STIR: Fed Rates Fade Hawkish Shifts In ECB and BoE Pricing
Feb-19 11:30
- Fed Funds implied rates are little changed overnight as they consolidate yesterday’s climb.
- There is little sign of reaction to Trump’s latest tariffs threats (focused on autos, pharmaceuticals and semiconductors, more details due Apr 2) or hawkish shifts in BoE (CPI) and ECB (Schnabel) pricing.
- Cumulative cuts from 4.33% effective: 0.5bp Mar, 3.5bp May, 13bp Jun, 17.5bp Jul, 26bp Sep and 36bp Dec.
- It’s another quieter US macro calendar, with the FOMC minutes eyed at 1400ET. They will be scrutinized primarily for three things: why the Fed shifted its statement language on inflation; was there any discussion of a rate hike scenario; and was there any further discussion over the potential impact of government policy shifts?
- MNI FOMC Minutes Preview.
- Vice Chair Jefferson also talks on the household balance sheet at 1700ET with both text and Q&A. He last spoke Feb 4, talking on the need for caution along with many of FOMC members: “As long as the economy and labor market remain strong, I see it as appropriate for the Committee to be cautious in making further adjustments… Over the medium term, I continue to see a gradual reduction in the level of monetary policy restraint placed on the economy as we move toward a more neutral stance as the most likely outcome…that said, I do not think we need to be in a hurry to change our stance.”
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OUTLOOK: Price Signal Summary - USDJPY Support Remains Intact
Jan-20 11:29
- In FX, the trend condition in EURUSD is unchanged, it remains bearish and last week’s recovery appears corrective. Recent weakness resulted in a print below 1.0226, the Jan 2 low. The breach confirms a resumption of the downtrend. Sights are on 1.0138 next, a 1.764 projection of the Sep 25 - Oct 23 - Nov 5 price swing. Resistance to watch is 1.0437, the Jan 6 high. Initial resistance is at 1.0338, the 20-day EMA.
- The trend condition in GBPUSD remains down and short-term gains are considered corrective. Recent weakness has confirmed a resumption of the downtrend and marks an extension of the price sequence of lower lows and lower highs. Sights are on 1.2087 next, a 0.764 projection of the Sep 26 - Nov 22 - Dec 6 price swing. Initial firm resistance is at 1.2398, the 20-day EMA.
- The trend condition in USDJPY is unchanged, it remains bullish and last week’s move lower appears corrective - for now. The pair has traded through the 20-day EMA and an extension would signal scope for a deeper retracement. Support to watch is 154.97, the 50-day EMA. A return higher and a breach of 158.87, the Jan 10 high, would confirm a resumption of the uptrend.
EUR: The Pound is paring losses
Jan-20 11:28
- The EUR is still pushing higher, and at a new intraday high versus the USD, CHF, SEK, and the Yen.
- The Pound and the AUD have pared some losses, aided by some USD selling interest.
- Cable fell some 61 pips post the EU Equity Cash Open, but has recovered some ~40 pips in the past hour and a half or so, now looking to push back above 1.2200.
EGB SYNDICATION: Lithuania 5/15-year LITHUN Mandate
Jan-20 11:16
Lithuania has announced a mandate for a new 5-year / new 15-year LITHUN EMTN dual-tranche syndication to take place in the "near future".
- The LITHUNs will mature in January 2030 and January 2040 respectively.
- Lithuania's gross borrowing requirement for 2025 is E8.8bln of which E6.0bln is expected to be raise from EMTNs. This increases the scope for a larger Lithuanian syndication that we have seen in recent years (and note this will be the first dual-tranche Lithuanian transaction to see two new issues since April 2020).
- We pencil in E750mln to E1.5bln to be sold in each tranche, with a total deal size at least matching the E2.0bln sold in the April 2020 syndication (and the possibility of E2.5-3.0bln).
- We expect the transaction to take place tomorrow.
