SWAPS: ING: Steeper EUR Curves As Dutch Pension Funds Approach Transition Date
ING note that “the very long end of the euro swap curve is seeing increased volatility and we believe more is still to come. Volatility measures of EUR rates are mostly following a gradual path lower, but the implied volatility of the 30-Year over the coming three months is an outlier and has started picking up again this month”.
- They suggest that “the recent moves higher in 30-Year rates are not just about fiscal concerns. If increased government issuance was the key driver, we would expect Bund yields to underperform swaps… but the 30-Year swap spread has remained fairly steady. We therefore see the anticipated Dutch pension fund rotation away from longer-dated swaps as a potential driver behind recent moves.”
- ING note that “as many large Dutch pension funds prepare for a transition on 1 January ‘26, we may see more steepening of the 10s30s swap curve. EUR 10s30s is already at new records since 2021 but finding catalysts that push in the opposite direction is difficult”.
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SWEDEN: June PES Data Indicates Labour Market Conditions Are Still Subdued
The Swedish unemployment claims rate ticked up a tenth to 7.1% on a rounded basis in June, after seven consecutive months at 7.0%. Labour demand metrics within the report improved slightly relative to May, but the broader signal is still that the labour market is subdued. This will likely contribute to one more Riksbank cut this year, with analysts generally leaning towards a move in September. However, it is still too early to fully rule out a cut in August.
- Vacancies rose to 80k from 77k in May, but remain down 13% Y/Y. This meant the vacancy to unemployment claims ratio was steady at 0.21, the lowest since March 2021.
- Redundancy notices fell back to 5.1k, after rising notably to 7.9k in May. Some analysts had pointed to the Northvolt bankruptcy as a potential driver of the May increase. Still, the 3mma of redundancies remains at 6.2k, above the 4.8-5.2k seen between December and April.
USDCAD TECHS: Trend Signals Remain Bearish
- RES 4: 1.3920 High May 21
- RES 3: 1.3862 High May 29
- RES 2: 1.3798 High Jun 23
- RES 1: 1.3749 50-day EMA
- PRICE: 1.3707 @ 08:02 BST Jul 16
- SUP 1: 1.3557 Low Jul 03
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
USDCAD is trading at its recent highs. Short-term gains appear corrective and the trend structure remains bearish. Resistance to watch is the 50-day EMA, at 1.3749. A clear break of the EMA would signal scope for a stronger recovery and highlight a possible reversal. For bears, sights are on key support at 1.3540, the Jun 16 low. Clearance of this level would confirm a resumption of the downtrend and open 1.3503, a Fibonacci projection.
GILTS: Futures Called To Open Lower After CPI
Desks calling futures in the 91.25-35 range at the open after CPI.
