US DATA: Continuing Claims Hold Off June/July Cycle Highs
Continuing claims have drifted higher in recent weeks, although we’re still cautious of a strong pattern of downward revisions to latest weeks. They remain somewhat elevated by recent year standards but off cycle highs. We see the combination with initial claims as a continuation of a low fire, low hire labor market without any notable deterioration being seen.
- MNI estimates continuing claims at a seasonally adjusted 1935k in the week to Oct 11 after another downward revised 1920k (we initially estimated 1929k).
- It’s tentatively the highest since mid-August but we again note the continued trend of downward revisions.
- Whilst it’s another small increase from what we calculate to have been a recent low of 1909k in mid-September, it’s still below recent cycle highs around 1960k’s in June and July.
- That push higher to those levels came with a marked slowdown in hiring at the time, with the continuing claims trend since then implying a stabilization and modest improvement but still chiming with soft hiring conditions.
- The initial jobless claims figures are still consistent with periods of a healthier labor market than continuing claims, but this trend has been seen for some time now. The combination points to a continuation of a low fire, low hire labor market.
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EGBS: Spreads To Bunds Wider On Russia-Ukraine Fears; Short End IT Supply Due
10-year EGB spreads to Bunds are up to 1.5bps wider on the session, with BTPs lightly underperforming (spread to Bunds at ~81bps). Concerns around President Trump’s remarks on the Russia-Ukraine conflict yesterday and Russia pointing to further advances in Ukraine this morning may be contributing to peripheral underperformance versus Bunds intraday.
- The BTP/Bund spread has tightened almost 40bps year-to-date, but has struggled to consolidate below the 2010 lows of ~76bps in recent weeks.
- BTP futures are +8 ticks at 119.75, lightly underperforming Bunds (+18 ticks at 128.36). The primary trend condition in BTP futures remains bullish, with the pullback from the Sep 11 considered corrective. Initial support is the Sep 4 low at 119.06, with key support at the Sep 3 low of 118.36.
- Italian short-end (and linker) supply is due at 1000BST, with E2.0-2.5bln of the on-the-run 2.10% Aug-27 BTP Short Term on offer.
- This BTP Short Term was last re-opened in August, where it attracted a 1.56x bid-to-cover ratio for the E3bln on offer.
- The Italian curve is lightly bear flatter ahead of the supply, with 2-year yields little changed and 30-year yields down almost 1bp.
FOREX: FX OPTION EXPIRY
Of Note:
EURUSD 1.39bn at 1.1800 (could act as magnet).
GBPUSD 1.31bn at 1.3500 (could act as magnet).
USDJPY 1.1bn at 148.40/148.50.
AUDUSD ~1bn at 0.6600.
EURUSD 2.32bn at 1.1800/1.1805 (thu).
EURUSD 2.02bn at 1.1750 (fri).
AUDUSD 1.29bn at 0.6625 (mon).
- EURUSD: 1.1730 (628mln), 1.1750 (978mln), 1.1760 (324mln), 1.1800 (1.39bn), 1.1811 (355mln).
- GBPUSD: 1.3500 (1.31bn).
- USDJPY: 147.90 (241mln), 148.00 (296mln), 148.40 (350mln), 148.50 (729mln).
- USDCAD: 1.3850 (540mln).
- AUDUSD: 0.6600 (904mln), 0.6625 (575mln).
- NZDUSD: 0.5890 (351mln), 0.5900 (372mln).
- EURNOK: 11.7500 (405mln).
RBA: VIEW: TD Remove Call For Nov & Feb Cuts, Pay Nov RBA OIS
Sell-side names continue to adjust their RBA calls in a hawkish direction after the latest round of monthly CPI data. TD Securities note that “CPI is running hotter than the RBA would probably like and with activity holding up, this prompts a change of RBA call. We no longer forecast RBA cuts in November and February”. They will issue a full update of their view on Friday. They recommended paying November ‘25 RBA-dated OIS alongside this call change.
