US COMMUNICATIONS: Paramount Skydance: Talking to PE Firms to join WBD Bid
Takeaways - The report increases our odds of a bid coming from PSKY, ahead of WBD's planned April split. However, we see valuation being an issue of contention (speculated at $22-$24/share), with PSKY having limited upsizing potential, especially if Larry is stepping back. This could potentially push the timeline closer to WBD's split, at which point PSKY's bid would likely be untenable. With WBD HY shorts likely to have mostly been covered after the initial speculation, we would expect limited spread movement on this, while higher leverage expectations could pressure PARA spreads.
• The New York Post reported that David Ellison is in talks with PE firms including Apollo to join the bid for WBD. Blackstone is said to not be interested in participating at the moment.
• The article notes that Larry Ellison appears to have limited appetite for media deals.
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GBPUSD TECHS: Remains Above Last Week’s Low
- RES 4: 1.3681 High Jul 4
- RES 3: 1.3636 76.4% retracement of the Jul 1 - Aug1 downleg
- RES 2: 1.3595 High Aug 14 and a bull trigger
- RES 1: 1.3556 High Sep 5
- PRICE: 1.3538 @ 16:03 BST Sep 8
- SUP 1: 1.3417/3333 Low Sep 4 / 3
- SUP 2: 1.3315 61.8% retracement of the Aug 1 - 14 bull leg
- SUP 3: 1.3249 76.4% retracement of the Aug 1 - 14 bull leg
- SUP 4: 1.3142 Low Aug 1 and a key support
GBPUSD is holding on to the bulk of its latest gains following the recovery from last Wednesday’s low. The move higher appears corrective - for now. Recent weakness resulted in a breach of 1.3391, the Aug 22 low. This signals scope for a deeper retracement and exposes 1.3315 next, 61.8% of the Aug 1 - 14 bull leg. On the upside, clearance of 1.3595, the Aug 14 high, is required to reinstate a bull theme.
US: FED Reverse Repo Operation
RRP usage slips to $19.416B with 20 counterparties this afternoon from $20.997B last Friday. Compares to $17.923B on Wednesday, Sep 3 - the lowest levels since early April 2021. This year's high usage of $460.731B occurred on June 30.
FOREX: JPY Volatility in Focus, USD Index Tilts Weaker
- The Japanese yen was the main focus across G10 currency markets on Monday, following the resignation of PM Ishiba and the associated sharp initial negative reaction at the open. USDJPY gapped higher from last Friday’s close around 147.40, swiftly erasing the post payrolls decline to trade as high as 148.58. Resistance in USDJPY at 148.78, the Aug 22 high, remains intact for now.
- Thatcherite MP Sanae Takaichi is a front-runner among many opinion polls to takeover, having previously made clear her preference for easy monetary policy and a bigger role for fiscal spending - reminiscent of the Abenomics policy set from 2012 - 2020. Markets have subsequently calmed, and USDJPY tracks back towards 147.75 ahead of Tuesday’s APAC crossover.
- Overall, weaker-than-expected US employment data continues to keep the risks tilted towards the weaker dollar narrative, emphasised by the USD index spending today’s US session consolidating close to six-week lows. Associated strength in G10 has been led by the likes of AUD and NZD, while political risks in France may have contained the EURUSD price action somewhat.
- The NZDUSD (+0.65%) rally places a clear focus on 50-day EMA resistance (intersecting today at 0.5921), a breach of which would counter the most recent bearish theme. Furthermore, spot has also closed in on 0.5944, short-term trendline resistance drawn from the July 01 high. Further gains would target the August 13 high at 0.5996.
- Tuesday’s calendar will be centred around the preliminary annual payrolls benchmark revision, which is widely expected to imply large downward revisions to nonfarm payrolls growth through the twelve months to March 2025. SNB Chairman Schlegel will also participate in a fireside chat titled "Future-proofing central banks" at the BIS Innovation Summit, in Basel.
- Focus this week remains on the US inflation picture, with PPI and CPI prints due on Wednesday and Thursday respectively.
