STIR: Fed Rate Path Only Marginally Lower Than Pre-FOMC Levels
Sep-18 10:28
- Fed Funds implied rates are up 0.5-2.5bp lower overnight looking out to the next six meetings, leaving rates only 2-2.5bp lower compared to levels shortly before yesterday’s FOMC decision.
- The lack of conviction on the FOMC about the rate path forward was a key theme of the September meeting’s release materials, as well as Chair Powell’s press conference. Despite a lower rate path signalled in the new Dot Plot (which was mostly as expected by analysts), a seeming lack of clarity on delivering those future rate cuts saw an early dovish market reaction subsequently reverse.
- Cumulative cuts from 4.33% effective: 22bp Oct, 45bp Dec, 58.5bp Jan, 72bp Mar, 80.5bp Apr and 95.5bp Jun.
- SOFR futures are 0.5-2.5 ticks higher on the day looking out to end 2027.
- The SOFR implied terminal yield of 2.925% (SFRH7) is 2.5bp lower on the day for just 0.5bp lower since the FOMC announcement (and 3bp higher since Powell look to the podium).
- Today sees data focus on weekly jobless claims after last week’s Texas driven spike has since been linked at least partly to ID fraud.
- MNI Fed Review: https://media.marketnews.com/Fed_Review_SEP_2025_7605364ee6.pdf
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US 10YR FUTURE TECHS: (U5) Monitoring Support
Aug-19 10:27
- RES 4: 113-23 76.4% retracement of the Sep’24 - Jan’25 sell-off
- RES 3: 113-07 76.4% retracement of the Apr 7 - 11 sell-off
- RES 2: 112-23 High May 1
- RES 1: 112-15+ High Aug 5
- PRICE: 111-19+ @ 11:16 BST Aug 19
- SUP 1: 111-10+ 50-day EMA
- SUP 2: 110-23+/08+ Low Aug 1 / Low Jul 15 & 16
- SUP 3: 110-03 76.4% retracement of the May 22 - Jul 1 bull leg
- SUP 4: 109-28 Low Jun 6 and 11
The underlying bullish theme in Treasury futures remains intact, supported by the recent clearance of 112-12+, the Jul 1 high. Short-term weakness is considered corrective. A resumption of gains would open 112-23, the May 1 high and the next important resistance. Above 112-23, retracement levels are layered between 113-07 and 113-23. Key support is 110-08+, the low on Jul 15 and 16. First key support is yet to be tested at 110-23+, the Aug 1 low.
BUNDS: Buxl leads the recovery off the Lows in Bonds
Aug-19 10:25
- The German Bund is back at the 129.00 Figure, the 2.80% Yield resistance has again held today, printed a 2.784% high.
- The German 30yr Buxl is the contract that has led Bonds, the Yield traded to its highest level since July 2011 earlier, and the Futures has bounced off the 113.00 level since.
- There's been some interest in fading the 5s/30s away from the 103.00 level, printed a 102.99 high, but settling down to 102.10 now.
LOOK AHEAD: Tuesday Data Calendar: House Starts/Permits, Fed VC Bowman
Aug-19 10:21
- US Data/Speaker Calendar (prior, estimate)
- 08/19 0830 Housing Starts (1.321M, 1.297M), MoM (4.6%, -1.8%)
- 08/19 0830 Building Permits (1.393M, 1.386M), MoM (-0.1%, -0.5%)
- 08/19 1000 Fed VC Bowman interview on Bbg TV
- 08/19 1130 US Tsy $85B 6W bill auction
- 08/19 1410 Fed VC Bowman blockchain symposium, WY
- Source: Bloomberg Finance L.P. / MNI
