ISRAEL: IAF Dismisses Pilot & Protest Leader As US Def Sec Visit Curtailed

Mar-09 12:30

Guy Elster at Walla News reporting that the Israeli Air Force (IAF) has dismissed a pilot and one of the leaders of a protest movement among reservists opposed to the gov'ts proposed judicial reforms. This comes as a visit by US Secretary of Defense Lloyd Austin III initially due to last two days is curtailed to two hours at Ben Gurion Airport amid mass protests in cities across the country.

  • The head of the Israeli Defense Forces Herzi Halevi warned of the potential consequences of reservists refusing to serve due to their opposition to reforms. “Certain cracks can form that will be irreparable in the future. Refusal is a red line, it should not be in the military protocol. It is unacceptable to discuss refusal, it is unacceptable to act on refusal.”
  • Major protests against the judicial reforms - that critics say will erode checks and balances on the gov't - have not seen a significant shift in support for parties of the gov't or the opposition, highlighting the deep divisions within the Israeli electorate over the issue. PM Benjamin Netanyahu's Likud maintain a lead over the main opposition Yesh Atid.
  • The Netanyahu gov't (Likud, Religious Zionist Party and allies, Shas, UTJ) holds a comfortable majority in the Knesset. However, small cracks have emerged over Settler issues in the West Bank, resulting in the resignation of Noam leader Avi Maoz from gov't. While he continues to support the coalition, similar issues could drive wedges between parties in the future, risking gov't stability.
Chart 1. Israel General Election Opinion Polling, Seats

Source: Direct Polls, Camil Fuchs, Midgam, Kantar, Panels Politics, MNI

Historical bullets

US EURODLR FUTURES: Post-LIBOR Settle Update: 3M New High, Spds Pare Inversion

Feb-07 12:13

Lead quarterly Mar'23 (EDH3) -0.010 to 94.94 after 3M LIBOR set' inches +0.00186 to new 14-year high of 4.84500% (+0.01086/wk).

  • Fed funds implied hike for Mar'23 at 25.4bp, May'23 cumulative 44.2bp to 5.026%, Jun'23 53.6bp to 5.120%, terminal at 5.120% in Jul'23/Aug'23.
  • Balance of Eurodollar Whites (EDM3-EDZ3) steady to +/-0.005, Reds (EDH4-EDZ4) +0.005-0.030, Greens through Blues (EDH5-EDZ6) +0.035-0.015, Golds (EDH7-EDZ7) steady to -0.005.
  • Current deferred spds vs. prior settles:
    • Jun'23/Sep'23: +0.000 vs. +0.005
    • Mar'23/Red Mar'24: -0.555 vs. -0.550
    • Jun'23/Red Jun'24: -1.280 vs. -1.260
  • Option recap: Surge in SOFR option volume Monday, two-way in wings as underlying continued to sell-off/price in higher for longer rate hike expectations following last Fri's NFP jobs surge.

US 10YR FUTURE TECHS: (H3)‌‌ Bear Cycle Extends

Feb-07 11:59
  • RES 4: 116-00 High Feb 2
  • RES 3: 115-22+ High Feb 3
  • RES 2: 114-18 20-day EMA
  • RES 1: 114-11+ High Feb 6
  • PRICE: 113-15+ @ 11:46 GMT Feb 7
  • SUP 1: 113-10+ Feb 6 Low
  • SUP 2: 112-29 76.4% retracement of the Dec 30 - Jan 19 bull run
  • SUP 3: 112-18+ Low Jan 5
  • SUP 4: 112-10+ Trendline support drawn from the Oct 21 low

A sharp pullback in Treasury futures Friday and a continuation lower Monday, highlights a bearish cycle and signals scope for an extension of the current bear cycle. The contract has breached 114-05+, the Jan 30 low and a short-term bear trigger. Note that price has also breached the 50-day EMA. This opens 112-29 next - a Fibonacci retracement. Initial firm resistance is seen at 114-18, the 20-day EMA.

LIBOR: US FIX - 07/02/23

Feb-07 11:56
  • O/N 4.55329 -0.01128
  • 1M 4.58071 -0.00758
  • 3M 4.84500 0.00186
  • 6M 5.13500 -0.00471
  • 12M 5.44000 0.03557