COMMODITIES: WTI Futures Breach Bear Trigger and Key Support

In a video clip posted to X announcing the date of the budget (26 Nov), Chancellor of the Exchequer Rachel Reeves claims "Britain's economy isn't broken, but I do know that it's not working well enough for working people. Bills are too high and you feel that you're putting in but you're getting less out."

• Reeves: "...But there are still challenges. The cost of living pressures I know are still very real. We need to bring inflation and borrowing costs down. We do that by keeping a tight grip on day-to-day spending and by enforcing my non-negotiatble fiscal rules."
• Reeves: "Renewal is our mission, and growth is our challenge. Investment and reform are our tools..."
• Politically, the chancellor and wider gov't remain in a very difficult position. It faces an increasingly sceptical gilt market, a decades-high tax burden that risks deterring investment, manifesto pledges not to raise income tax, VAT or employee National Insurance contributions, and a sizeable wing of the parliamentary Labour party fully opposed to any further gov't spending cuts. 

The 10-Year gilt/Bund spread is on track for the highest close seen since June, last 203.4bp. The next level of upside interest comes in at the June 6 close (206.8bp). Fiscal risks in the UK have returned to the fore in recent weeks, driving spread widening.

Fig. 1: UK/Germany 10-Year Yield Spread (bp)

Source: MNI - Market News/Bloomberg Finance L.P.

Of note:

EURUSD 2bn at 1.1680/1.1700 (a little far).

EURUSD 2.11bn at 1.1600 (thu).

EURUSD 2.05bn at 1.1600 (fri).

AUDUSD 1.08bn at 0.6500 (fri).

• EURUSD: 1.1600 (942mln), 1.1625 (524mln), 1.1650 (746mln), 1.1680 (948mln), 1.1700 (1.06bn).
• GBPUSD: 1.3350 (326mln).
• USDJPY: 148.00 (624mln), 148.50 (566mln), 149.00 (508mln).
• AUDUSD: 0.6475 (570mln).
• USDZAR: 17.8500 (380mln).