US TSYS: Holding Pattern Into NFPs
Jun-02 08:44
Tsys remain in a holding pattern ahead of the impending NFP print (see our full preview of that event here), consolidating the move off yesterday’s ULC/ISM prices paid-driven richest levels.
- That leaves the major cash Tsys sitting 0.5-1.5bp cheaper, while TYU3 is 0-01+ softer on the day, hovering around the middle of its narrow 0-05 range.
- FOMC-dated OIS remains shy of the recent hawkish extremes. ~7bp of tightening is priced in for this month’s meeting and a cumulative 17bp of tightening is priced through July. Beyond that, ~40bp of cuts are priced by the end of ’23.
- Note that there is no Fedspeak scheduled before the blackout period goes into effect this weekend, with the recent dovish overtures from Governor (and Vice Chair-designate) Jefferson continuing to reverberate.
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STIR: SFRZ3 96.00/96.50/97.00/97.50 Call Condor Blocked
May-03 08:40
Latest block trades lodged at 09:20:53 London/04:20:53 NY
- SFRZ3 96.00/96.50/97.00/97.50 call condor 5.0K lots blocked at 5.5, looks like a seller per market contact, vs. 250 SFRZ3 at 95.690.
CROSS ASSET: Global Risk Recovering; Brent Prints Below 75$/bbl
May-03 08:14
- Global risk is recovering, with US and European equity futures seen higher, although the pullback in the US 10y yield persists: 10y at 3.40% and lowest level since Apr 26.
- Crude resumes the decline from yesterday to take Brent back below 75$/bbl, driven by recessionary fears and concern for future oil demand growth. Next technical support for Brent is at 74.06$/bbl.
- Pressure on the greenback extended through Asian hours session and into the European open. The JPY is the day’s strongest G10 currency, closely followed by GBP. EUR is also trading firmer, with EUR/USD eyeing resistance at 1.1095 – the April 26 high.
- Across EM, the MYR outperforms following the unexpected 25bps hike from the BNM. HUF is outperforming in CEE as optimism builds that legislative changes will unlock access to EU cohesion funds. Nevertheless, the CZK trades firmer ahead of the CNB policy meeting – where rates are widely expected to be held.
CROSS ASSET: USDJPY heads towards support, helped by Bonds
May-03 08:10
- Not too far for next support in USDJPY at 135.58, all a function of Government Bonds, pushing higher.
- Bund is now edging to that gap level, starting at 136.62.
- Resistance in TYM3 is at 115.30+ initially.
