MARKET INSIGHT: What to watch
Jun-08 06:51
- There is a relatively light calendar today with markets probably starting to look towards tomorrow's ECB decision. We published our ECB preview yesterday and note that while a 50bp hike in July is still a low probability, the risk is increasing. The probability of 50bp hikes in September or later is also increasing. Any language hinting at policy beyond September or at 50bp hikes is likely to be market moving tomorrow. Markets are now pricing a cumulative 26bp by July and 71bp by September (i.e. over an 80% probability is priced into the market of a 50bp hike by September. For the full MNI ECB Preview click here.
- Data this morning has not been market moving and there are no key data points due later (the remaining highlights being the final print of Q1 Eurozone GDP and US wholesale inventories). And there are no Fed/ECB/BOE speakers scheduled.
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MARKET INSIGHT: What to watch
May-09 06:49
- As our overnight team have noted, after Treasuries initially sold off on the open, they reversed mos t of their losses as the focus switched to the negative headline flow, including focus on fresh western sanctions on Russia, another North Korean missile launch, a warning re: the “complicated and grave” situation that the Chinese labour market is facing via the country’s Premier and deeper mobility restrictions in areas of Beijing (confirmed) & Shanghai (rumoured, per RTRS sources).
- This is being coupled with participants’ being cognisant of headline risks surrounding the Russia-Ukraine conflict (ahead of President Putin’s annual Victory Day parade address, scheduled for later today). Note that the parade begins at 8:00BST / 9:00CET and the speech is just confirmed to take place during the ceremony.
- The data calendar is light today so focus will remain on central bank speakers.
- Perhaps one of the most notable of the scheduled speakers will be BOE's Saunders. He is due to speak at the Resolution Foundation at 14:00BST / 15:00CET. His speech is enable "Where does monetary policy go in a low rate, high inflation, unstable economic environment?" Recall that he is one of the most hawkish members of the MPC and voted for a 50bp hike last week. Also note that Saunders will be leaving the MPC on 8 August (so his last contribution and vote will be at the August MPC meeting).
USD: Cable is through Friday's low
May-09 06:47
- Close to 100 pips range for Cable, through Friday's low and hovering near a new intraday low.
- Immediate support comes at 1.2252 Low Jun 29 2020
- DXY remains at a 20 year high and USD test session high against THB, SGD, JPY, MYR, GBP, EUR.
- Keep an eye on the USDJPY, and 131.25 High Apr 28 and the bull trigger
BUNDS: A busy week ahead
May-09 06:25
- Bund is off the overnight low, and a slightly better overnight session, in terms of volumes, albeit light on the cash open.
- German 10yr Yield tested the 1.15%, but off that level, with futures finding a bid in early trade.
- Note overnight movers, have been Equities, with the Estoxx (VGM2) opening with a 35 points downside gaps, on fresh sanctions on Russia, another North Korean missile launch, and more restrictions risks in Beijing.
- Opening gap for the Estoxx is from 3597.00 down to 3562.00.
- There is no market moving data for the session, US Wholesale Inventories will be final reading.
- It should be a more muted start for today, with a massive week in store, packed with speakers, and Data, including the US CPI and Wednesday.
- Speakers will take centre stage.
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