ECB: Makhlouf Confident Medium-Term Inflation Will Be At 2%
Dec-10 18:13
From Makhlouf's speech: “The latest projections – from September – and the incoming data that I have seen so far lead me to feel confident that inflation will be at target over the medium term, in line with our price stability objective (although, again, there will be a new set of projections next week incorporating the latest data and information)."
Recall that Makhlouf last month told Reuters that another ECB move would need pretty compelling evidence with him seeing no significant change in ECB projections. He had since said on Nov 25 that he was "a bit" worried about services and food inflation.
Elsewhere, the speech focuses on removing barriers within the EU.
- "The IMF has explained the impact that the barriers within the Single Market are having. They estimate that the internal barriers within the Single Market are equivalent to a 45 per cent tariff on goods. And a 110 per cent tariff on services."
- "We need to build economic resilience if we are to support communities through economic transitions, and if we are to manage the radical uncertainties that characterise our age."
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FOREX: Equity Sentiment Key to AUD Outperformance, JPY Under Pressure
Nov-10 18:10
- Renewed optimism surrounding the US government reopening have significantly boosted risk sentiment, prompting the US Dollar to consolidate last week's losses. Reactions across G10 do not surprise, with the boost to risk assets filtering through to the underperforming JPY, while supporting the likes of AUD, NZD and NOK.
- USDJPY rose sharply from the open and extended gains to a 154.25 high on Monday. The pair has once again met some resistance above the 154.00 handle, registering a seventh daily high between 154.14-154.48, bolstering the short-term significance of this resistance cluster. First important support to watch lies at 152.68, the 20-day EMA.
- AUD received further tailwinds from RBA Hauser comments being on the hawkish side. For AUDUSD (+0.70%), a break above key resistance at 0.6618 (Oct 29 high) would be required to reinstate a bullish theme.
- NOK meanwhile also benefits from an upside surprise to domestic October CPI. A December cut was already unlikely following last week's Norges Bank meeting and the prospects of that are likely to fall back even further. EURNOK has extended the pullback from 11.80, potentially forming a double top pattern multi-week.
- ZAR (+1%) outperforms in the emerging market space, very much a product of the precious metals rally (gold +2.5%, silver +4%), which adds further support to the positive risk backdrop, boosting higher beta currencies. Latin American currencies have followed suit, with all regional currencies rising Monday.
- Key to watch in the days ahead will be further developments on the shutdown, with a handful of legislative hurdles still to be met. UK labour market data takes focus Tuesday, while NZ inflation expectations and German ZEW also cross.
PIPELINE: Corporate Bond Update: $11B Verizon 5Pt Launched, LyondellBasell Too
Nov-10 18:10
- Date $MM Issuer (Priced *, Launch #)
- 11/10 $11B #Verizon: $2B +7Y +90, $2.25B +10Y +100, $1.5B 20Y +110, $3.25B 30Y +120, $2B 40Y +130
- 11/10 $1.5B #LyondellBasell $500M 5Y +145, $1B 10Y +185
US TSYS/SUPPLY: Review 3Y Note Auction: Stopped Through, Tsys Pare Losses
Nov-10 18:04
- Treasury futures pare losses slightly (TUZ5 104-04.88, -1.88) after $58B 3Y note auction (91282CPK1) stops through: drawing 3.579% high yield vs. 3.589% WI; 2.85x bid-to-cover vs. 2.66x prior.
- Peripheral stats: Indirect take-up 62.96% vs. 62.7% prior; direct bidder take-up at 27.32% from 26.58% prior; primary dealer take-up 9.72% vs. 10.72% prior.
- The next 3Y auction is tentatively scheduled for December 8.
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