EU FINANCIALS: Julius Baer - Moody's stabilises outlook
Sr Unsecured Rating A3 - Stable
There is seemingly no permanent damage to the franchise from the Signa loans, which cost it its CEO and CHF 586mn. The company has exited private debt altogether.
"incorporating our assessment that JBG's wealth management franchise has not been materially impaired by the events that surrounded the full loss allowance taken against the outsized exposure towards the European conglomerate." - Moody's
Link to the statement from Moody's -https://mni.marketnews.com/41G3Bts
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
OPTIONS: Busier GBP, EUR/JPY Trade Makes Up for Quieter Options Market
- Options turnover is less impressive, with more muted JPY, CNY and EUR hedging countering the busier EUR/JPY and GBP/USD markets. Front-end vols are seeing support, however, with the uptick in spot volatility today prompting 1 point gains in USD/JPY implied.
- We noted earlier today that EUR/JPY's sentiment-triggered pullback met a decent confluence of support at the Y162.00 level (pierced in the early pullback). The intraday vol may have stimulated the uptick in notional traded, with the more salient trades including a decent-sized vol hedge, consistent with a 157.10/165.00 strangle, rolling off in mid-December to capture the lead-up to the final BoJ decision of the year on Dec 19th.
- Across GBP/USD, demand for upside exposure has picked up following the protracted multi-week drawdown in spot, with close to $2 in calls trading for every $1 in puts. Near $500mln call notional has traded between 1.3085-1.3105, making up a decent part of today's activity.
EUROZONE DATA: Labour Market Easing Continues To Be Demand-driven
The Eurozone flash Q3 vacancy rate eased a tenth to 2.5% (SA terms). This is down from a peak of 3.3% in Q2 2022, and sees the series move a little closer to the 2019 average of 2.35%. Eurozone labour market easing since 2022 has largely been via the labour demand channel, with the unemployment rate remaining at historical lows of 6.3% in September. However, we're starting to get towards a vacancy rate that on a pre-pandemic Beveridge curve could start to see upward pressure on the unemployment rate.
- At a country level, the vacancy rate eased by two tenths in Germany to 3.0% and one tenth in France to 2.6%. This is consistent with the downward trend in real time indicators such as the Indeed job postings tracker.
- The vacancy rate was steady in Spain and Italy and 0.9% and 2.0% respectively.
- Softer labour demand should be consistent with easing wage pressures across the region in H2 2024 and into 2025. Q3 compensation per employee data is due on December 6 alongside the final national accounts.
- Note that preliminary Q3 labour costs were also released today, and eased to 4.6% Y/Y (vs 4.9% prior), However, there were upward revisions to both Q1 and Q2 readings. We don’t read too much into the labour cost data at this stage, as Eurostat has to estimate multiple components (e.g. compensation, hours worked) using partial/preliminary data from member states.
OUTLOOK: Price Signal Summary - Bunds Tests Key Resistance
- In the FI space, Bund futures are holding on to their recent gains and are trading in a volatile manner today. S/T gains are considered corrective. The trend direction is down and the Nov 6 break to a fresh cycle low reinforces this theme. The 131.00 handle has been cleared, opening 129.99, a 1.236 projection of the Oct 1 - 10 -16 price swing. Resistance points at 132.34, 20-day EMA, and 132.91, 50-day EMA, have been pierced. A clear break of both EMAs would highlight a stronger reversal.
- The trend condition in Gilt futures remains bearish and the latest shallow recovery is considered corrective. The contract has recently breached 92.99, a 2.00 projection of the Sep 17 - 30 - Oct 1 price swing. This signals scope for an extension towards 92.23, the 2.236 projection. Initial firm resistance to watch is 94.73, Nov 1 high.
