STIR: Fed Rates Hold Broad 50/50 Call On Dec Cut, FOMC Minutes Headline
Nov-19 11:40
- Fed Funds implied rates are little changed on the day, holding a dovish tilt yesterday on risk-off grounds but with next month’s meeting still seen as slightly more likely to pause than cut in a close call ahead of tomorrow's September NFP report.
- The FOMC Minutes from the Oct 28-29 meeting headline a lighter docket (before Nvidia earnings after the close) with strongly differing views on the committee, but there’s only so much impact it can have as it's been clear since then that the hawks have become more vocal and arguably more entrenched.
- MNI Preview: https://media.marketnews.com/Fed_Minutes_Preview_Nov2025_2e5fc3ae40.pdf
- Cumulative cuts from 3.87% effective: 11bp Dec, 22bp Jan, 32.5bp Mar, 40.5bp Apr and 56bp Jun.
- SOFR futures are only up to 1 tick higher on the day, with the terminal yield of 3.07% (H7) only just keeping to the 3.065-3.16% range for closes seen in recent weeks.
- Other Fedpseak is unlikely to offer anything new on mon pol although Miran could be of note on banking: Gov. Miran on bank regulation (1000ET, text + Q&A), Richmond Fed’s Barkin repeats yesterday’s speech on the economic outlook (1245ET) and NY Fed’s Williams gives welcoming remarks (1400ET).
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OUTLOOK: Price Signal Summary - Bull Phase In Gilts Remains Intact
Oct-20 11:24
- In the FI space, despite strong selling pressure on Friday, a bull cycle in Bund futures remains intact. The impulsive nature of the latest rally and a fresh cycle high on Friday, paves the way for a test of the next key resistance 130.80, the Jun 13 high. Clearance of this level would strengthen the bullish condition. Note that the contract is overbought, a deeper pullback would allow this condition to unwind. Key support is 129.12, the 20-day EMA. Initial firm support is 129.44, the Sep 10 high.
- A bull cycle in Gilt futures remains intact and last week’s strong impulsive rally reinforces current conditions. Recent gains resulted in a breach of key resistance at 91.82, the Sep 24 high. The break opens 93.30 next, a 1.236 projection of the Sep 3 - 11 - 26 price swing. Note that the trend is overbought and a deeper retracement would allow this condition to unwind. Key support to watch lies at 91.39, the 20-day EMA. Initial firm support is at 91.82, the Sep 24 high and a recent breakout level.
UK: MNI Gilt Week Ahead: Another huge data week to come
Oct-20 11:18
Full MNI Gilt Week Ahead here.
- It will be another busy week for UK data next week with fiscal data due for release on Tuesday, CPI on Wednesday and retail sales and flash PMI data due on Friday. Note that these will be the last releases of these data to be included in both the November MPR and the OBR's forecasts for the Budget.
- We look at the weekend's fiscal news and the impact on CPI that different changes to energy taxation could have.
- We also look back at last week's main MPC comments and ahead to this week.
- The full document also includes supply previews for the week ahead, balance sheet and repo operations trackers, a UK-focused calendar and a summary of gilt operations and the DMO's issuance plans.
EGB OPTIONS: Bund downside Put Spread
Oct-20 10:57
RXF6 129.00/127.50ps, bought for 33 in 2k.
