STIR: Heavy Front End Volumes Persist On Fed Dec Pause Prospects
Nov-13 18:27
- US rates have seen a sizeable hawkish shift today with greater interest in the December FOMC meeting being a 50/50 call between another 25bp cut or a hold.
- Moves extended a sell-off seen late yesterday, with the best headline culprit at the time being Collins (a ’25 voter) favoring holding rates steady in her first post-FOMC remarks despite having hinted at such prior to the meeting. A general positioning unwind with the government re-opened could also be at play.
- SFRZ5 has seen particularly strong volumes today, with 580k currently about 1.8x the recent average for the time of day. It sees the largest losses on the day, -0.04, for back to earlier lows seen early in the session as US desks filtered in before stabilizing.
- Fed Funds implied rates have continued their hawkish shift however, now pricing 11bp of cuts for next month’s meeting from an assumed 3.87% effective.
- Cumulative cuts: 11bp Dec, 21.5bp Jan, 32.5bp Mar, 39.5bp Apr and 54bp Jun.
- Reverting to SOFR futures, the terminal yield of 3.10% (SFRH7, +1.5bp) has actually softened slightly through US trading. It’s still +4.5bp from Tuesday’s close having digested the soft weekly ADP print but still off the multi-month high close of 3.16% from last Wednesday after more encouraging monthly ADP and especially ISM Services data.
- Still to come today, state-level jobless claims data at ~1700ET in lieu of today's national-level release that wasn't able to be published at 0830ET coming so soon after the government re-opened.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EURGBP TECHS: Monitoring Support Around The 50-Day EMA
Oct-14 18:00
- RES 4: 0.8835 High May 3 2023
- RES 3: 0.8800 Round number resistance
- RES 2: 0.8769 High Jul 28 and the bull trigger
- RES 1: 0.8725/8751 High Oct 10 / High Sep 25
- PRICE: 0.8718 @ 17:09 BST Oct 14
- SUP 1: 0.8675/8656 50-day EMA / Low Aug 10
- SUP 2: 0.8633 Low Sep 15
- SUP 3: 0.8597 Low Aug 14 and key support
- SUP 4: 0.8562 50.0% retracement May 29 - Jul 28 upleg
The latest bear leg in EURGBP appears corrective and trend signals remain bullish. Note that the cross has pierced support around the 50-day EMA, at 0.8675. A continuation lower and a clear breach of this EMA would signal scope for a deeper retracement towards 0.8633, the Sep 15 low. Key trend support lies at 0.8597, the Aug 14 low. On the upside, key resistance and the bull trigger is unchanged at 0.8769, the Jul 28 high.
SOFR OPTIONS: BLOCK: Dec'25
Oct-14 17:59
- 25,000 0QZ5 98.00 call spds, 1.25 net ref 97.035 at 1349:45ET, total volume on day at 105,000.
PIPELINE: Corporate Bond Update: $10B Goldman Sachs 5Pt Launched
Oct-14 17:52
- Date $MM Issuer (Priced *, Launch #)
- 10/14 $10B #Goldman Sachs $2.5B 4NC3 +67, $500M 4NC3 SOFR+92, $3B 6NC2 +77, $500M 6NC5 SOFR+108, $3.5B 11NC10 +92
- 10/14 $600M *KEB Hana Bank $300M 3Y SOFR+60, $300M 5Y +43
- 10/14 $3.2B Terawulf 5NC2 investor calls
