MEXICO: Equities Rebound As Banxico Easing Cycle Still Set To Continue
Nov-07 16:39
- Local equities are notably outperforming today, with the 0.2% gain in the IPC index standing in contrast to weakness in major equity indices on Friday. The rebound unwinds most of losses made in the aftermath of last night’s Banxico meeting, when the Board amended its forecast guidance to suggest the possibility of a pause in the easing cycle after a further cut in December.
- Despite this shift in the guidance, the Board maintained a dovish bias overall and analysts still expect the policy rate to be cut to at least 6.5% next year, as before, just perhaps at a slower pace.
- In addition, sentiment may also have been buoyed by the lack of any negative surprises in today’s Oct CPI data, which came in line with expectations. Indeed, the data showed some signs of improvements in core inflation dynamics at the margin, according to Itaú, especially in tradeables. They note that core CPI is tracking at 3.8% 3mma saar, with tradeables at 2.9% and services at 4.6%.
- Amid the potential for a slower pace of rate cuts, TIIE-F swap rates have edged up by another 4-6bp today, with 2Y yields now 9bp higher over the last two sessions. USDMXN has also extended modest losses today (-0.4%), with the pair dipping below the 50-day EMA and 18.50 level in recent trade. A resumption of the downtrend would turn focus back to recent cycle lows around 18.20.
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US TSY FUTURES: BLOCK: Dec'25 2Y Sale
Oct-08 16:33
- -6,364 TUZ5 104-07, post time bid at 1224:51ET, DV01 $250,000.
- The 2Y contract trades 104-07 last (-1.12)
US TSYS/SUPPLY: Preview 10Y Auction
Oct-08 16:19
Treasury futures are steady to mixed, off early session highs with the TYZ5 steady at 112-21.5 (10Y yield -.0421 at 4.0454%) ahead of the $39B 10Y Note auction re-open (91282CNT4) at the top of the hour, WI is currently 4.117%, 8.4bp cheap to last month's stop.
- September auction recap: Treasury futures gapped higher - extended highs (TYZ5 +7.5 at 113-18.5 vs. 113-20 high; 4.0321% yld) after the $39B 10Y note auction re-open (91282CNT4) stopped through: drawing 4.033% high yield vs. 4.047% WI; 2.65x bid-to-cover vs. 2.35x prior.
- Peripheral stats: indirect take-up surged to 83.13% vs. 64.23% prior; direct bidder take-up at 12.66% from 19.61% prior; primary dealer take-up fell to new low of 4.21% vs. 16.87% prior.
LOOK AHEAD: Thursday Data Calendar: Fed Speakers, 30Y Bond Re-Open
Oct-08 16:16
Thursday's weekly Jobless Claims and Wholesale Trade Sales/Inventories suspended due to the Gov shutdown.
- US Data/Speaker Calendar (prior, estimate)
- 10/09 0830 Fed Chair Powell welcome remarks
- 10/09 0835 Fed VC Bowman open remarks, moderated discussion
- 10/09 1130 US Tsy $110B 4W & $95B 8W bill auctions
- 10/09 1245 Fed Gov Barr Speaks economic outlook/moderated discussion
- 10/09 1300 US Tsy $22B 30Y bond auction re-open (912810UM8)
- 10/09 1300 MN Fed Kashkari & Barr moderated discussion
- 10/09 1545 Fed VC Bowman community banking (text, no Q&A)
- 10/09 2140 SF Fed Daly, moderated discussion Silicon Valley Dir Exchange
- Source: Bloomberg Finance L.P. / MNI
