STIR: Less Than 1/3 Odds Of Fed December Cut Ahead Of Sept NFP Report
Nov-20 11:30
US rates consolidate yesterday’s two-pronged (and latest) hawkish shift on very near-term rate cut prospects from 1) the BLS confirming that today’s NFP report for September will be the last payrolls report the FOMC sees before its Dec 9-10 meeting and 2) the FOMC minutes further highlighting committee divisions.
- Fed Funds implied rates are unchanged overnight for December although 2bp higher for Mar-Jun meetings, aided by firmer risk sentiment stemming from Nvidia’s earnings after yesterday’s close.
- Cumulative cuts from 3.88% effective: 7bp Dec, 20bp Jan, 29bp Mar, 36.5bp Apr and 51.5bp Jun.
- SOFR futures meanwhile are up to 1.5 tick lower looking out to end-2027 contracts.
- SFRZ5 trades at 96.16, paring a lift to 96.17 overnight, vs 96.195 pre-BLS scheduling headlines.
- The terminal implied yield of 3.10% (SFRH7) has lifted a little off the low end of its 3.065-3.16% range for closes in recent weeks, a range primarily dictated by data developments.
- MNI NFP Preview, with this September report now having added importance with the October establishment figures being rolled into the November release on Dec 16: https://media.marketnews.com/USNFP_Sep2025_Preview_postshutdown_6c53ab7531.pdf
- Along with payrolls, there’s also the formal resumption of national jobless claims data after a technical error led to a single week of data being published earlier this week. It should be hard to see material surprises to historical data considering the large share of state-level data already known, although continuing claims data are always prone to reasonable revisions.
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OUTLOOK: Price Signal Summary - Gilts Hold On To The Bulk Of Their Gains
Oct-21 11:22
- In the FI space, Bund futures continue to trade below last week’s high, however, a bull cycle remains intact. The impulsive nature of the latest rally and a fresh cycle high on Friday, paves the way for a test of the next key resistance 130.80, the Jun 13 high. Clearance of this level would strengthen the bullish condition. Note that the contract is overbought, a deeper pullback would allow this condition to unwind. Initial key support is 129.20, the 20-day EMA.
- A bull cycle in Gilt futures remains intact following the latest strong impulsive rally. Recent gains resulted in a breach of key resistance at 91.82, the Sep 24 high. The break strengthened a bull cycle and sights are on 93.30 next, a 1.236 projection of the Sep 3 - 11 - 26 price swing. Note that the trend is overbought and a retracement would allow this condition to unwind. Firm support to watch lies at 91.51, the 20-day EMA.
SEK: EURSEK Pierces Support With Scandis Outperforming G10 Basket
Oct-21 11:20
- SEK outperforms the G10 basket alongside NOK this morning, despite little net movement in European equity futures and SEK swap rates. SEK already outperforms the G10 basket year-to-date, and conditions appear in place for this relative strength to extend.
- EURSEK is down 0.4%, piercing the October 7 low at 10.9392. Clearance of the Oct 7 low would expose more important support at 10.9036, the September 15 low. The cross has traded in a fairly contained 10.90 – 11.10 range since the end of August. Moving average studies are currently in a bear-mode setup, reinforcing current bearish conditions.
- We’ve previously highlighted several factors that could support continued SEK outperformance in the coming months, including an accommodative monetary policy stance, an expansionary 2026 fiscal budget aimed at stimulating household consumption and positive German/European defence spending spillovers.
- The median analyst surveyed by Bloomberg expects EURSEK at 11.00 at year-end, 0.5% above current spot levels. However, forecasts range from a low of 10.60 to a high of 11.20.
- Vols imply a ~46% probability of EURSEK ending the year below 10.90, compared to a ~25% probability of the cross ending the year above 11.10. This suggests the risks to the consensus median may be skewed to the downside.
- Important Swedish growth metrics are due next week, including September credit data and retail sales, and the October Economic Tendency Indicator. The Q3 flash GDP indicator is also due. July/August monthly GDP data suggests there are upside risks to the Riksbank’s 0.5% Q/Q Q3 projection, but as always we caution that the flash activity indicators are unreliable and revision prone.
MNI EXCLUSIVE: Interview with Former BOE policymaker Andrew Sentance
Oct-21 11:14
- Former BOE policymaker Andrew Sentance looks at interest rates and inflation -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
