US TSYS: Tsys Futures Edge Lower Ahead Of PPI & Jobless Claims
Dec-12 05:14
- Tsys futures have edged lower throughout the session, with most contracts breaking below Wednesday's lows. There hasn't been much in the way of headlines, while volumes have also been below recent averages, there has also been no notable trades to mention. TU is the best performing contract, trading -00+ at 103-01+, while TY trades -02 at 110-20, WN is trading -11 at 124.23
- Focus tonight will be on PPI numbers with consensus for m/m PPI to remain in line with the prior month at 0.2%.
- Cash tsys curve has continued the overnight moves, with the curve slightly steeper. Yields are 0.8bps to 1.2bps higher, with the 2yr +0.8bps at 4.161%, while the 10yr is +1.2bps at 4.283%. The 2s10s is +0.336 at 11.914.
- Fed fund futures are currently pricing in 24.7bps of cuts next week, up from 21.5bps prior to CPI. Pricing has just been bought forward slightly, with rate cut pricing cooling 3-5bps further out, currently the market expects a cumulative 83.5bps of cuts through to December 2025.
- Tonight, we have PPI and Jobless claims. There will also be a 4w, 8w and a 30y auction.
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US TSYS: Tsys Futures Off Earlier Highs, Curve Ber-Flattens, Fed Speakers Later
Nov-12 05:06
- Tsys futures are off earlier session highs, although ranges remain narrow. TU is currently +00¾ at 102-22⅛, TY is +04+ is 110-01+. There has been little in the way of drivers through the session, USD continues to edge higher making new yearly highs as investors await remarks from Fed speaker tonight and inflation data due later in the week.
- Cash tsys have reopened after a three day break, with the curve bear-flattening, yields are -1bps to +4bps, with the 3yr yield underperforming. The 2yr is +3.2bps at 4.286%, while the 10yr is +1.8bps at 4.322%. The 2s10s continues to flatten is testing recent lows, at 4bps back at October 10 levels.
- The flattening move was supported earlier after a Block 2s10s flattener, DV01 $645k
- The market is no longer pricing in a full rate cut in December, projected rate cuts into early 2025 compared to early Monday levels (*): Dec'24 cumulative -16.3bp (-17.1bp), Jan'25 -24.3bp (-25.7bp), Mar'25 -37.6bp (-38.9bp), May'25 -45.0bp (-46.9bp).
- It is another slow session for US data, Fed speakers will be the focus with Waller, Barkin, Kashkari and Harker all speaking, while attention will turn to CPI on Wednesday
JGBS: Subdued Data-Light Session, PPI & 30Y Supply Tomorrow
Nov-12 04:59
JGB futures have pushed into negative territory, -6 compared to settlement levels.
- Outside of the previously outlined M2 & M3 Money Stock, there hasn't been much by way of domestic drivers to flag. Machine Tool Orders data is due soon.
- Cash US tsys are flat to 4bps cheaper in the Asia-Pac session today with a flattening bias. US tsys reopened today after being closed for the Veterans Day holiday yesterday.
- Fed futures are pricing 17bps of cuts at the December meeting with a cumulative 25.7bps of cuts priced in by the January meeting.
- Cash JGBs are little changed across benchmarks beyond the 1-year (+2bps).
- Swap rates are little changed as well.
- Tomorrow, the local calendar will see PPI data alongside 30-year supply.
ASIA STOCKS: Asian Equities Mostly Lower As Semiconductors Struggle
Nov-12 04:52
Asian equities are mostly lower today. Japanese equities have given back session gains to now trade mixed with tech stocks underperforming. Hong Kong listed equities have seen a sharp drop due to concerns about domestic macroeconomic conditions and rising geopolitical tensions, headlines out earlier supporting the China property market have done little to push equities higher. Asian tech stocks are the worst performing today, with the large-cap semiconductor stocks leading the losses. US Tsys yields rose, driving funds into the dollar and pressuring emerging Asian currencies, with the Thai baht and Indonesian rupiah weakening.
- Asia tech is struggling, tracking moves made overnight in the Philadelphia SE Semiconductor Index. Investors are now looking to key earnings reports from Tencent and Alibaba to gauge the impact of business streamlining efforts, and whether consumer spending will recover with potential Beijing stimulus.
- China mainland equities are outperforming Hong Kong listed equities, with the CSI 300 +0.40%, while the HSI is -1.75%, HSTech Index is -2.50%.
- Japanese equities are off earlier highs, with the TOPIX now just 0.10% higher for the day, Recruit Holdings surged 8.20% in early morning trading following better-than-expected operating profit for 2Q however most of those gains have now been erased and trades just 2.5% higher. The Nikkei has erased earlier gains and now trades down 0.70%, with Tokyo Electron (-3.20%) struggling.
- South Korea’s Kospi is trading 1.30% lower, marking a third straight session of losses, driven by foreign and local fund selling, while retail investors stepped in to buy. Taiwan's TAIEX is trading 1.70% lower, largely due to a 2.30% drop from TSMC following a 2.54% fall in the Philadelphia SE Semiconductor Index overnight.
- Australia's ASX 200 is 0.2% lower, primarily impacted by declines in gold miners as bullion prices retreated following volatility in the US. Meanwhile, Australian consumer confidence rose in November, as households appeared less worried about future interest rate hikes.
