US DATA: PPI Aggregates Further Boosted By Robust Revisions
Feb-13 14:17
- The PCE-relevant components of PPI have clearly set the tone with the market's dovish reaction to the release but the aggregate series were still notably stronger than expected.
- Overall PPI final demand inflation printed at 0.40% M/M sa (cons 0.3) after a heavy upward revision of 0.50% (initial 0.22) in Dec although that was partly offset by a downward revised 0.23% (initial 0.38) in Nov.
- Our preferred core PPI series, ex food, energy & trade services painted a slightly stronger picture again, surprising with 0.32% M/M (cons 0.2) after an upward revised 0.35% (initial 0.07) with much smaller near-term downward revisions.
- The NSA-based Y/Y calculations weren't subject to annual seasonal adjustment revisions and were still clearly stronger than expected as we pointed to earlier with core PPI at 3.4% Y/Y vs cons 3.1%.
- Recent momentum also looks stronger, with the three-month accelerating to 3.3% annualized from 3.1% in Dec (revised up from 1.9%) whilst the six-month eased to 3.1% but only after an upward revised 3.2% (initial 2.4%).
- See the revisions table and trend charts below:
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US TSY OPTIONS: Large Mar'25 10Y Call Buy
Jan-14 14:12
- +50,000 TYH5 108.5 calls, 27 vs. 107-08.5/0.31%, total volume just over 57,000 - exceeding open interest of 31,317 coming into the session
GILTS: Still Under Pressure
Jan-14 14:09
Gilts edge away from recent session lows, although markets seem keen to continue to fade rallies at this stage, with Chancellor Reeves offering little new in the Commons today.
- Reeves conceded that the UK is facing “economic headwinds”, while stressing the need to go further to kickstart growth and pledging to meet the fiscal rules at all times. A reminder that her future in the role is in doubt
- Futures as low as 89.15, last 89.23.
- Bearish technicals intact, initial support at cycle lows of 88.96.
- Yields little changed to 2bp higher, curve bear steepens.
- 10s & 30s within 3.5bp of cycle highs, located at 4.921% & 5.473%, respectively.
- Tomorrow’s 10-Year gilt supply is eyed, although today’s 30-Year I/L supply saw decent enough demand.
- CPI and comments from BoE dovish dissenter Taylor also due Wednesday.
FOREX: EURGBP Rally Extends, Focus Turns to UK CPI Release
Jan-14 14:06
- Sterling weakness continuing to stand out in G10 currency markets, as EURGBP extends session gains to 0.5%, registering a fresh two-month high in recent trade ~0.8443, helped by the quick fade of GBPUSD strength following the soft US data release.
- Price action for EURGBP narrows the gap to the next target of 0.8448, the Oct 31 high and a reversal trigger from a technical perspective. Further upside would signal scope for a move towards 0.8494, the August 26 high.
- The next key input for the Pound will be UK CPI, released tomorrow at 07:00 GMT, with focus on the services Y/Y figure for which consensus stands at a slightly softer 4.8% (vs 5.0% November). Our full preview for the release will be published shortly.
