US TSYS: Dovish Fed Williams Comments Raise Chances of Dec Cut
Nov-21 20:12
- Treasuries look to finish stronger Friday - upper half of the range but off early knee jerk highs after NY Fed Pres Williams dovish comment he still sees potential for near term rate cut. Projected rate cut pricing: current levels vs. early morning (*): Dec'25 at -17bp (-9.3bp), Jan'26 at -26.1bp (-23.6bp), Mar'26 at -34.5bp (-35.1bp), Apr'26 at -44.1bp (-44.1bp).
- "I view monetary policy as being modestly restrictive, although somewhat less so than before our recent actions. Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral, thereby maintaining the balance between the achievement of our two goals," Williams Said.
- Treasuries held moderate gains after the S&P Global PMIs data were on balance stronger than expected in the flash November release, led by services increasing slightly whilst manufacturing fell a little more than expected. Overall activity saw the largest rise in new business seen so far this year whilst selling prices reaccelerated on the back of one of the fastest rates of input cost inflation in the past three years.
- Currently, TYZ5 trades +12 at 113-08 vs. -14 high, a bullish development and suggests scope for a climb towards 113-18+, the Oct 28 high. Note that the move high also cancels a recent short-term bearish theme. Key support to watch is 112-06, the Sep 25 low. Trendline support, drawn from the May 22 low, lies at 112-08.
- Stocks are extending highs late Friday - apparently reacting to headlines that the the WH is "internally floating" sales of high-end Nvidia H200 chips to China - that are currently embargoed by the Trump admin to make it more difficult to further develop AI.
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USDCAD TECHS: Corrective Pullback
Oct-22 20:00
- RES 4: 1.4200 Round number resistance
- RES 3: 1.4167 50.0% retracement of the Feb 3 - Jun 16 bear leg
- RES 2: 1.4111 High Apr 10
- RES 1: 1.4080 High Oct 16 and the bull trigger
- PRICE: 1.3998 @ 15:47 BST Oct 22
- SUP 1: 1.3976/3900 20- and 50-day EMA values
- SUP 2: 1.3821 Bull channel base drawn from the Jul 23 low
- SUP 3: 1.3727 Low Aug 29 and a bear trigger
- SUP 4: 1.3689 Low Jul 28
USDCAD has pulled back from its recent highs. The trend condition remains bullish and a move lower is considered corrective. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4111, the Apr 10 high, and further out, scope is seen for an extension towards 1.4167, a Fibonacci retracement. First key support lies at 1.3900, the 50-day EMA. Support at the 20-day EMA lies at 1.3976.
US OUTLOOK/OPINION: GS Below Consensus For CPI, Helped By Lower Airfares
Oct-22 19:47
Goldman Sachs are at the dovish end unrounded analyst estimates we've seen for monthly CPI inflation in Friday's September release, eyeing core CPI at 0.25% M/M after the 0.35% M/M in August and headline CPI at 0.33% M/M. We judge the median unrounded analyst estimate to be at 0.32% M/M for core CPI, with a range of 0.25-0.36%.
- Four key component-level trends Goldman expect to see in this report:
- “unchanged used car prices, reflecting the signal from auction prices, and a modest increase in new car prices, reflecting downward pressure on consumer prices from increased dealer incentives.”
- “a 0.3% increase in the car insurance category based on premiums in our online dataset.”
- “a 1.5% decline in airfares in September, reflecting a fading boost from seasonal distortions and a decline in underlying airfares based on our equity analysts’ tracking of online price data.”
- “upward pressure from tariffs on categories that are particularly exposed, such as communication, household furnishings, and recreation, worth +0.07pp on core inflation.”
- “Over the subsequent few months, we expect tariffs to continue to boost monthly inflation and forecast monthly core CPI inflation of around 0.2-0.3%. Aside from tariff effects, we expect underlying trend inflation to fall further, reflecting shrinking contributions from the housing rental and labor markets.” They see core CPI at 3.1% Y/Y in Dec 2025 and core PCE at 3.0% Y/Y (or 2.2% for both excluding tariff effects).
US TSYS: Tsys Buoyed Amid Ongoing Trade Tensions
Oct-22 19:35
- Treasuries look to finish modestly higher Wednesday, reversing midmorning losses after Reuters reported the Trump admin "is considering broad restrictions of exports to China made with US software, citing an unnamed US official and three people briefed by US authorities."
- No noticeable reaction in rates after late Bbg headline: "US TO ANNOUNCE 'PICK UP' IN RUSSIA SANCTIONS TODAY OR TOMORROW".
- Treasury futures gain slightly (TYZ5 113-24 +0.0) after $13B 20Y Bond auction re-open (912810UN6) stopped through - drawing a high yield of 4.506% vs 4.517% WI at the cutoff; 2.73x bid-to-cover vs. 2.74x prior.
- The Wall Street Journal reports citing sources that the ADP has stopped providing the Fed with weekly data on private payrolls and earnings. Per the WSJ piece, the Fed has had access to the data since "at least 2018", and was available to the Fed with "a roughly one-week delay". The publicly-available ADP payrolls report is published monthly.
- Equity earnings expected to release after the close include Southwest Airlines, Raymond James, Churchill Downs, Alcoa, Crown Castle, United Rental, Lam Research, Tesla and IBM.
- Thursday's weekly Jobless Claims & Chicago Fed data suspended.
