LATAM: Summary – November 12
- In Latam, Brazil will publish September services volume figures on Wednesday, where the market expects growth to rise to 3.8% y/y, from 2.5%. Elsewhere, Colombia will release October consumer confidence data, while in Argentina, monthly CPI inflation is expected to edge up to 2.3% m/m. Annual inflation is still expected to moderate to 31.2% y/y, however.
- In the G10, US MBA Mortgage applications as well as Canada building permits highlight the data calendar. A set of Fed speakers is scheduled for today, while ECB's de Guindos is also set to speak but likely won't move the needle. The US government is expected to reopen tomorrow if the House expectedly signs the deal on that today.
- The Japanese yen has weakened again Wednesday, with USDJPY’s move higher notable given further FX jawboning from Finance Minister Katayama, who reiterated authorities are closely watching FX moves with a high sense of urgency. This has led USDJPY to erase the ADP-driven losses from Tuesday, and then accelerate through 154.50, as well as 154.80, placing the pair at the highest level since February. This puts sights on 155.35, a Fibonacci projection.
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BOE: Greene's comments remain consistent with last week
"*BOE'S GREENE: MIGHT NEED TO WORRY MORE ABOUT 2ND-ROUND EFFECTS
*BOE'S GREENE: I AM CONCERNED ABOUT HOW RESTRICTIVE MONETARY IS
*BOE'S GREENE: CASE FOR HIGHER FOR LONGER RATES, SKIPPING CUT" Bloomberg
These are all in line with recent communications. The MPC statement still describes policy as restrictive too ("The timing and pace of future reductions in the restrictiveness of policy...").
BOE: Greene says more concerned about food prices than energy
This is an interesting point. The research the MPC has been citing has suggested that food prices, energy and fuel prices have outsized impacts on inflation expectations. And the narrative had been that food prices were the more concerning recently. This seems to be the point that Greene is making - not that she would be more worried about food than energy if they were both increasing - but that food prices are more of the near-term concern.
- "*BOE'S GREENE: I AM MORE CONCERNED ABOUT FOOD THAN ENERGY PRICES
- *BOE'S GREENE: HOUSEHOLDS PARTICULARLY SENSITIVE TO FOOD PRICES" Bloomberg
OUTLOOK: Price Signal Summary - Recovery In Gilts Extends
- In the FI space, Bund futures rallied sharply higher on Friday confirming a resumption of the recovery that started Sep 25. The move higher reinforces a bullish theme and attention is on the next key resistance at 129.44, the Sep 10 high. Clearance of this hurdle would pave the way for a climb towards 129.58, 61.8% of the Jun 13 - Sep 3 bear leg. Initial support to watch lies at 128.64, the 50-day EMA. A break of this level would instead signal a reversal.
- Gilt futures rallied sharply higher on Friday confirming a resumption of the recovery that started Sep 25. The move higher reinforces a bullish theme and attention is on the next key resistance at 91.28, the Sep 24 high. It has been pierced, a continuation higher would pave the way for an extension towards key resistance at 91.82, the Sep 11 high. On the downside, price needs to trade below support at 90.26, the Sep 26 low, to reinstate a bearish theme. First support lies at 90.86, the 20-day EMA.
