FRANCE: Socialist Party Ldr-Agreement w/Gov't Possible In The Coming Hours
Speaking to BFM TV leader of the centre-left Socialist Party (PS) Olivier Faure says that after conversations with PM Francois Bayrou overnight they could see a non-censorship agreement in exchange for a suspension/freeze/pause of the controversial 2023 pension reforms, among other policies. Faure says that any such agreement not to vote for the gov'ts censure in confidence motions would apply to today's general policy speech from Bayrou (taking place in the National Assembly at 1500CET (0900ET, 1400GMT) as well as the social security budget (PLFSS) and state budget (PLF). However, it would not apply to general gov't policy beyond that.
- Faure says that he has made a proposal to Bayrou that would win the PS' support but will not reveal it. Instead, he says "if the Prime Minister definitively accepts it, it is up to him to announce it."
- A move to suspend the increase in the pension age could bring the PS on board, but would risk alienating the conservative Republican Right. President of the Senate Gerard Larcher: "I have no problem with [Bayrou] being open and having dialogue with the left. It's just that, on matters of state and budget, there are things that the right will not give up," It would also risk alienating President Emmanuel Macron, for whom the pension reforms stand as an issue of legacy.
- Support from the PS would likely prove sufficient for the Bayrou gov't to avoid censure in a 16 Jan censure vote. no matter whether the Republican Right votes for or abstains.
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MACRO ANALYSIS: MNI US Macro Weekly: Inflation Data Keep Fed Cut On Track
We have published and e-mailed to subscribers the MNI US Macro Weekly offering succinct MNI analysis across the range of macro developments over the past week. Please find the full report here:
USDCAD TECHS: Fresh Cycle High
- RES 4: 1.4393 2.0% 10-dma envelope
- RES 3: 1.4327 2.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4296 2.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4246 2.00 proj of the Oct 17 - Nov 1 - 6 price swing
- PRICE: 1.4236 @ 16:38 GMT Dec 13
- SUP 1: 1.4069/3944 20- and 50-day EMA values
- SUP 2: 1.3928 Low Nov 25 and a key support
- SUP 3: 1.3822 Low Nov 6
- SUP 4: 1.3747 Low Oct 17
The trend direction in USDCAD remains up and this week’s gains to a fresh cycle high, reinforces the current bullish theme. The pair has cleared 1.4178, the Nov 26 high, to confirm resumption of the uptrend and maintain the price sequence of higher highs and higher lows. Sights are on 1.4246 next, a Fibonacci projection. Key short-term support has been defined at 1.3928, the Nov 25 low. Initial support to watch lies at 1.4069, the 20-day EMA.
US TSYS: Extending Late Session Lows, Curves Bear Steepen Ahead Next Wed's FOMC
- Treasuries traded steadily lower throughout Friday's session, initially mirroring weak action in Bunds and Gilts. By the close, the Mar'25 10Y contract slipped to 109-26 (-18) the lowest level since November 22, 10Y yield rising to 4.4046% high (+.0768).
- Initial technical support at 109-22 (76.4% Nov 15 - Dec 6 Upleg) followed by 109-20 (Low Nov 20/21).
- Curves bear steepened: 2s10s +2.272 at 15.568 as short end rates outperformed ahead of next week's FOMC policy announcement where another 25bp rate cut was expected but not certain amid current macro and political uncertainty. That said, the latest unemployment and inflation data have kept the FOMC on track to cut the federal funds rate by 25bp (to 4.25-4.50%) next Wednesday.
- Projected rate cuts into early 2025 look near steady to lower vs. this morning levels (*) as follows: Dec'24 cumulative -24.3bp (-23.7bp), Jan'25 -28.6bp (-29.6bp), Mar'25 -42.2bp (-43.9bp), May'25 -48.4bp (-50.5bp).
- No reaction to this morning's import/export prices, Monday brings flash S&P Global PMIs, Retail Sales, IP & Cap-U on Tuesday.
