STIR: Repo Reference Rates

• Treasury futures extended highs after Fed Gov Waller comments on Fox Business - supportive of Dec rate cut.
• Dec'25 10Y contract tapped 113-11.5 high (+3.5) before retracing to 113-09 last (+1). Last week’s breach of resistance at 113-02, an area of congestion since Nov 5, marks a bullish development and suggests scope for a climb towards 113-18+, the Oct 28 high. Note that the move higher also cancels a recent short-term bearish theme.
• Aside - heavier volumes (TYZ5 over 630k) tied to Dec/Mar roll ahead of Friday's "first notice".

Fed's Waller speaks on Fox Business, striking a familiar tone and advocating for a December rate cut: 

• "SINCE LAST FED MEETING AVAILABLE DATA SUGGESTS NOT MUCH CHANGE, INFLATION NOT A BIG PROBLEM WITH LABOR MARKET WEAK, ADVOCATING FOR A RATE CUT AT THE DECEMBER MEETING"
• He is, however, more interesting when commenting on policy for early 2026, stating that a January meeting will be "tricky", with a flood of incoming data meeting that the Fed need to adopt a meeting-by-meeting approach.
• Likely hinting at his candidacy for Fed chair next year, Waller says:
• "TALKED TO BESSENT ABOUT 10 DAYS AGO, HAD ANOTHER GREAT MEETING TALKING ABOUT ECONOMICS AND MARKETS, THINK THE ADMINISTRATION IS LOOKING FOR SOMEONE WITH EXPERIENCE WHO KNOWS HOW TO DO THE JOB" - Reuters
• Waller remains a prime candidate to be announced for Powell's replacement as Fed chair into 2026 - Polymarket currently sees 14% implied odds of him being announced as Fed chair this year (in third place behind Hassett with 15% implied odds and 'No announcement this year' at 54%).
• Waller's comments broadly inline with expectations, keeping the front-end broadly contained for now. 

• In the FI space, a rally in Bund futures on Friday appears to be a correction - for now. Price remains below an important resistance around the 50-day EMA, at 129.04. A clear break of the EMA is required to signal a potential reversal. Recent weakness has resulted in a print below support at 128.52, 76.4% of the Sep 25 - Oct 17 bull leg. A resumption of the bear leg would open 128.25, the Oct 7 low.
• A sharp sell-off in Gilt futures last Wednesday strengthens a bear threat and cancels a recent bullish condition. The contract has traded through 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 92.70, the 20-day EMA. A clear break of the average is required to signal a reversal. For now, gains are considered corrective.