OUTLOOK: Price Signal Summary - Bull Cycle Extension In Gilts
Feb-06 11:33
- In the FI space, Bund futures remain in a bull cycle and the contract traded higher yesterday. Price has recently cleared resistance at 132.22, the Jan 22 high, and is through both the 20- and 50-day EMAs. The break higher confirms a resumption of the corrective bull cycle that started Jan 14. Sights are on 133.73, 50.0% of the Dec 2 - Jan 14 bear leg. First support is at 132.36, the 20-day EMA.
- A bullish phase in Gilt futures remains in play, signalling scope for a continuation higher near-term. This week’s extension reinforces current conditions. The contract has traded through 93.09, the Dec 20 high, and breached 93.64, the 61.8% retracement of the Dec 3 - Jan 13 bear leg. Sights are on the 94.00 handle next. Initial firm support lies at 92.32, the 20-day EMA.
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EQUITIES: EU Bank Risk Reversal
Jan-07 11:33
SX7E (17th Jan) 143/151RR, bought the call for 0.25 in 10k.
ESM ISSUANCE: 3-Month ESM-Bill
Jan-07 11:33
| Type | 3-month bills |
| Maturity | Apr 3, 2025 |
| Amount | E1.095bln |
| Target | E1.1bln |
| Previous | E1.09bln |
| Avg yield | 2.649% |
| Previous | 2.817% |
| Bid-to-cover | 3.65x |
| Previous | 4.07x |
| Previous date | Dec 03, 2024 |
STIR: Fed Rate Path Holds Yesterday Nudge Higher With Data In Focus
Jan-07 11:27
- Fed Funds implied rates hold yesterday’s mild increase with ahead of a docket focused on both the November JOLTS and December ISM Services reports at 1000ET.
- Cumulative cuts from 4.33% effective: 2bp Jan, 11bp Mar, 16bp May, 25bp June and 39bp Dec.
- The SOFR-implied terminal yield of 3.985% holds close to recent highs of 4.03% seen late last month and cycle highs of 4.15% back in April.
- In FOMC shuffling, Semafor reported earlier today that Bowman is a top candidate for the VC Supervision role according to several people familiar with the matter after Barr announced his resignation yesterday. That doesn’t surprise us, as we wrote at the time yesterday.
- Today’s Fedspeak is limited to Richmond Fed’s Barkin speaking to the Raleigh Chamber at 0800ET. It shouldn’t be a market mover as the text will be a repeat of Friday’s speech on the 2025 outlook and we don’t expect the Q&A to differ from the tone of more ambiguity on scope for further rate cuts after the 100bps last year, which has been viewed as a necessary recalibration in monetary policy. Previously a ’24 voter, he’s next set to vote in ’27.
