US TSYS: What to Watch: Bond Yields Breach 4%
Continued selling across the curve sees 30YY just top 4%: 4.0010% high, 3.9982% last +.0450, highest since Nov'22. 10YY extended 4 month highs earlier as well, 4.0458% high, 4.0379 last. 2YY tapped 4.9352% - new 16 year high earlier, 4.9080% last. Heavier volumes in lead-up to NY open. TYM3 over 560k so far.
- US Data out of the way early, all at 0830ET: Initial Jobless Claims (192k, 195k); Continuing Claims (1.654M, 1.669M); Nonfarm Productivity (3.0%, 2.5%) and Unit Labor Costs (1.1%, 1.6%)
- Tsy auction wrap up the week w/ US Tsy $75B 4W, $60B 8W bills at 1130ET
- Fed speaker scheduled later: Fed Gov Waller eco-outlook, text, moderated virtual event at 1400ET
- MN Fed Kashkari on race, justice and economy w/ MN Supreme Court Justice Alan Page at 1830ET, Livestreamed
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US TSYS: What to Watch: Chicago PMI, ECI, House Price Index, Eq Earnings
Tsys little firmer, off highs generated by mixed European data overnight. Inside range as Fed kicks off two-day policy meeting later. Fed funds implied hike for Feb'23 steady at 26.4bp, Mar'23 cumulative 46.9bp to 4.798%, May'23 57.9bp to 4.908%, terminal at 4.92% in Jun'23-Jul'23.
- Data kicks off at 0830ET w/ Employ Cost Index 4Q (1.2%, 1.1%) followed by
- FHFA House Price Index MoM (0.0%, -0.5%) and S&P CoreLogic CS 20-City MoM SA (-0.52%, -0.65%), YoY NSA (8.64%, 6.65%) at 0900ET
- MNI Chicago PMI 45.1 rev, 45.0) at 0945ET
- Conf. Board Consumer Confidence (108.3, 108.9), 1000ET
- Dallas Fed Services Activity at 1030ET
- FHFA House Price Index MoM (0.0%, -0.5%) and S&P CoreLogic CS 20-City MoM SA (-0.52%, -0.65%), YoY NSA (8.64%, 6.65%) at 0900ET
- No Tsy auctions: resume Wednesday w/ 17W bill sale
- Equity earnings resume: International Paper (IP, $0.87 adj EPS), Pfizer (PFE, $0.87 EPS), Philips 66 (PSX, $3.97 EPS), Pulte Grp (PHM, $3.85 EPS), McDonalds (MCD, $2.59 EPS), Marathon Petroleum (MPC, $7.09 EPS), Corning (GLW, $0.47 adj EPS), Sysco (SYY), Caterpillar (CAT, $2.79 EPS), Exxon (XOM, $3.40 adj EPS). Still waiting on UPS, GM. After market: EA, AMD, AMGN.
US TSYS: Early SOFR/Treasury Option Roundup
Mixed flow on modest overnight volumes ahead Wed's FOMC annc:
- SOFR Options:
- 2,000 OQM3 96.06/96.56 3x2 put spds ref 96.48
- Block, 3,500 SFRG3 95.06/95.12 put spds, 1.25 vs. 95.145/0.12%
- over 8,000 SFRG3 95.12/95.18 strangles ref 95.16
- 3,500 SFRZ3 94.50 puts, 4.5 ref 95.545
- Treasury Options:
- 2,000 TYH3 118 calls, 4 ref 114-12.5
- over 18,000 TYH3 115.5 calls, 25-27 ref 114-15 to -17.5
AUSTRALIA: Labor On Course To Win NSW Election Dealing Further Blow To Coalition
The incumbent centre-right Liberal/National Coalition gov't of Premier Dominic Perrottet is on course to lose its majority in Australia's most populous state New South Wales according to opinion polling. The election, taking place on 25 March, looks set to deliver a majority for the centre-left Labor Party in what would be a notable political development in a state that has been run by the Coalition since 2011.
- Polling in January shows Labor ahead of the Coalition on a primary vote basis by 3-6%, but on the two-party preferred vote Labor leads by 12% according to polling by YouGov.
- Labor continues to benefit from the broad popularity of the gov't of PM Anthony Albanese at the federal level. A win for Labour in NSW would see the party control the gov'ts of all Australian states and internal territories, apart from Liberal-controlled Tasmania.
- The 29% primary vote support recorded by the Coalition in a January 2023 Resolve Strategic federal-level opinion poll was the lowest for the parties since March 2008, which came in the wake of Labor PM Kevin Rudd's landslide win in the Nov 2007 election.
- While the next federal election is not due until 2025 at the latest without a notable turnaround for Peter Dutton's Coalition, a sustained period of ALP governance looks increasingly likely.
Source: Resolve Strategic, Essential, Roy Morgan, YouGov, Newspoll, Freshwater Strategy, MNI
