OUTLOOK: Price Signal Summary - Bounce in Gilts Appears Corrective For Now
Nov-21 12:26
- In the FI space, a bear cycle in Bund futures remains intact, despite today’s bounce. A fresh cycle low yesterday reinforces a bear theme. Recent weakness has resulted in a print below support at 128.52, 76.4% of the Sep 25 - Oct 17 bull leg. A clear break of this level would open 128.25, the Oct 7 low. Key short-term resistance is seen at 129.40, the Nov 13 high. Clearance of this hurdle would signal a reversal. First resistance is 129.05, the 50-day EMA.
- A sharp sell-off in Gilt futures on Wednesday strengthens a bearish threat and cancels a recent bullish condition. The contract has traded through support at 91.82, the Sep 11 high, and the move down signals scope for a deeper retracement that opens 91.12, 61.8% of the Sep 3 - Nov 4 bull leg. On the upside, initial key resistance is seen at 92.74, the 20-day EMA. A clear break of the average is required to signal a reversal. For now, gains appear corrective.
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EURIBOR OPTIONS: Large Call Condor vs Put
Oct-22 12:25
ERM6 98.25/98.4375/98.50/98.87c condor vs 97.87p, bought the condor for 1.5 in 10k.
US: MNI POLITICAL RISK - Trump Meets Rutte After Nixing Putin Summit
Oct-22 12:24
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- At 16:00 ET 21:00 BST, President Donald Trump will meet NATO Secretary General Mark Rutte for a hastily arranged 'closed press' meeting after Trump floated - then appeared to quash - a summit with Russian President Vladimir Putin.
- In November, Saudi Crown Prince Mohammad bin Salman will visit the White House for the first time since 2018. The trip may deliver progress toward Saudi-Israeli normalisation and the signing of a new defence pact with the Trump administration.
- Vice President JD Vance will meet Israeli Prime Minister Benjamin Netanyahu today as he continues a trip aimed at shoring up the Gaza peace plan.
- Government shutdown Day 22: Senate Majority Leader John Thune (R-SD) will hold an eleventh vote on the GOP's CR and a separate vote on a bill to pay essential government employees required to work during the shutdown. Both are expected to fail.
- Trump expects to make a "good deal" with Chinese President Xi Jinping on the margins of the APEC summit.
- The Trump administration's economic policies are on track to close the deficit, according to Treasury Department analysis.
- India and the US are reportedly nearing a deal to lower tariffs.
- Crypto leaders will meet with Senators today, in an attempt to restart stalled talks on a market structure bill.
- Treasury Secretary Scott Bessent confirmed the Treasury Department signed an economic stabilisation agreement with Argentina.
- Chart of the Day: US corporations appear optimistic about the economy.
Full Article: US DAILY BRIEF
US TSYS: Swap Spreads Widen On Bloomberg Source Report On Bank Capital
Oct-22 12:19
US swap spreads widen up to ~1bp on that latest Bloomberg report before fading a little. The report suggested the Fed has floated plans to relax a Biden-era bank capital proposal for big banks. Less stringent capital rules would in theory free up more balance sheet space to hold USTs.
- 10-year swap spreads are now at -33bps. A close at current levels would be the highest since the start of April (amid Liberation Day volatility).
- Spreads have widened around 5bps since the middle of September, including a notable move last week following comments from Fed Chair Powell (who pointed to the potential end to QT in the coming months).
