FRANCE: Socialists Threaten Gov't Ouster If Budget Concessions Not Forthcoming
Oct-24 09:49
Speaking to BFM-TV, First Secretary of the centre-left Socialist Party (PS), Olivier Faure, said that if the gov't did not make changes to the 2026 state budget and social security budget by Monday, 27 Oct, then "it will be over", referring to the second gov't of PM Sebastien Lecornu. The National Assembly takes up the revenue section of the 2026 budget at 15:00CET (09:00ET, 14:00BST).
- Faure listed a "series of horrors" they his party demands be removed from the budget, including "the [tax] reduction on pensioners...the freezing of retirement pensions [and] the freezing of social benefits". On the revenue-raising side, Faure claims "If we can find between EUR15-20bln in additional revenue, we have the means to correct the government's mistakes. For the moment, we are very far from the target." To do this, Faure says "We need to hit the Gafam [Google, Apple, Facebook, Amazon, Microsoft], we need to hit the ultra-rich, we need to hit the super-inheritances."
- It is not only the PS that Lecornu needs to keep on board. In an earlier committee vote, only deputies from Renaissance backed the revenue section of the budget plans, with the conservative Les Republicains joining the far-left and far-right in voting against and centrist MoDem and centre-right Horizons abstaining.
- The PS continue to hold decisive sway over the future of Lecornu's gov't as the far-left and far-right do not carry enough votes between them to reach a majority in a censure motion.
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OUTLOOK: Price Signal Summary - Bull Cycle In EUROSTOXX50 Futures Intact
Sep-24 09:49
- In the equity space, a bull cycle in S&P E-Minis remains intact and the contract traded to a fresh cycle high on Monday. Price has recently breached the 6700.00 handle and this signals scope for an extension towards 6787.63, a 1.382 projection of the Aug 1 - 15 - 20 price swing. Moving average studies remain in a bull-mode position, highlighting a dominant uptrend and positive market sentiment. Initial support to watch lies at 6625.74, the 20-day EMA.
- EUROSTOXX 50 futures are trading closer to their recent highs. The contract recently cleared resistance around the 20-day EMA - a bullish development - and the subsequent rally reinforces a bullish theme. The move signals potential for a climb towards 5525.00, the Aug 22 high and a bull trigger. On the downside, key support to monitor is 5302.00, the Sep 2 low. First support lies at 5417.44, the 20-day EMA.
FOREX: AUD Outperforming Following CPI, CBA Expect AUDUSD Move to 0.72
Sep-24 09:44
- Firmer-than-expected monthly CPI data in Australia is prompting some Aussie outperformance on Wednesday. Whilst the RBA will continue to place more weight on the quarterly reading, AUDUSD is currently up 0.2% and bucking the stronger dollar theme. The pair’s technical uptrend remains intact, and the latest post-Fed pullback is considered corrective - for now. A weekly close above the prior 0.6625 high would be a bullish development.
- Market participants have been more focussed on AUDNZD, which has extended its impressive rally to trade to a fresh cycle high of 1.1317. As noted, resistance remains scant on the chart until 1.1491, the 2022 high. It is also worth reflagging that the NZ government has appointed Riksbank First Deputy Governor Anna Breman to be the new RBNZ governor.
- CBA forecast AUD will lift against all the major currencies, except for NZD, over the next few quarters. They believe “a weaker USD and elevated risk appetite amid an improving global economic outlook will underpin the AUD cross rates.”
- For AUDUSD specifically, CBA expect spot to converge closer to their estimate of fair value of 0.72 in coming quarters. They then expect AUDUSD to decline in the second half of 2026 if they are right about the Chinese economy expanding below potential again next year.
EGBS: Monday's High Contains Upside In Bund Futures Again
Sep-24 09:39
- The light early bid in Bund futures faded as the bidding deadline for today’s 7-year Bund auction approached. With supply now in the rear view, Bunds are +10 ticks at 128.28. Monday’s high of 128.41 has contained upside once again, with today’s range just 21 ticks wide.
- Early upside in Bunds may have been driven by renewed concerns around the Russia-Ukraine conflict alongside a weaker-than-expected German September IFO print.
- German yields are up to 1bp lower across the curve, with a light bull flattening bias intact. The 7-year Bund results were much better than last month’s soft outing.
- 10-year EGB spreads to Bunds are up to 1.5bps wider, seemingly a result of the Russia/Ukraine concerns, with BTPs underperforming (spread to Bunds at ~81bps).
