LNG: Ukraine Energy Ministry Not Holding Talks on Transit Flows
The Ukrainian energy ministry is not holding any talks on Russian or any other gas transit for 2025, according to Argus, citing the parliament
- The ministry is not negotiating on transit and has not authorised any officials to conduct negotiations regarding the continuation of transit of Russian or any other gas after the existing agreement between Naftogaz and Gazprom expires Dec. 31.
- The ministry further specified that it has not participated in talks with Italy, Austria, and Slovakia regarding Azeri flows via Ukraine beyond 2024.
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GBPUSD TECHS: Bear Cycle Extends
- RES 4: 1.3434 High Sep 26 and key resistance
- RES 3: 1.3389 High Oct 1
- RES 2: 1.3305 High Oct 2 and the bull trigger
- RES 1: 1.3077/3151 Intraday high / 20-day EMA
- PRICE: 1.3001 @ 16:56 BST Oct 16
- SUP 1: 1.2983 Low Oct 16
- SUP 2: 1.2959 61.8% retracement of the Aug 8 - Sep 25 bull leg
- SUP 3: 1.2890 Low Aug 18
- SUP 4: 1.2846 76.4% retracement of the Aug 8 - Sep 25 bull leg
GBPUSD traded sharply lower Wednesday, marking the end of the recent consolidation phase. The break lower also confirms a resumption of the current bear cycle. Note that an important support at 1.3002, the Sep 11 low, has been breached. This also reinforces the bear theme and opens 1.2959, a Fibonacci retracement point. On the upside, initial resistance to watch is 1.3151, the 20-day EMA. A clear breach of this average would signal a reversal.
US TSYS/OVERNIGHT REPO: O/N Reverse Repo Takeup Declines Further Below $300B
Takeup of the NY Fed's overnight reverse repo facility fell for a 2nd consecutive session Wednesday, to $272.0B vs $286.4B prior.
- Tuesday's fall below $300B (for the first time in a month) had been anticipated due to higher coupon settlements increasing demand for overnight financing.
- No significant pickup in ON RRP usage is seen until toward month-end - see chart for September's pattern.
US OUTLOOK/OPINION: Fed Staff See Rent Inflation Above Norm Until Mid-2026
- Cleveland Fed economists write that “Our baseline forecast implies that CPI rent inflation will remain above its prepandemic norm of about 3.5 percent until mid-2026. Our alternative forecasts highlight both upside and downside risks to this forecast.”
- https://www.clevelandfed.org/publications/economic-commentary/2024/ec-202417-new-tenant-rent-passthrough-and-future-of-rent-inflation
- As we noted in the Inflation Insight after last week’s inflation releases, the weighted average of CPI OER and primary rents cooled from a particularly hot 0.47% M/M in August but at 0.32% M/M in September it’s still above the 0.27% M/M averaged pre-pandemic. There has only been one month this cycle consistent with this pre-pandemic pace, with exactly 0.27% in June. That puts more onus on other services or core goods inflation to moderate to below average rates.
