CANADA DATA: Easing April Factory Gate Prices A Softer Note Amid Strong CPI
May-22 19:19
Canadian input prices fell more sharply than expected in April: industrial product prices (IPPI) fell 0.8% M/M (-0.5% survey, 0.3% prior rev from 0.5%), with raw materials prices down 3.0% M/M (-2.3% survey, -0.7% prior rev from -1.0%). The BOC may get some comfort from these pipeline price readings given April's stronger-than-expected CPI pressures, though the data are volatile and would only become apparent in consumer prices with a lag (and are potentially affected by Canadian counter-tariffs on imports).
- This was the first fall in IPPI since September 2024, with ex-energy/petroleum products likewise seeing the first drop since then (-0.5% M/M after +0.8%), though this should be caveated by the fact that all month-to-month changes are not seasonally adjusted.
- Raw materials all-items dropped the most since September 2024 as well, and by 3.6% Y/Y (ex-energy/petroleum was -0.3% M/M but +10.1%). The biggest upside contributor category was crop products (+2.3%), with the downside led by crude energy (-8.1%).
- IPP was up 2% Y/Y, with metals (gold, silver, aluminum) driving the increase.
- StatCan notes that there were some FX factors in play: "The Canadian dollar appreciated 2.7% against the US dollar from March to April. If the average monthly exchange rate had remained constant from March to April, the IPPI would have declined 0.5% month over month instead of decreasing 0.8%."
- However, tariffs and counter-tariffs - which aren't directly recorded in these series - were only mentioned a few times in the report, "Prices for softwood lumber (-11.1%) posted their largest month-over-month decrease since June 2022 (-29.4%) and were the main driver for the monthly decline in April 2025. Many buyers decided not to increase their inventory due to potential tariffs, exerting downward pressure on prices."
- In one example of trade policy impacting inflation to the upside, canola/rapeseed oil prices surged 8.4%: "Rising input costs played a role in this increase; as measured in the RMPI, prices for canola (including rapeseed) increased 12.0% in April. Demand for Canadian canola was strong over the 12 months ending in April, particularly in markets overseas. According to data from the Canadian Grain Commission, year-to-date canola exports for the week ending April 28 were 69.3% higher than they were a year prior. Although China imposed tariffs on Canadian canola oil and meal in March, tariffs were not applied on canola seeds, the Canadian canola product that is most exported to China."
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US TSYS: Late SOFR/Treasury Options Roundup: Go With the Flow
Apr-22 19:18
SOFR & Treasury option flow remained mixed on net Tuesday, early SOFR calls segued to low delta put structures as underlying futures traded weaker in the short end, curves scaling back from Monday's broad based steepening (2s10s -6.385 at 57.816). As such, projected rate hike pricing consolidated vs. morning levels (*) as follows: May'25 -2.7bp (-3.4bp), Jun'25 at -17.7bp (-18.3bp), Jul'25 at -38.6bp (-41.6bp), Sep'25 -57.6bp (-59.5bp).
- SOFR Options:
- Block/screen, 15,000 SFRU5/SFRV5 95.62 put spds, 0.25-0.50 steepener
- +2,500 SFRU5/SFRV5 95.62 put spds cab
- -2,500 SFRZ6 96.25/97.25 call over risk reversals, 8.0 vs. 96.86/0.75%
- +3,000 SFRU5 95.25/95.75 put spds, 3.0
- +5,000 SFRK5 96.93/97.12/97.31 call flys 2.5 vs. 96.87/0.05%
- +2,500 SFRM6 98.75/99.00/99.75 call trees, 0.5 ref 96.85
- +4,000 SFRM6 99.00/100.00 call spds 4.25 vs. 96.855/0.10%
- +2,500 0QN5 96.75/97.00 call spd vs. 0QU5 97.25/97.75 call spds 0.25 net
- +5,000 0QK5 96.93/97.12/97.31 call flys, 2.5
- -2,500 0QU5 96.87 straddles 70.5
- +1,500 0QM5 96.87 straddles 47.5
- 11,000 SFRM5 95.87/96.00/96.18 broken call flys ref 95.92
- 21,000 SFRZ5 96.75/97.00/97.12 broken call flys ref 96.57
- 4,000 3QZ5 94.00/95.00 put spds ref 96.31
- 2,000 0QN5 96.50/96.81 put spds
- 2,000 SFRN5 95.93/96.25 put spds vs. 0QN5 96.81 puts
- 3,000 SFRM5 SFRZ5 96.75/97.00/97.12 broken call flys ref 96.565
- 1,500 SFRM5 96.06/96.18 call spd vs 2QM5 96.75/96.87 call spd spd
- 1,000 2QK5 96.75/97.00 call spds vs. 96.00/96.25 put spds ref 96.70
- 1,000 SFRK5 95.62/95.75/95.81/95.87 put condors ref 95.925
- 1,500 SFRZ5 95.68 puts ref 96.575
- Treasury Options:
- 2,000 TYK5/Wed weekly 111 call spds
- 1,500 TYM5 109.5/112 put spds ref 110-27.5
- 1,800 TYK5 110/112.25/110.75 2x1x1 put trees
- 1,800 TYK5 110.75/111.25/111.5 1x1x2 call trees
- 2,500 USK5 110/111.5 2x1 put spds 6 ref 113-13
- 5,400 TYK5 112/112.75 1x3 call spds ref 110-23
- 5,000 TYK5 110/111 3x2 combo
- 2,000 FVK5 108/109/110 call flys
- over 7,000 TYK5 111.25 calls 9-10 ref 110-21.5 to -24.5
- 2,000 TYM5 112/113/114.5/116 call condors ref 110-17.5
- 1,000 TYK5 109.25/109.75/110.25 put flys ref 110-19
- over 12,000 TYK5/TYM5 112 call spds ref 110-20.5 to -21
- 2,300 TYM5 114/116 call spds, 7 ref 110-21
EURJPY TECHS: Trend Signals Remain Bullish
Apr-22 19:00
- RES 4: 165.43 High Nov 8
- RES 3: 164.90 High Dec 30 ‘24 and a key medium-term resistance
- RES 2: 164.55 High Jan 7
- RES 1: 163.55/164.19 High Apr 14 / High Mar 18 and the bull trigger
- PRICE: 161.63 @ 16:19 GMT Apr 22
- SUP 1: 161.18/158.30 50-day EMA / Low Apr 7 and key support
- SUP 2: 157.02 76.4% retracement of the Feb 28 - Mar 18 bull cycle
- SUP 3: 155.60 Low Low Mar 4
- SUP 4: 154.80 Low Low Feb 28
The recent pullback in EURJPY appears corrective - for now - and trend conditions remain bullish. Key short-term support has been defined at 158.30, the low on Apr 7. A break of this level is required to signal scope for a deeper retracement. This would open 157.02, a Fibonacci retracement. For bulls, a resumption of gains would expose 164.19, the Mar 18 high and the bull trigger. Clearance of this hurdle would resume the uptrend.
COMMODITIES: Crude Gains, Gold Pulls Back From Record High
Apr-22 18:54
- Oil prices are higher today after the US imposed sanctions on Iran’s LPG trade, reversing most of yesterday’s losses amid demand concerns due to tariffs and US monetary policy.
- Comments by Trump about his call with Netanyahu and Bessent’s comments on China were late drivers of the rally.
- WTI Jun 25 is up by 1.9% at $64.3/bbl.
- A bearish theme in WTI futures remains intact and the recovery since Apr 9 is - for now - considered corrective. The move higher is allowing an oversold trend condition to unwind.
- Initial firm resistance is seen at $64.49, the Mar 5 low and a recent breakout level.
- Meanwhile, gold has pulled back from a fresh record high reached earlier in the session, with the yellow metal currently 1.4% lower today at $3,377/oz.
- Gold remains 8% higher MTD, amid ongoing haven demand, and it traded briefly at the $3,500 level earlier today, before traders took profit.
- The trend needle in gold continues to point north, with initial resistance at today’s intra-day high, followed by $3,547.9, a Fibonacci projection.
- Elsewhere, copper has rallied by 2.2% today to $489/lb, amid optimism of a de-escalation in US-China trade tensions. However, gains were pared after US Treasury Secretary Bessent said that negotiations with China will be a slog.
- For copper futures, the latest recovery, although strong, appears corrective - for now. However, price pierced $490.27, a Fibonacci retracement today, and a clear break would open $521.30, the Mar 28 high.
