STIR: Lower Tier Labour Market Data Extends Dovish Move In USD Front End
Nov-06 14:05
Dovish extension in the USD front end as the Revelio NFP and Chicago Fed unemployment estimates add ...
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GILTS: Off Lows Alongside Bunds
Oct-07 14:02
Gilts rally from session lows alongside a similar move in Bunds, with support in the German benchmark holding.
- Gilt futures based at 90.34, ahead of initial support at 90.26.
- Yields 1-2bp higher on the day, Initial resistance points intact across the curve.
- 10s last ~4.75%, comfortably within the 4.60-4.80% multi-week closing range.
- International political developments and cross-market moves have provided the major inputs for gilt markets early this week.
- UK fiscal risks continue to point towards the potential for further curve steepening, particularly with 2s10s and 5s30s back from recent highs.
- BoE-dated OIS still shows ~5bp of easing through year-end, which we believe underestimates the odds of a rate cut in Q4.
- SONIA futures flat to -2.5, cycle lows in SFIZ5 & Z6 remain untouched.
- Comments from BoE chief economist Pill are due Wednesday, along with a GBP5bln sale of the new 4.00% May-29 gilt.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Nov-25 | 3.961 | -0.1 |
Dec-25 | 3.919 | -4.8 |
Feb-26 | 3.814 | -15.3 |
Mar-26 | 3.785 | -18.2 |
Apr-26 | 3.711 | -25.7 |
Jun-26 | 3.687 | -28.0 |
Jul-26 | 3.639 | -32.8 |
Sep-26 | 3.631 | -33.7 |
MNI: CANADA SEP IVEY PURCHASING MANAGERS INDEX 59.8 SA
Oct-07 14:00
- CANADA SEP IVEY PURCHASING MANAGERS INDEX 59.8 SA
FOREX: Markets May Be Erring in Favour of Larger RBNZ Cut; NZD Underperforms
Oct-07 13:56
The strong open for US equities alongside the retreat from highs for the US 10y yield has helped the USD edge off the day's best levels, an effect most evident in GBP/USD, which has recovered back above the 1.34 handle.
- The medium-term run higher in gold has continued, helping spot to new record highs of 3985.7 (although in futures space, COMEX gold has now shown above $4,000 for the first time), but the strength in gold looks pretty isolated: silver, oil prices and base metals are all seen lower, which may be limiting the bounce off lows for AUD/USD, which is yet to bounce back above 0.6600.
- NZD remains the underperformer into the RBNZ rate decision, and with 36bps of easing priced for Wednesday’s meeting and a cumulative 63bps by November, markets may be erring in favour of a more sizeable rate cut this week.
- A return lower for NZD would re-open upside in AUD/NZD through to 1.1355-67 resistance, clearance above which returns focus to the bull trigger and cycle high at 1.1418.
