EU CONSUMER CYCLICALS: Flutter; S&P comes off positive outlook
(Secured; Ba1/BBB- Stable now/BBB)
As we flagged was likely last week on Fanduel buy-out, S&P has come off positive outlook. Supply looks to be a near-term, unclear which currency it will hit (€/$/£ issuer): "To fund the transaction, Flutter has secured a $1.75 billion bridge facility, which it intends to refinance with a mix of bond and term loan instruments in the coming weeks." - S&P
S&P echoes it could be higher rated if it shows evidence of taking its net 2.0-2.5x leverage target seriously (has stayed outside target in recent years to prioritise M&A - but now starting buybacks as well).
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US TSY FUTURES: Limited Positioning Swings On Monday Owing To Geopolitics
OI data points to fairly non-committal trade for a second consecutive session, with net OI and DV01 equivalent swings fairly limited as geopolitical risk centred on the Middle East remained heightened on Monday.
- There was a mix of net short setting (FV, TY, UXY & WN) and long cover (TU & US) as contracts settled lower.
- The apparent net short setting in TY futures provided the only 7 figure DV01 equivalent net positioning move on the curve.
| 16-Jun-25 | 13-Jun-25 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 3,979,676 | 3,983,489 | -3,813 | -149,319 |
FV | 6,897,741 | 6,880,210 | +17,531 | +763,300 |
TY | 4,830,693 | 4,809,088 | +21,605 | +1,430,258 |
UXY | 2,347,111 | 2,346,995 | +116 | +10,112 |
US | 1,733,338 | 1,735,439 | -2,101 | -288,557 |
WN | 1,893,897 | 1,893,809 | +88 | +15,663 |
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| Total | +33,426 | +1,781,456 |
OUTLOOK: Price Signal Summary - USDJPY Resistance Remains Intact
- In FX, the trend set-up in EURUSD remains bullish and the pair continues to trade closer to its recent highs. A key resistance at 1.1573, the Apr 21 high, has been breached. This strengthens the bullish theme and confirms a resumption of this year's uptrend. Sights are on 1.1696 next, a 1.618 projection of the Feb 28 - Mar 18 - 27 price swing. Initial firm support is at 1.1419, the 20-day EMA. The 50-day EMA lies at 1.1278. Short-term weakness is considered corrective. Short-term weakness is considered corrective.
- GBPUSD bulls remain in the driver’s seat and the pair is trading closer to its recent highs. A rising price sequence of higher highs and higher lows, together with a bull set-up in moving average studies, highlights a dominant uptrend. Sights are on 1.3681 next, the 1.500 projection of the Feb 28 - Apr 3 - 7 price swing. Resistance at 1.3616, the Jun 5 high has been pierced - a bullish development. Support to watch lies at 1.3456, the Jun 10 low.
- USDJPY is trading in a range and remains below last week’s high. Recent weakness suggests the correction between Jun 3 - 11, is over. The trend direction is down - moving average studies are in a clear bear-mode position, highlighting a dominant downtrend. A resumption of weakness would open 142.12, the May 27 low. Key short-term resistance is 146.28, the May 29 high. First resistance is 145.46, Jun 11 high.
STIR: May Hard Data Update Due As FOMC Meeting Gets Underway
- Fed Funds implied rates are up to 2bp lower on the day for 2025 meetings but continue to hold little odds of a near-term Fed cut, with a next cut fully priced for October.
- US rates outperform European counterparts (e.g. SFRZ6 +2.5 ticks vs ERZ6 -2 ticks) in signs of some haven demand for US assets with Trump promising “bigger” and “better” than an Israel-Iran ceasefire on Truth Social and speaking to reporters on Air Force One.
- Cumulative cuts from 4.33% effective: 0bp for tomorrow, 3.5bp for Jul, 19bp Sep, 32bp Oct and 48.5bp Dec.
- The SOFR implied terminal yield of 3.295% (SFRZ6, -2.5bp) last closer lower on Thursday (Jun 12).
- Today sees data including retail sales and import prices for May (0830ET) before industrial production for May (0915ET). They provide important hard data updates for May heading into the two-day FOMC meeting starting today.
- MNI Fed Preview: https://media.marketnews.com/Fed_Prev_Jun2025_With_Analysts_a9c8a317ff.pdf
