SCHATZ TECHS: (Z5) Bearish Theme
- RES 4: 107.320 High Oct 17 and the bull trigger
- RES 3: 107.235 High Oct 22
- RES 2: 107.175 High Oct 24
- RES 1: 107.063/087 20- and 50-day EMA values
- PRICE: 107.020 @ 05:42 GMT Nov 13
- SUP 1: 107.000 Low Nov 12
- SUP 2: 106.995 Low Oct 8
- SUP 3: 106.965 Low Oct 6
- SUP 4: 106.920 Low Sep 25 and a key support
A short-term bear cycle in Schatz futures remains intact. The downleg that started Oct 17 is considered corrective and has allowed a recent overbought trend condition to unwind. Note that 107.014, 76.4% of the Sep 25 - Oct 17 bull leg and the next important support, has been pierced. A clear break of it would signal scope for a deeper retracement and open 106.995, the Oct 8 low. Initial resistance is at 107.087, the 50-day EMA.
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SOFR: SFRZ5 Lifted
SFRZ5 paper paid 96.380 on ~17K over several clips.
UK DATA: Labour market: The details in poor wage growth with payroll revisions
- That is a big downward surprise to the single month private regular AWE which came in at 4.21%Y/Y in September. That follows 4.51% in July and 4.55% in June (neither of which were revised).
- That is the lowest M/M rise (0.11%) since March.
- Recall that the BOE's forecast is for 4.62%Y/Y in the 3-months to September. If we assumed we saw another single month Y/Y print in September the same as today's that would lead to a 0.3ppt downward surprise to the BOE's forecast.
- PAYE median monthly pay also saw a decent downside surprise, falling 1ppt to 5.51%Y/Y.
- Bailey cited that in August one of the reasons he voted for a cut was the downside surprise to the Bank's wage growth forecasts. That was based on a 0.4ppt downside surprise, so we are getting closer to a similar level of miss here.
- We have also see the unemployment rate increase to 4.83% from 4.66% despite only marginal changes to the economic activity rate. While the V/U ratio has fallen further to 0.41 (from 0.42 last month which was revised down from 0.43).
- As noted above, the main bright spot in the report is payrolls revisions. September M/M was broadly in line falling 9.8k (-11k exp) but there was an upward revision to August from -7.7k to +9.6k and August was also revised higher. This means that payrolls look to have stabilised rather than fall over the past 3-months now.
- The claimant count rate was 4.4% and showed a decent rise in September, but the rise in August was revised away.
BRENT TECHS: (Z5) Bearish Outlook
- RES 4: $76.82 - 2.382 proj of the Apr 9 - 23 - May 5 price swing
- RES 3: $75.43 - High Jun 23 and a bull trigger
- RES 2: $69.87/71.20 - High Sep 26 / High Jul 30 and key resistance
- RES 1: $66.20 - 50-day EMA
- PRICE: $63.04 @ 07:10 BST Oct 14
- SUP 1: $62.00 - Low Oct 10
- SUP 2: $60.85 - Low May 30
- SUP 3: $58.50 - Low May 5
- SUP 4: $57.88 - Low Apr 9 and a key support
A bearish threat in Brent futures remains present and last Friday’s move down reinforces this theme. The break lower confirms a resumption of the downtrend - support at $64.00 has been breached. The move down also maintains the price sequence of lower lows and lower highs. Sights are on a weakness towards $60.85, the May 30 low. Initial firm resistance has been defined at $69.87, the Sep 26 high.
