OIL: VLCC Charter Rates Rise Amid Concern for Tighter Tanker Supply
Jan-09 12:19
Rising oil supertanker shipping costs reflect concerns over tighter tanker supplies, according to Bloomberg citing shipbrokers and charterers.
- VLCC oil charter costs from Middle East to China ( TD3C route) rose to 52 worldscale points on Jan. 8 from 45-47 worldscale points last week.
- The rise followed the addition of Cosco to the US military blacklist, and Shandong port restrictions on vessels sanctioned by the US from docking, sources said.
- The Shandong restrictions will result in fewer tankers to deliver Iran-to-China flows.
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GILTS: Seeing a clear pick up in Volumes
Dec-10 12:17
- There's clearly some notable volumes going through in Gilt to the Downside, more long bailing out could be in part the driver after the contract broke through the December, but the contract has already traded half the volume that has been seen in the past 7 sessions.
- Gilt is testing the next immediate support at 95.17 Low Nov 28, so far holding.
FOREX: USDJPY Extends Recovery to 20-day EMA, Tankan Survey This Week
Dec-10 12:16
- Further upward pressure on core yields have further weighed on the Japanese Yen Tuesday, with USDJPY extending the most recent recovery to around 2.1%. While the moves have likely been supported by the most recent news from China, it is also worth noting the impending decision for the Bank of Japan next week.
- MNI highlighted last week that the potential political reaction to rate hikes is making senior Bank of Japan officials tend towards normalising policy more slowly, despite data showing it is moving towards achieving its inflation target.
- Furthermore, the Bank’s concerns over politics, and also over how markets might react to higher rates, means that an increase to the 0.25% policy rate at the Dec 18-19 meeting will be unlikely unless USDJPY were to strengthen to ~160 against the dollar.
- Spot is now trading close to pre-election levels and the latest strength has narrowed the gap to initial resistance at 151.70, the 20-day EMA. A close back above this average would bolster the case for a more protracted recovery to the bull trigger at 156.75, Nov 15 high.
- This week’s Tankan survey will also remain significant for the BOJ board, ahead of its December 19 decision.
US TSYS: Two-Stage Sell-Off, 3Y Supply Ahead Before CPI Tomorrow
Dec-10 12:00
- Treasuries trade modestly lower on the day having sold off in two steps. The first leg paired previous gains and looked to tally with European FI reflecting on yesterday’s late Treasury sell-off along with some technical breaks. A second step lower coincided with a lift for equity futures before a further helping hand from a notable jump in small business optimism post-election.
- Data focus is more firmly on tomorrow’s CPI report although a resumption of supply with today’s 3Y auction will be of interest after strong auctions for 2s, 5s and 7s in late November.
- Cash yields are 1.6-3.3bps higher, with the long end leading increases.
- 2s10s has recently touched 9.4bps for fresh highs since Bessent’s Treasury pick helped see brief inversion.
- TYH5 has seen an overnight low of 110-31 (-06+) in recent trading where it appears to have met some modest support around the 111-00 mark. Volumes are light, only just over 250k.
- More notable support is seen at 110-18 (Dec 4 low), and a 4.25% 10Y yield would coincide with 110-26 in the interim, although the recently designated bull cycle is seen in play with resistance at 111-20+ (Dec 6 high).
- Data: Nonfarm productivity/ULCs Q3 final (0830ET)
- Note/bond issuance: US Tsy $58B 3Y Note auction - 91282CMB4 (1300ET)
- Bill issuance: US Tsy $70B 42D CMB auction (1130ET)
