FED: NY Fed To Run Regular Morning Standing Repo Ops
May-28 18:16
The NY Fed announces that (as has been the case for the last couple of month- / quarter- ends) that it will run a daily morning overnight Standing Repo Facility (SRF) operation (0815-0830ET) starting Jun 26, in addition to the usual afternoon SRF ops (1330-1345ET). Announcement here.
- What is unusual is that there is now no end-date to these operations - this announcement confirms what NY Fed SOMA manager Perli said last week, along with the reasoning:
- "The SRF is an important facility, but it is not frictionless. Our SRF counterparties have mentioned some features of the SRF that discourage its usage even if market rates exceed its minimum bid rate. One such friction is the fact that SRF auctions are carried out and settled in the afternoon, while most repo market activity takes place in the morning. Afternoon auctions are important because they can provide cash later in the day should a need for liquidity arise when most repo market activity has already taken place. Still, that does not mean additional earlier SRF auctions cannot be helpful....in the not-too-distant future the Desk will start implementing daily morning SRF operations that will also be settled in the morning. This will be an important step in enhancing the efficacy of the facility, and, at the margin, it can contribute to a smaller SOMA portfolio than would otherwise have been the case."
- Daily aggregate size for the combined operations is $500B.
- On the margins this should be helpful for market functioning at times of distress, but given such limited takeup of the morning SRF in the last couple of quarter-end windows, and the fact that the NY Fed telegraphed this decision previously, there shouldn't be much of a market reaction.
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PIPELINE: Corporate Bond Update
Apr-28 18:06
$17.025B to price Monday:
- Date $MM Issuer (Priced *, Launch #)
- 04/28 $5B #Alphabet $750M 5Y +32, $1.25B 10Y +47, $1.5B 30Y +62, $1.5B 40Y +70
- 04/28 $2.5B #Philip Morris $750M 3Y +58, $400M 3Y SOFR+83, $750M 5Y +75, $600M 10Y +93
- 04/28 $2B #Keurig Dr Pepper $500M each: 1.5Y SOFR+58, 3Y +68, 5Y +83, 10Y +98
- 04/28 $1.25B #Procter & Gamble $700M 5Y +28, $550M 10Y +43
- 04/28 $1.125B #Consumer Energy $500M +5Y +67, $625M 10Y +87
- 04/28 $1.1B #Northern States Power $600M 10Y +83, $500M 30Y +98
- 04/28 $1.1B #CBRE Services $600M 5Y +120, $500M 10Y +135
- 04/28 $750M #General Dynamics 10Y +78
- 04/28 $700M *Posco Holdings $400M 5Y +137.5, $300M 10Y +157.5
- 04/28 $700M *Kookmin Bank $400M 3Y +77.5, $300M 5Y +82.5
- 04/28 $500M #Colgate Palmolive 5Y +38
- 04/28 $500M #DR Horton +5Y +103
- 04/28 $Benchmark Goldman Sachs investor calls
BONDS: EGBs-GILTS CASH CLOSE: Bear Steepening Ahead Of Euro Inflation
Apr-28 18:04
European yields backed up slightly Monday, reversing the modest declines seen Friday.
- Various factors weighed on core FI in a session that was devoid of market-moving data (Spanish Q1 unemployment saw a notable uptick).
- These factors included slightly more positive risk-on tone on US tariffs coming in from the weekend, and reports Monday morning of a Ukraine proposal for a full 30-day ceasefire with Russia.
- While a widespread Spanish and Portuguese energy blackout made headlines, the market impact was limited.
- The German and UK curves both bear steepened, though Schatz/Bobl notably underperformed their UK counterparts.
- Periphery/semi-core EGBs were mixed and little changed on the day.
- The April Eurozone flash inflation round starts Tuesday with Spain - MNI's preview is here.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 2.3bps at 1.742%, 5-Yr is up 4.2bps at 2.059%, 10-Yr is up 5.2bps at 2.521%, and 30-Yr is up 5.8bps at 2.947%.
- UK: The 2-Yr yield is up 0.8bps at 3.866%, 5-Yr is up 1.2bps at 3.986%, 10-Yr is up 3bps at 4.509%, and 30-Yr is up 5.1bps at 5.27%.
- Italian BTP spread up 0.3bps at 110.8bps / Spanish spread up 0.6bps at 66bps
EURGBP TECHS: Doji Candle Formation
Apr-28 18:00
- RES 4: 0.8800 Round number resistance
- RES 3: 0.8781 2.236 proj of the Mar 3 - 11 - 28 price swing
- RES 2: 0.8768 High Nov 20 ‘23
- RES 1: 0.8624/0.8738 High Apr 21/ High Apr 11 and the bull trigger
- PRICE: 0.8500 @ 16:45 BST Apr 28
- SUP 1: 0.8494 Low Apr 28
- SUP 2: 0.8477 61.8% retracement of the Mar 28 - Apr 11 rally
- SUP 3: 0.8457 50-day EMA
- SUP 4: 0.8415 76.4% retracement of the Mar 28 - Apr 11 rally
GBP strength Monday has prompted EUR/GBP to trade through a major support area we flagged last week at 0.8520-31 - marking both the early April pullback low as well as the 50% retracement of the tariff-inspired upleg off 0.8323. Monday weakness exposes the 50-day EMA at 0.8457. A doji Japanese candle pattern on Friday, highlights an early reversal signal and if correct, the end of the correction. A resumption of gains would refocus attention on 0.8738, the Apr 11 high and bull trigger.
