BONDS: /STIR: Markets Look To Inflationary Impact Of Higher Oil Prices
Jun-13 10:53
Note that EUR & GBP traded inflation metrics have moved higher today, providing a source of pressure for core global FI markets, as longer-term upside risks to oil pricing come to the fore and the initial risk-off impulse from the Israeli offensive against Iran fades from extremes
- Accordingly, year-end ECB pricing is ~2.5bp less dovish on the day, while end of year BoE pricing is ~5bp less dovish, at least partly reflecting the increased inflationary risk (there was also a flow element surrounding the higher Euribor fix to factor in as well).
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US TSYS: Modestly Firmer In A Thin Docket Before A Busy Thursday
May-14 10:50
- Treasuries are slightly firmer overnight, more comfortably back in the middle of yesterday’s range awaiting fresh drivers.
- It’s a thin data docket today (just weekly mortgage data) which sees Fed Vice Chair Jefferson in a little more focus at 0910ET, and with an eye on tomorrow’s April reports for US PPI and retail sales amongst others.
- US President Trump flies from Saudi Arabia to Qatar today.
- Cash yields are 0.5-1.5bp lower on the day, with declines led by the belly.
- TYM5 sits at 110-06+ (+ 07+) as it lifts a little more off yesterday’s latest lows of 109-30, on modest cumulative volumes of 280k.
- Technicals point to a bear mode condition, having most recently cleared support at 110-01+ (76.4% retrace of Apr 11 – May 1 bull leg) in a step closer to key support at 109-08 (Apr 11 low).
- Data: MBA mortgage applications (0700ET)
- Fedspeak: Jefferson (0910ET), Daly (1740ET) – see STIR bullet
- Bill issuance: US Tsy to sell $60bn 17-w bills (1130ET)
LOOK AHEAD: Wednesday Data Calendar: Fed Speak Goolsbee, Waller, Jefferson, Daly
May-14 10:49
- US Data/Speaker Calendar (prior, estimate)
- 14-May Chicago Fed Goolsbee appr 30 minutes into NPR's Morning Edition
- 14-May 0515 Fed Gov Waller on central bank research (text, Q&A)
- 14-May 0700 MBA Mortgage Applications (11.0%, --)
- 14-May 0910 Fed VC Jefferson economic outlook (text, no Q&A)
- 14-May 1130 US Tsy $60B 17W Bill auction
- 14-May 1740 SF Fed Daly fireside chat (no text, Q&A)
OUTLOOK: Price Signal Summary - Key Support In Gold Remains Intact
May-14 10:46
- On the commodity front, the latest pullback in Gold still appears corrective. Key short-term support to watch is $3202.0, the May 1 low. A clear break of this level would undermine the short-term bullish theme and signal scope for a deeper retracement. This would open $3164.3, 61.8% of the Apr 7 - Apr 22 upleg. Note that the 50-day EMA is at $3164.5 - a key support too. The M/T trend remains bullish, a reversal would refocus attention on $3500.1, the Apr 22 high and bull trigger.
- In the oil space, a downtrend in WTI futures remains intact and S/T gains are considered corrective. For now, the corrective cycle remains in play and price has traded through the 20-day EMA. Key resistance to watch is $63.55, the 50-day EMA. It has been pierced, a clear break of it would highlight a stronger reversal. This would open $66.41, the Apr 4 high. For bears a reversal lower would refocus attention on $54.67, the Apr 9 low and bear trigger.
