ITALY DATA: Households Are Saving - Not Consuming - Disp Income Rises
Jan-07 11:54
Italian households have been hesitant in channelling increases in disposable income to consumption. The Government will hope that a tax cut to middle-income earners in the 2026 budget will help spur additional household spending in 2026, supporting a cyclical economic recovery. Bloomberg consensus currently sees annual Italian consumption growth at 0.9% in 2026, up from a projected 0.8% in 2025.
- Italian disposable income growth was 1.7% Q/Q in Q3, corresponding to a 3.1% Y/Y rate (vs 1.4% in Q2). However, the savings rate rose to 14.1%, up from 12.7% in Q2 for a four year high.
- Italian sectoral balances have been broadly stable since the start of 2025. Government fiscal consolidation post-covid - which was delayed by the (fiscally) expensive Superbonus scheme - has mostly been reflected in declining private sector (primarily household) savings balances. However, the current account has also moved back into surplus (i.e. foreign saving has declined) since 2023.
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US TSYS: Futures Revisit Mid-December Lows Ahead Wednesday's FOMC
Dec-08 11:47
- Treasuries are under moderate pressure at the moment, reversing early overnight gains on average volumes. Today's data limited to NY Fed Survey of Consumer Expectations at 1100ET. Pres Trump participates in a roundtable meeting at 1400ET.
- The main focus is on Wednesday's FOMC decision, widely expected to deliver a third consecutive 25bp cut after NY Fed Williams’ uncharacteristic guidance following the delayed September payrolls report. Potentially contentious meeting with many FOMC members preferring to have paused.
- The dot plot distribution will be watched keenly whilst we expect the economic projections to show an upward revision for GDP growth and downward revision for core PCE inflation.
- The FOMC will see two months of JOLTS data on the first day of their two-day meeting otherwise must wait until the following week for NFP (Dec 16) and CPI (Dec 18) reports for November.
- Treasury Mar'26 10Y futures are revisiting November 20 levels: currently trading -3.5 at 112-13 vs. -12 low, 10Y yield +.0195 to 4.1545%. Bearish conditions resume with sights on 112-07, the Nov 5 high and a bear trigger. A reversal higher is required to once again refocus attention on the key resistance and bull trigger at 113-29+, the Oct 17 high.
OUTLOOK: Price Signal Summary - Recent USDJPY Weakness Still Appears Corrective
Dec-08 11:43
- In FX, a bullish theme in EURUSD remains intact. Gains last week resulted in a breach of key short-term resistance at 1.1656, the Nov 13 high and a bull trigger. The move higher highlights a potential reversal and opens 1.1694 next, the 50.0% retracement of the Sep 17 - Nov 5 bear leg. Clearance of this retracement point would strengthen the developing bull theme. On the downside, initial support to watch is 1.1601, the 20-day EMA. A breach of it would be bearish.
- A bull theme in GBPUSD remains intact and the pair is holding on to its recent gains. The breach of resistance around the 50-day EMA, at 1.3264, undermines a recent bearish theme and highlights a stronger reversal. This paves the way for an extension towards 1.3452, 50.0% retracement of the Sep 17 - Nov 4 bear leg. Initial firm support is seen at 1.3226, the 20-day EMA.
- Recent weakness in USDJPY is considered corrective. The deeper retracement has allowed an overbought condition to unwind. An extension lower would expose the 50-day EMA at 153.49 and the next important support. Moving average studies remain in a bull-mode position, highlighting a dominant medium-term uptrend. A resumption of the trend would open 158.00.
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Dec-08 11:41
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