EURIBOR OPTIONS: Latest trades
Jun-28 07:25
- ERZ3 95.625p, bought for 9.25 in 3.5k.
- ERZ3 96.00/95.87/95.37p ladder, bought for 1.25 in 4.5k.
- ERH4 96.375/96.25/95.875/95.625 broken p condor, bought for 0.25 in 2.5k.
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EGBS: Holding A Modest Rally Since The Cash Open
May-29 07:14
- Bunds have seen two-way trade since the cash open but remain constrained to relatively narrow ranges, and easily within Friday’s range, with reduced volumes on Memorial Day observances elsewhere.
- RXM3 trades +0.19 at 133.12 (cumulative volumes just 12k) off a recent low of 133.10 and an overnight low of 133.05 after the open, but hasn’t looked to trouble support at 132.83 (Fri low). There is no sign of the contract breaking out of the current bear mode though, with resistance notably higher at the 20-day EMA of 134.52.
- In yield space, EGBs trade relatively tightly across the board, with Bunds -0.8bps and only slightly underperforming OATs and BTPs, with the BTP-Bund spread dipping just 0.3bp to 183.8bps for still the tightest since May 19.
- Little by way of German data until regional CPIs on Wed.
STIR: Fed Cuts Trimmed Further After Debt Talk Progress
May-29 06:34
- Fed Funds implied rates are off overnight highs but have continued to unwind cuts later in the year after weekend debt deal is set to head to Congress.
- Less than 50bp of cuts from July peak to January.
- Cumulative from 5.08% effective: +15.5bp Jun (-0.5bp from Fri), +24bp Jul (-1bp), +19bp Sep (+0.5bp), +8.5bp Nov (+2.5bp), -5bp Dec (+3bp) and -20bp Jan (+3.5bp).
- Chicago Fed’s Goolsbee (’23 voter) in an interview with CBS on Sunday echoed other Fed speakers that he doesn’t want to prejudge June’s rate move [notable releases between now and then include payrolls on Jun 2 and CPI on Jun 13].
- He did however keep to dovish leaning remarks that Fed moves takes months, years to work through the economy.
- Other comments meanwhile took aim at debt talk discussions despite weekend progress: seeing fear and uncertainty in rates over an impasse and with a last minute deal “a little dangerous”.
Source: Bloomberg
TURKEY: Newly Minted President Pledges “Credibility” of Incoming Economic Team
May-29 06:33
- Erdogan has declared victory in the second round Presidential Election, sealing 52% of the vote vs. 48% for the opposition Kilicdaroglu. Erdogan’s victory was solidly expected following a strong showing the first round of voting, and as opposition lawmaker Ogan pledged his party’s support for Erdogan last week.
- Erdogan is now set for a second term as President out to 2028, and his third term in office after parliamentary reforms following 2017’s referendum. Focus now shifts to Erdogan’s economic policy, with the newly crowned President pledged to put together a new team with “international credibility” to address the nation’s finances and deal with inflation.
- Both Biden and Putin issued congratulatory messages to Erdogan following the results, underscoring Turkey’s role bridging the West and East.
- Focus in Turkey turns to key appointments at the Finance Ministry and any potential for market-friendly cabinet ministers. Turkey is also yet to grant Sweden membership into NATO, demanding Stockholm crack down on the Kurdistan Workers’ Party.
