LATIN AMERICA: Credit Market Wrap

The AUD/USD had a range overnight of 0.6530-0.6550, Asia is trading around 0.6545. Risk consolidated its recent gains and the USD drifted sideways. The AUD/USD has found support and continues to consolidate above 0.6500. The AUD will be one of the main beneficiaries while this positive sentiment dominates the market. The AUD/USD needs a sustained push above the 0.6550 area for the focus to turn back toward the 0.6650/0.6700 year highs. Perhaps the catalyst could be the employment data release today ?

• MNI AU -  Steady October Labour Market Forecast, Watch Underemployment Too. After the unemployment rate rose 0.2pp to 4.5% in September, the October jobs release will be monitored closely to see if there is some stabilisation as the data can be volatile on a monthly basis. Bloomberg consensus expects it to fall 0.1pp to 4.4% with new jobs up 20k and the participation rate stable at 67%. RBA Governor Bullock has advised to look at the data on a 3-month average basis.
• Bloomberg reported the views of a CBA strategist, “The Australian labour force report for October has the potential for a larger impact on AUD/USD if it changes perceptions about the future path of the RBA’s cash rate.”
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6500(AUD549m), 0.6520(AUD902m), 0.6525(AUD 680mm). Upcoming Close Strikes : 0.6400(AUD913m Nov 18), 0.6750(AUD2.17b Nov 14) - BBG
• The Average True Range for the last 10 Trading days: 43 Points
• Data/Event: Consumer Inflation Expectation, Employment Change

Fig 1: AUD/USD spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

Wednesday's US rates/bond options flow included:

• TYZ5 111.50 puts paper paid 0-02 on 4K
• TYF6 114c, bought for '27 in 28k (was bought in 100k Tuesday)
• adding to this: TYF6 114c, bought for '27 in 40k vs 112.28 (29del)
• SFRX5 96.18/96.31^^, traded half in 5k
• SFRX5 96.25/96.12ps, traded 1.75 in 2k
• SFRZ5 96.18/96.31/96.50/96.62c condor, traded for 6 in 5k
• SFRZ5 96.12/96.25/96.50/96.62c condor, traded for 6.75 in 6k
• SFRF6 96.37/96.18ps vs 0QF6 96.68p, bought the front for half in 2.5k (on screen).
• SFRF6 96.50/96.68/96.81c fly, bought for 3 in 15k (5k done on Block).
• SFRH6 96.37/96.25ps 1x2, traded half in 5k
• SFRM6 96.25/96.12/96.00p ladder, bought for flat in 2.5k.
• 0QX5 97.12/97.06/96.87/96.75p condor, traded 5 in 5k
• 0QU6 97.25/97.50cs, sold at 5.5 in 4k.
• 2QX5 96.75/96.68ps strip, bought for half in 4k
• 3QM6 96.87c, bought for 13.5 in 2k

Stocks saw broad gains Wednesday as it appeared the federal government would re-open imminently, with the Dow Jones set for an all-time high close (+1.2% to 48,344) but with the Nasdaq (-0.2%) and S&P 500 (+0.1%) faring less well.

• Despite mixed tech stocks overall (Nvidia, Amazon, Google, Meta, Apple all lower, Microsoft up slightly), Advanced Micro Devices (AMD) stood out, jumping 8% on optimistic sales projections.
• Airlines (Delta, United, Southwest) were among the top 10 gainers on the S&P 500 with flight limits set to abate after the expected reopening of the federal government following a House vote after the cash close.
• Healthcare stocks led gains, up 1.5% in the S&P, while financials fared well as Goldman rose 3+% for a fresh all-time high - leading the way for the Dow's intraday record.