STIR FUTURES: Fed Hike Expectations Firm Despite GDP/PCE Miss
Apr-28 18:24
- Broadly mirroring the rise in long-term inflation breakevens, hikes implied by Fed Funds futures sit ~2bps higher with a cumulative 108bps for June, 154bps for July and 240bps to year-end.
- This comes despite a miss in core PCE Q/Q inflation in the Q1 GDP release, implying downside risk to tomorrow’s March core PCE print at closer to +0.15% M/M (cons. 0.3%) if there are no revisions to prior months.
Source: Bloomberg
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US TSYS: Brief 2s10s Inversion, Harker Points To 3M-10Y
Mar-29 18:05
- 2s10s were briefly inverted for the first time since Sep-2019 as perceived peace talk progress has been quashed by Western officials questioning the genuineness of Russian participation.
- Comments have included Blinken not seeing ‘real signs of seriousness’ from Russia on pursuing peace whilst Biden most recently says ‘we’ll see’ if Russia follows through on its de-escalation.
- The 2Y yield currently sits 0.8bp higher at 2.373%, off an earlier high just above 2.45% (highest since Mar-2019), whilst 10Y yields have rallied 7.5bps to 2.383%, leaving 2s10s at just 1bp.
- The Fed has however continued to push back about reading too much into 2s10s inversion, with focus instead on shorter-term segments of the curve, starting with Powell.
- Philly Fed’s Harker (2023 voter, median dot calling for 7 hikes in 2022 back in Mar 16) has been the latest, with a modification of suggesting looking at the 3M-10Y spread and other measures to the very different signals they give.
US 2s10s and 3M-10Y spreads.Source: Bloomberg
EURGBP TECHS: Bullish Rally
Mar-29 18:00
- RES 4: 0.8553 High Dec 10/14 2021
- RES 3: 0.8536 2.0% 10-dma envelope
- RES 2: 0.8498 High Dec 23
- RES 1: 0.8477/78 High Mar 29 / Feb 7
- PRICE: 0.8460 @ 17:00 GMT Mar 29
- SUP 1: 0.8386 Intraday low
- SUP 2: 0.8296 Low Mar 23
- SUP 3: 0.8278 Low Mar 7
- SUP 4: 0.8203 Low Mar 7 and the bear trigger
EURGBP traded higher again Tuesday, easing the current bearish threat. Key short-term resistance at 0.8458, Mar 17 high was broken and this highlights a short-term reversal. The break also confirms a resumption of the uptrend that started Mar 7 and signals scope for an extension higher near-term. The focus is on 0.8278, Mar 7 high and 0.8498, the Dec 23 2021 high. Initial support is at Tuesday’s low of 0.8386.
US: Special ASEAN Summit In Washington To Take Place 'Soon'
Mar-29 17:50
President Biden and Prime Minister Lee Hsien Loong of Singapore have delivered a joint press conference at the White House following a bilateral meeting.
- Biden: 'We share a commitment to ASEAN and the US will host a special ASEAN summit in Washington DC in Spring.'
- The White House statement: 'Prime Minister Lee welcomes President Biden’s invitation to ASEAN leaders for a historic ASEAN-U.S. Special Summit in Washington, D.C.'
- Biden says the two leaders discussed a wide range of concerns to peace and stability in the Indo-Pacific. Biden: 'That includes ensuring all nations in the region, including China, uphold the principles that enable a free and open region.'
- Biden: 'America and Singapore are both committed to freedom of navigation as well as unimpeded flow of maritime commerce in the South China Sea. We shared out concern about the DPRK and their destablising ballistic missile launches.'
- It should be noted that President Biden made a emphatic mention of China in his opening remarks but China is conspicuously omitted from the official White House transcript of the meeting.
- The White House statement can be read here.
