BOE: Huge increase in STR usage; repo operation usage up GBP21.4bln this week
Oct-30 10:54
- There has been a huge increase in STR usage today of GBP14.201bln. This is the largest increase on record eclipsing the previous GBP8.1bln record increase.
- This puts STR usage at GBP97.882bln and follows a large increase in ILTR usage to GBP54.321bln (the biggest weekly net increase since the first week of the COVID lockdown).
- Overall this puts BOE repo operation usage at GBP152.203bln - an increase of GBP21.359bln from a previous record high.
- This will have coincided with large TFSME repayments (there was still around GBP25bln due to be repaid by the end of October following the last weekly balance sheet update dated 22 October).
- This broadly shows that the balance sheet hasn't really fallen in size despite the reduction in TFSME lending.
- The next balance sheet update will be published today at 15:00.
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OUTLOOK: Price Signal Summary - WTI Pulls Back from Its Recent Highs
Sep-30 10:53
- On the commodity front, the trend condition in Gold is unchanged and a bull cycle remains in play. The yellow metal has started the week on a bullish note, trading to a fresh cycle high. This confirms a resumption of the primary uptrend. Note that MA studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on $3909.4, a 2.00 projection of the May 15 - Jun 16 - 30 price swing. On the downside, support to watch lies at $3646.3, the 20-day EMA. A pullback would be considered corrective.
- In the oil space, WTI futures have pulled back from their latest gains. The contract has recently breached $65.43, the Sep 2 high and this has potentially improved the S/T condition for bulls. However, the next key resistance is at $68.43, the Jul 30 high, where a break is required to signal scope for a stronger recovery. For bears, a clear reversal lower would refocus attention on key support at $60.85, the Aug 13 low. A break of this level would reinstate the downtrend.
US TSYS: Month End, Military Heads to Quantico, Data, US Govt Shutdown Looming
Sep-30 10:51
- A lot happening heading into month end in addition to looming US govt shutdown at midnight (barring last minute resolution), Pres Trump and Sec of War Hegseth to address senior military leaders at Quantico while data picks up with housing prices, Consumer Confidence, MNI Chicago PMI, JOLTS.
- The BLS plans to postpone key economic releases in the event of a shutdown: "BLS will suspend all operations. Economic data that are scheduled to be released during the lapse will not be released. All active data collection activities for BLS surveys will cease. The BLS website will not be updated with new content or restored in the event of a technical failure during a lapse." LINK
- Treasuries are trading modestly mixed w/ Bonds lagging 2s-10s: Tsy Dec'25 10Y contract (TYZ5) currently trades at 112-19 (+2.5) on moderate cumulative volumes of 220k. 10Y yield at 4.1309% (-.0078). Curves twist steeper: 2s10s +.236 at 51.852, 5s30s +1.404 at 98.214.
- A short-term bear cycle in Treasury futures remains in play. Last Thursday’s sell-off resulted in a print below the 50-day EMA, currently at 112-10+. A clear break of this average would undermine a bull theme and signal scope for a deeper retracement. This would open 111-13+, the Aug 18 low and the next key support. On the upside, initial firm resistance to watch is 113-00, the Sep 24 high.
- Economic Data: FHFA & S&P Cotality House Price Indexes (0900ET), MNI Chicago PMI (0945ET), JOLTS Jobs data (1000ET), Consumer Confidence (1000ET) and Dallas Fed Services Activity (1030ET).
- Treasury Auctions: $85B 6W & $50B 52W bills at 1130ET.
- Fedspeak: Fed VC Jefferson keynote speech earlier at 0600ET, Boston Fed Collins Council on Foreign Relations (0900ET), Dallas Fed Logan wraps up with a moderated discussion later this evening (1910ET).
- Politics: President Trump delivers remarks to the Department of War, Quantico (0900ET), returns to White House to make announcements (1100ET), executive orders signing (1500ET).
EGB FLOWS: A lot of activity in Block trades
Sep-30 10:41
A lot of activity in EGB Block trade, more than usual:
- RXZ5 ~2.91k at 128.60.
- UBZ5 ~1.28k at 114.50.
- IKZ5 950 at 119.87.
- IKZ5 518 at 119.84.
