STIR FUTURES: Fed Rate Path Continues Ebb Lower
Dec-22 11:13
- Fed Funds implied hikes sit at 32.5bp for Feb (unch), cumulative 46bp to 4.79% Mar (-1bp), terminal 4.85% May (-1bp) and 4.35% for Dec (-2.5bp).
- The terminal continues to slowly drift back to pre-FOMC levels of 4.80% having touched 4.9% in the interim, whilst sticking to 50bp of cuts to end-2023.
- No scheduled Fedspeak with docket headlined by third readings for Q3 GDP/PCE and weekly jobless claims, the latter after a surprising dip lower for initial claims to 211k.
FOMC-dated Fed Funds futures implied ratesSource: Bloomberg
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EQUITIES: Large EU Bank option
Nov-22 11:08
SX7E (15/12/23) 85/70ps, bought for 3.9 in 50k vs 8.5k at 94.20
OUTLOOK: Price Signal Summary - USDJPY Bounce Considered Corrective
Nov-22 11:05
- In FX, the EURUSD traded lower Monday, extending the pullback from last week’s 1.0479 high on Nov 15 high. The move lower is considered corrective and is allowing a recent overbought condition to unwind. Next support to watch lies at 1.0198, the Sep 12 high. On the upside, a break of 1.0479 would confirm a resumption of recent gains.
- The GBPUSD trend condition remains bullish and the pair is consolidating closer to its recent highs. A clear breach of the 1.2000 handle would reinforce the bullish theme and this would open 1.2080, the Aug 18 high. A deeper pullback would be considered corrective. Firm support is at 1.1544, the 50-day EMA.
- USDJPY short-term trend conditions remain bearish and Monday’s gains are considered corrective. The move higher is allowing a recent oversold trend condition to unwind. Resistance to watch is at 143.62, the 50-day EMA. On the downside, a break of 137.68, Nov 15 low, would resume the downtrend and open 137.37, the Aug 29 low.
BONDS: Looking ahead to Fed speeches
Nov-22 11:01
- Core fixed income has traded within yesterday's ranges in the European morning session, albeit with the German curve steepening (and other curves remaining unchanged on the day).
- Later today we will see European consumer confidence data and the Richmond Fed manufacturing index.
- However, more important will be a number of Fed speakers: Mester , George and Bullard are all due on the docket.
- TY1 futures are up 0-6 today at 112-16 with 10y UST yields down -3.9bp at 3.791% and 2y yields down -4.0bp at 4.495%.
- Bund futures are down -0.22 today at 140.20 with 10y Bund yields up 1.2bp at 2.001% and Schatz yields up 2.9bp at 2.077%.
- Gilt futures are down -0.06 today at 106.19 with 10y yields up 0.9bp at 3.189% and 2y yields up 1.0bp at 3.161%.
