EMERGING MARKETS: Global news: September 13
- US - Former Federal Reserve Bank of New York President William Dudley said there’s scope for a half-point rate cut at the central bank’s meeting next week. “I think there’s a strong case for 50,” Dudley said on Friday at a forum organised by The Bretton Woods Committee in Singapore. “I know what I’d be pushing for.”
- ECB - The ECB must continue to lower borrowing costs, though the pacing of such moves will be dependent on incoming data, according to Governing Council member Gediminas Simkus. Inflation is “calming down” and “its trajectory suggests that further rate cuts must happen,” he told Radio LRT on Friday. “Rates will continue declining, but the speed of cuts will depend on data.”
- CHINA - Chinese President Xi Jinping called on government officials at all levels to achieve the country’s annual growth target of around 5%, but couched it in less forceful terms than usual. The subtle change sparked speculation over Beijing’s resolve to pursue a goal that many economists see as increasingly out of reach. Officials need to “strive to achieve the full-year economic and social development goals,” Xi told a meeting he chaired in Lanzhou.
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RIKSBANK: VIEW: SEB Now Look For 25bp Cuts At All Remaining '24 Meetings
SEB note that “the Riksbank is very likely to cut rates by 25bps to 3.50% on their August meeting.”
- They believe that the Board will "signal that there will be in total 3-4 rate cuts in the second half of 2024, which is one rate cut more than indicated in the rate path in the June Monetary Policy Report. With core inflation back at the target and international central banks expected to cut rates, we predict the Riksbank will be slightly more aggressive when easing the monetary policy stance.”
- As a result, they lower their policy rate forecast and now predict 25bps cuts at every remaining meeting this year.
STIR: OI Suggests Net Long Setting Dominated In SOFR Futures Following PPI
The combination of yesterday’s rally in most SOFR futures and OI data points to net long setting dominating in the wake of Tuesday’s softer-than-expected PPI data.
- Pockets of net short cover were also seen, although such instances were comfortably outweighed in all packs through the blues.
- U.S. STIRs stuck within the ranges in play over the past couple of weeks.
- Fed Funds futures price ~40bp of cuts through September and ~107bp of cumulative cuts priced through year end vs. ~39bp and ~100bp late Monday.
| 13-Aug-24 | 12-Aug-24 | Daily OI Change |
| Daily OI Change In Packs |
SFRM4 | 1,130,363 | 1,120,333 | +10,030 | Whites | +74,029 |
SFRU4 | 1,099,591 | 1,085,694 | +13,897 | Reds | +44,440 |
SFRZ4 | 1,119,518 | 1,124,175 | -4,657 | Greens | +25,596 |
SFRH5 | 936,367 | 881,608 | +54,759 | Blues | +11,054 |
SFRM5 | 817,144 | 818,688 | -1,544 |
|
|
SFRU5 | 678,238 | 673,262 | +4,976 |
|
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SFRZ5 | 874,969 | 879,946 | -4,977 |
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SFRH6 | 668,374 | 622,389 | +45,985 |
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SFRM6 | 619,786 | 608,291 | +11,495 |
|
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SFRU6 | 561,252 | 554,375 | +6,877 |
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SFRZ6 | 490,238 | 483,108 | +7,130 |
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SFRH7 | 262,307 | 262,213 | +94 |
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SFRM7 | 251,996 | 239,910 | +12,086 |
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SFRU7 | 212,846 | 213,282 | -436 |
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SFRZ7 | 245,947 | 246,212 | -265 |
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SFRH8 | 165,524 | 165,855 | -331 |
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US 10YR FUTURE TECHS: (U4) Trend Needle Points North
- RES 4: 116-00 Round number resistance
- RES 3: 115-30+ 2.764 proj of the Apr 25 - May 16 - 29 price swing
- RES 2: 115-17 2.618 proj of the Apr 25 - May 16 - 29 price swing
- RES 1: 114-03/115-03+ High Aug 6 / 5 and the bull trigger
- PRICE: 113-20+ @ 11:13 BST Aug 14
- SUP 1: 112-11 20-day EMA
- SUP 2: 111-10+ 50-day EMA values
- SUP 3: 110-18+ Low Jul 22
- SUP 4: 110-07 Low Jul 9
A bullish theme in Treasuries remains intact following recent gains, and this week’s recovery is a positive development. Moving average studies are in a bull-mode position and the recent breach of 111-01, the Jun 14 high, confirmed a resumption of the uptrend. Scope is seen for 115-17, a Fibonacci projection. The recent move down is considered corrective. Initial support to watch is 112-11, the 20-day EMA.
