US TSYS: Trade Uncertainty Saps Risk Sentiment
Mar-13 19:06
- Brief two-way trade as Treasury futures pare losses then retreat again following latest PPI inflation data: headline PPI printed 0.0% M/M, below the 0.3% consensus, but January was revised up 0.2pp to 0.6%; core PPI (ex-food/trade/energy) saw only a modest dip to 0.2% from 0.3% prior (0.3% expected, Jan unrevised at 0.3% rounded).
- Initial jobless claims were lower than expected at 220k (sa, cons 225k) in the week to Mar 8 after a marginally upward revised 222k (initial 221k). Continuing claims meanwhile also surprised lower as they fell to 1870k (sa, cons 1888k).
- Treasuries bounced off midmorning lows, look to finish moderately highs amid ongoing trade war uncertainty and recession concerns. President Trump threatened soaring tariffs on US imports of EU alcoholic beverages earlier, Tsy Sec Bessent followed up with: "if trading partners want to ratchet things up, surplus countries will take the biggest hit".
- After the bell, Jun'25 10Y futures trade +9.5 at 110-30, well below technical resistance above at 111-25 (High Mar 11). Curves flatter, 2s10s mildly steeper +.538 at 32.498. Stocks weaker but off lows (SPX eminis -50.0 at 5554.75), Gold nearing 3000 as it climbs over 2983.0, Crude weaker (WTI -1.16 at 66.52).
- Bbg US$ index off early high of 1270.18 to modestly higher late Thursday at 1267.47 (+1.12).
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EURGBP TECHS: Trading Below The Pivot Resistance
Feb-11 19:00
- RES 4: 0.8474 High Jan 20 and a key resistance
- RES 3: 0.8420 76.4% retracement of the Jan 20 - Feb 3 bear leg
- RES 2: 0.8388 61.8% retracement of the Jan 20 - Feb 3 bear leg
- RES 1: 0.8378 High Jan 6
- PRICE: 0.8332 @ 16:12 GMT Feb 11
- SUP 1: 0.8297/8248 Low Feb 4 / 3 and a bear trigger
- SUP 2: 0.8223 Low Dec 19 and a key support
- SUP 3: 0.8203 Low Mar 7 ‘22 and a lowest point of a multi-year range
- SUP 4: 0.8163 123.6% retracement of the Dec 19 - Jan 20 bull leg
EURGBP gains last week appear to have undermined a recent bearish threat, however, the pullback from last Thursday’s high does highlight a developing bearish threat, once again. 0.8378, the Jan 6 high, has been defined as a ley short-term resistance. Clearance of it would strengthen a bullish condition and signal scope for a stronger recovery. For bears, a continuation lower would open 0.8248, the Feb 3 low and bear trigger.
US OUTLOOK/OPINION: Analyst Expectations Of Key CPI Sequential Drivers
Feb-11 18:53
- Lodging away from home (+ve): Lodging is for the most part seen firming in January, with an average of 0.5% (range -0.4% to +1.5%) after the -0.95% in Dec was the largest downside surprise of the report.
- Vehicle insurance (+ve): Seen increasing an average 0.6% M/M after the 0.4% in Dec. It’s a series that has seen sizeable swings in recent years, accelerating again from a trough of -0.1% M/M in Oct but having previously averaged 1.2% M/M through Jan-Sep 2024 and an even hotter 1.6% in 2023. It accounts for a non-trivial 4% of the core CPI basket and 11% of supercore, but doesn’t feed into core PCE.
- Airfares (-ve): There’s another wide range to airfare estimates (-1.2% to +1.5%) but they’re on average seen increasing 0.7% M/M for a much small boost than the surprisingly strong 3.9% in December. As always, any surprises here are likely to be faded with the PPI equivalent of note for core PCE tracking.
- Used cars (-ve): Seen unlikely to match December’s 1.2%, with estimates we’ve seen averaging 0.9% M/M (between 0.0-1.5%).
- Rents (marginal -ve): Owners’ equivalent rent and primary rents are expected to continue to hold their recent moderation to a 0.3% M/M rate. We see average estimates for OER of 0.31% (range 0.28-0.36) after 0.31% and primary rents at 0.28% (range 0.27-0.32) after 0.31%.
- Non-core: Food (+ve): Seen accelerating to 0.4% M/M after 0.31% M/M in Dec. Food-at-home inflation has overtaken the more service-focused food-away-from-home category in three of the past four months of data to December. A serious bird flu outbreak is expected to be a factor in January’s print with egg prices up sharply.
- Energy (-ve): Energy prices are seen increasing 0.6% M/M (but with a wider range to estimates than usual) after the solid 2.6% M/M in Dec. Estimates have a little wider range than usual, possibly down to assumptions for how gas prices are passed through.
See the full MNI US CPI Preview here.
PIPELINE: Corporate Bond Issuance Update $1.75B Zimmer Biomet 3Pt Launched
Feb-11 18:40
- Date $MM Issuer (Priced *, Launch #)
- 02/11 $5B #Israel $2.5B 5Y +120, $2.5B 10Y +135
- 02/11 $1.75B #Zimmer Biomet $600M 2Y +45, $550M 5Y +72, $600M 10Y +97
- 02/11 $1.25B #Tennessee Valley Authority 30Y +60
- 02/11 $1B Snap Inc 8NC3 7%
- 02/11 $800M #Flowers Food 10Y +125, 30Y +150
