MARKET INSIGHT: What to Watch: PPI, Wkly Claims, Limited Fed Speak, 30Y Sale
Aug-11 11:59
Tsys making modest gains on light volumes (TYU2<250k), top end narrow overnight range as markets await next round of data at 0830ET (prior, est):
- Initial Jobless Claims (260k, 265k)
- Continuing Claims (1.416M, 1.420M)
- PPI Final Demand MoM (1.1%, 0.2%); YoY (11.3%, 10.4%)
- PPI Ex Food and Energy MoM (0.4%, 0.4%); YoY (8.2%, 7.7%)
- PPI Ex Food, Energy, Trade MoM (0.3%, 0.4%); YoY (641.%, 5.9%)
- Scheduled Fed speakers rather limited after Wed's flat July CPI weighed on prior market expectations of 75bp hike in September. Lone scheduled speaker so far: SF Fed Daly, Bbg TV interview later this evening at 1930ET
- Treasury auctions:
- $55B 4W, $50B 8W bill auctions at 1130ET,
- $21B 30Y bond auction (912810TJ7) at 1300ET
- $55B 4W, $50B 8W bill auctions at 1130ET,
- Geopol: Ongoing Russia/Ukraine conflict. UN Secretary General Antonio Guterres has released a statement calling for calm regarding the Zaporizhizhia nuclear power plant in Ukraine, which is currently occupied by Russian forces and being used as a military base according to the head of Ukraine's nuclear power company, Petro Kotin.
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CANADA: GoC Inversion Builds With Risk-Off
Jul-12 11:54
- GoCs opened sharply higher and despite a small pull back, still see front-end yields down 5bps to reverse Friday’s move after the US and Canadian employment reports and longer end yields moving further below with 5Y and 10Y -6.5bps.
- The net result has been both 2s5s and 2s10s falling further into inversion at -10bps and -3bps respectively, with 2s5s in particular nearing lows from 2019 when looking through Mar’20 volatility.
- Broadly similar story in early trading for BAX futures coming ahead of tomorrow’s BoC decision, with the curve still extremely steep through 2022 before solid inversion thereafter and implied rates for late 2023/early 2024 back close to where they were after the Jun 1 BoC.
Source: Bloomberg
CROATIA: EUCO Gives Final Approval For Eurozone Accession
Jul-12 11:40
The ECOFIN group of EU finance ministers has adopted the three legal acts required to allow Croatia to join the eurozone and begin the process of replacing its kuna currency with the euro from 1 January 2023.
- Link to EUCO statement: https://www.consilium.europa.eu/en/press/press-rel...
- One of the three acts required sets the exchange rate at 7.53450 kuna per 1 euro. As stated in the act, this corresponds to the current central rate of the kuna in the exchange rate mechanism (ERM II).
- Croatia will be the 20th country to join the eurozone, and will sit as the currency union's 15th-largest economy.
EUR: EUR/USD Rejects Pressure to Break Below Parity, Rallies 50 pips
Jul-12 11:27
- A solid turnaround in the EUR/USD rate in recent trade - putting the pair well off the lows at parity and now at session highs having seemingly firmly resisted pressure to break below the 1.00 level.
- No specific headline driver or piece of news to drive the currency higher here, but there's been a considerable spike in activity evident in futures volumes at the NY crossover - around 1,700 EUR futures changed hands inside 60 seconds - that's ~$211mln cash equivalent
