UK FISCAL: Reeves Gives Little Signal On Youth Min Wage Or Def Spend Reports
Speaking to Sky News, Chancellor of the Exchequer Rachel Reeves does not respond directly when asked about reports that Labour plans to increase the minimum wage for 18-20 year olds to fall in line with other workers, which are being reconsidered amid a backlash from businesses warning the plans could further exacerbate youth unemployment.
- Reeves offers a lengthy answer, saying, "There are more people in work than there were this time a year ago. But I do recognise that there are challenges, particularly around young people leaving school, college and university,[...] And as a government, we are determined to do everything we can to support them, [...] we want to get that balance right. People deserve a fair day's pay for a hard day's work, but we also need to do more to ensure that young people have those opportunities."
- Asked about reports that the Treasury is blocking Ministry of Defence efforts to increase spending faster than expected on British armed forces (UK: Telegraph-Chancellor Reeves Blocking Defence Spending Boost), Reeves does not give a firm answer, saying, "At the moment, we're taking defence spending as a share of GDP, to 2.6% by April next year.[...] and of course, more money will be allocated in future spending reviews." Asked directly whether she is blocking a faster increase, the chancellor neither confirms nor denies.
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US TSY FUTURES: CFTC CoT Shows Asset Managers Remain Long, Funds Short
The CFTC CoT covering the week ending January 13 pointed to asset managers and leveraged funds extending pre-existing positioning further out the curve, while lightening up on exposure further forwards.
- Asset managers added to net longs further out the curve (UXY, US & WN) while reducing net longs further forwards (TU, FV & TY). The former outweighed the latter, with the cohort adding ~$7mln of DV01 equivalent, while remaining net long across the curve.
- Meanwhile, leveraged funds added to net shorts further out the curve (US & WN), while trimming net shorts across TU, FV, TY & UXY contracts. The DV01 swings effectively offset. The cohort remains net short across the curve.
- Wider non-commercial net positioning saw a reduction of pre-existing net shorts. The cohort remains net short across much of the curve, with the exception coming via modest net long positioning in US futures (for the second week in three).
Source: MNI / CFTC / Bloomberg Finance L.P.
EGB SYNDICATION: Spain New 10-year Obli: Mandate
"The KINGDOM OF SPAIN, rated A+/A/A3/AH/A (stab/stab/stab/stab/pos) (S&P/Fitch/Moody's/DBRS/Scope), has mandated Barclays, BBVA, HSBC, J.P. Morgan, Morgan Stanley and Santander for a new Obligacion del Estado syndicated 10-year Euro benchmark maturing on 30th April 2036. The transaction will be launched in the near future subject to market conditions. All remaining primary dealers in the Kingdom of Spain government bond market will be invited into the syndicate"
We had pencilled in a Spanish syndication for this week, though recent developments on the tariff front added a little more uncertainty over the weekend. Spain commonly issues a new 10-year Obli via syndication in January. We expect a transaction tomorrow, for a new Apr-36 maturity and look for a E13-15bln transaction size.
US 10YR FUTURE TECHS: (H6) Southbound
- RES 4: 112-31 High Dec 18 and key short-term resistance
- RES 3: 112-22 High Jan 7
- RES 2: 112-16 50-day EMA High Dec 30 / 31
- RES 1: 111-21 20-day EMA
- PRICE: 111-21+ @ 11:00 GMT Jan 19
- SUP 1: 111-19 1.236 proj of the Oct 17 - Nov 5 - 25 price swing
- SUP 2: 111-11 1.382 proj of the Oct 17 - Nov 5 - 25 price swing
- SUP 3: 111-00 Round number support
- SUP 4: 110-30+ 1.382 proj of the Oct 17 - Nov 5 - 25 price swing
The break lower in Treasuries on Friday, reinforces a bearish theme. Support and the bear trigger, at the Dec 10 low of 111-29, has been cleared. This confirms a resumption of the bear cycle and paves the way for an extension towards 111-11, a Fibonacci projection. A head and shoulders reversal pattern on the daily chart also highlights a bearish threat. Initial resistance is at 112-11, the 20-day EMA.
