BOE: Where are the main dovish risks?
Dec-19 11:51
Again a wholesale change of guidance could be dovish, but we see the following as the biggest dovish risks (again not in our base case):
- Like on the hawkish side, if the Agents survey is pointing to lower wage growth, that could factor into the opening statement and lead to a minorly dovish tilt.
- Some firming up of what "gradual" means to loosely push back on current market pricing. So far only Taylor has said he thinks "gradual" is consistent with 100bp of cuts in 2025. Dhingra's voting for sequential cuts so far has also been described as "gradual". Alternatively, a firmer pushback that "gradual" means quarterly cuts or more explicit push back on market pricing would be significant.
- Additional discussion on weak output or employment data, but with little acknowledgment of the wage pressures.
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EQUITIES: EU Bank call buyer
Nov-19 11:50
SX7E (17th Jan) 145c, bought for 3.90 in 6k vs 2.46k at 143.00.
OUTLOOK: Price Signal Summary - Recovery From Last Week’s Low Extends
Nov-19 11:46
- On the commodity front, the long-term trend condition in Gold is unchanged, it remains bullish and the latest move down is considered corrective. Price has recovered from its recent lows. The 20-day EMA is at $2653.3. A clear break above it would highlight a possible reversal and signal and the end of the recent bearish corrective cycle. This would open $2710.4, the Nov 11 high. Key short-term support lies at $2536.9, Nov 14 high. A break would resume the bear cycle.
- In the oil space, a bearish theme in WTI futures remains intact and the move lower from the Nov 7 high has reinforced current conditions. Attention is on $65.74, the Oct 1 low, and $63.90, the Sep 10 low and key support. For bulls, a clear reversal to the upside would instead refocus attention on the key short-term resistance at $77.04, the Oct 8 high. Clearance of this level would resume the recent uptrend. Initial firm resistance is $72.41, the Nov 7 high.
US TSYS: Firmer On Geopol Risks, State Payrolls and A Hawkish Schmid Ahead
Nov-19 11:44
- Treasuries are off highs but are still supported primarily by geopolitical spillover from Russia’s updated nuclear doctrine and Ukraine striking targets in Russian territory with ATACMS for the first time.
- Cash yields are 4.7-5.9bp lower, with largest decline in 3s.
- Curves are within recent ranges, including 2s10s at 13.5bps.
- TYZ4 trades at 109-31+ (+ 11+) off an earlier high of 110-04. It sees strong cumulative volumes of 665k that are boosted by earlier than usual rolling activity owing to next week’s Thanksgiving holiday (earlier today a third of front month volumes were spread-related).
- Resistance is seen at 110-12 (20-day EMA), which closely ties with a 4.30% 10Y yield equating to 110.11+, but the trend needle still points south with support at 108-18+ (1.236 proj of Oct 1-10-16 price swing).
- Data: Housing starts/building permits Oct (0830ET), State-level payrolls and unemployment Oct (1000ET).
- Fedspeak: Schmid on economic outlook and mon pol (1310ET)
- Bill issuance: US Tsy $80B 42D CMB auction (1130ET)
