US: Third-Party Candidates Likely To Damage Biden More Than Trump In 2024

• Cash Treasuries have pared some of the day’s sizeable belly-led losses in the second half of the session, with some risk-off flows most recently seen with Israel advising its citizens to leave Turkey.
• Nevertheless, 5Y yields are still 14bps higher today, currently at 4.858% off an earlier high of 4.892% that marked fresh highs since 2007, of which 12.5bps comes from real yields.
• TYZ3 trades at 106-11 (-27+) off earlier lows of 106-03+ which tested support at the Oct 4 low after which lies the round 106-00 before ultimately 105-06+ (2.0% 10-dma envelope). Volumes are elevated at a cumulative 1.9M.
• At the front end, the Fed terminal is seen with a cumulative +15bp of hikes to 5.48% effective in January followed by 70bps of rate cuts to year-end, pushing below the 71bps seen after the hawkish FOMC dot plot on Sep 20.
• Kashkari (’23 voter) still to come late on at 1700ET, whilst tomorrow sees a plethora of Fedspeak including permanent voters Waller, Williams and Bowman, along with the Fed’s Beige Book and housing data.

• Recap of the day’s moves: Early trading started with a more outright bear steepening. It came from an extension of yesterday’s move linked to US efforts to prevent a widening of the Israeli-Hamas conflict through the broader region, as well as a heavy supply burden in both Asia-Pac and European markets along with the hawkish combination of touted wage demands from Japan's largest wage union re: Spring '24 wage talks and BBG sources pointing to adjustments higher in the BoJ's upcoming updated CPI projections.
• The day’s moves then morphed into the belly-led sell-off seen at present after strong retail sales data, with the strength of domestic data later reinforced by an upward revision to the Atlanta Fed’s GDPNow to 5.4% annualized for Q3. There was minimal reaction to the NAHB housing index dropping to its lowest since January. There is also further political uncertainty after Jim Jordan failed to secure the speaker's gavel in a first roll call in the House.

• RES 4: 0.6630 High Aug 2
• RES 3: 0.6616 High Aug 16
• RES 2: 0.6522 High Aug 30 and Sep 1, and the key resistance
• RES 1: 0.6445/6501 High Oct 11 / High Sep 29
• PRICE: 0.6367 @ 16:32 BST Oct 17
• SUP 1: 0.6286 Low Oct 3 / 13 and the bear trigger
• SUP 2: 0.6272 Low Nov 3 2022 and a key support
• SUP 3: 0.6215 2.236 proj of the Jun 16 - Jun 29 - Jul 13 price swing
• SUP 4: 0.6170 Low Oct 13 2022 and a key support

The AUDUSD trend condition remains bearish following the recent breach of support at 0.6331, the Sep 27 low. Attention is on 0.6286, the Oct 3 / 13 low. A clear break of this support, would confirm a resumption of the downtrend and open 0.6215, a Fibonacci projection. On the upside, key trend resistance is unchanged at 0.6522, the Aug 30 and Sep 1 high. Clearance of this level is required to highlight a reversal.

A new survey from Ipsos has found that, “While most Americans (59%) think gas prices are rising in recent weeks, they really aren’t. According to GasBuddy, prices are down roughly 14 cents from a month ago and a quarter from a year ago.”

• Ipsos: “A whopping 74% in the West region think prices are rising as gas in California crested near $6 a gallon before starting to fall over the past week. California is still the only state with average prices above $5. Overall, three in five people thinking prices are rising is about where we were a year ago, in Wave 63 of the Tracker. At that point, prices had just started dropping after a two-year run of increases post-pandemic, according to data from the U.S. Energy Information Administration.”
• The survey shows that President Biden’s messaging on the economy and energy is failing to filter through to voters. If sentiment fails to change next year it could shape up a major vulnerability to Biden as presidential approval traditionally tracks closely with gasoline prices.

Figure 1: Is the Price of Gasoline Higher, Lower, or the Same as the Start of this Year?

Source: Ipsos