized that she expects rates to stay higher for longer. "I fully support the FOMC statement and agree with the policy guidance in the median SEP projections. I expect rates may have to stay higher, and for longer, than previous projections had suggested, and further tightening is certainly not off the table," she said in prepared remarks.
- Meanwhile, San Francisco Fed President Daly said it's "unlikely inflation will reach 2% goal in 2024.
- Treasury futures drew support after Flash PMI data comes out mixed: S&P Global US Manufacturing PMI (48.9 vs 48.2 est), Services PMI (50.2 vs. 50.7 est), Composite PMI (50.1 vs. 50.4 est).
- Cross asset summary: Greenback firmer (DXY +.195 at 105.558), Gold firmer (+4.92 at 1924.94), crude firmer (WTI +.77 at 90.40) and stocks marking modest gains again after retreating late: DJIA up 45.93 points (0.13%) at 34119.34, S&P E-Mini Futures up 12.25 points (0.28%) at 4384.5, Nasdaq up 62.1 points (0.5%) at 13287.28.
