OPTIONS: Larger FX Option Pipeline
* EUR/USD: Sep03 $1.1600-25(E2.9bln); Sep04 $1.1500(E1.4bln), $1.1600(E1.9bln), $1.1645-50(E1.1bln...
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US TSY OPTIONS: Large 5yr Put seller
FVU6 106p, sold at 17 in 20k.
US 10YR FUTURE TECHS: (U6) Fresh Cycle Low
- RES 4: 110-10+ High Jun 27 and a reversal trigger
- RES 3: 110-00 Round number resistance
- RES 2: 109-09 50-day EMA
- RES 1: 108-25+ 20-day EMA
- PRICE: 108-13 @ 11:04 BST Aug 03
- SUP 1: 107-29 1.618 proj of Apr 17 - May 4 - 7 swing
- SUP 2: 107-20+ 1.764 proj of Apr 17 - May 4 - 7 swing
- SUP 3: 107-06+ 2.000 proj of Apr 17 - May 4 - 7 swing
- SUP 4: 107-00 Round number support
The short-term trend condition in Treasuries remains bearish and Friday's sell-off reinforces current conditions. The contract traded to a fresh cycle low to confirm a resumption of the downtrend and maintain the bearish price sequence of lower lows and lower highs. This paves the way for a move towards 107-29, a Fibonacci projection. Resistance at the 20-day EMA is at 108-25+.
FED: Williams Strongly Supported Hold, Reiterates Policy Well Positioned
NY Fed's Williams (voter) has given an interview to Reuters maintaining his position at the dovish end of the FOMC spectrum saying he still believes Fed rate policy is “well positioned” to achieve 2% inflation and that he remains optimistic inflation pressures will gradually ease. He had previously said on Jul 15 ahead of last week’s meeting that there were encouraging reasons to believe inflation has peaked with the latest inflation data reassuring but that he can’t get too excited about one data point.
- If energy prices and trade tariffs have peaked and the economy remains on a solid footing, “I think that some of the big drivers that pushed up inflation” over the last year and half or so “will not be at play as much, and then some of the disinflationary forces that we've been seeing” should reassert themselves.
- However, "if the economy is not on a trajectory that will bring inflation back down to 2% ... it would absolutely be appropriate to act to get us on a trajectory that does bring inflation back to 2%.”
- "I am quite honestly focused quite a bit on, what are we seeing in the core inflation data over the next several months, and is that consistent with a kind of a run rate of inflation moving towards 2% and really on a disinflationary path consistent with us achieving our 2% inflation goal on a sustained basis by 2028." He added, "my forecast personally is for inflation to come down in the second half of this year and come down further next year."
- He “strongly ... supported the decision of the committee” to hold rates steady on Wednesday. Of course, there were three hawkish dissenters to that decision, with Hammack, Kashkari and Logan all voting for a hike, whilst Musalem (non-voter) has also since said he would have preferred to hike.
- Asked if the Fed would feel bound to set monetary policy based on market levels, he responded “absolutely not,” although the central bank closely watches financial markets.
