SCHATZ TECHS: (Z5) Trend Condition Remains Bearish
- RES 4: 107.235 High Oct 22
- RES 3: 107.175 High Oct 24
- RES 2: 107.064 50-day EMA
- RES 1: 107.026 20-day EMA
- PRICE: 106.995 @ 06:12 GMT Nov 21
- SUP 1: 106.945 Low Nov 17
- SUP 2: 106.920 Low Sep 25 and a key support
- SUP 3: 106.900 Round number support
- SUP 4: 106.830 Low Mar 27 (cont.)
The short-term trend condition in Schatz futures remains bearish. Recent weakness paves the way for an extension towards 106.920, the Sep 25 low and a key support. Clearance of this level would strengthen a bear theme. Initial firm resistance to watch is 107.026, the 20-day EMA. Resistance at the 50-day EMA is at 107.064. The area between the two averages represents a key short-term resistance zone.
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UK DATA: More details on UK CPI
- Within NEIG which was a 0.06ppt downside surprise to the BOE at 1.49%Y/Y (from 1.61%Y/Y in August), weakness has been seen in furniture (-0.02ppt to headline CPI), household appliances (-0.02ppt to headline CPI), books (-0.02ppt to headline CPI). Clothing was on the stronger side, contributing +0.03ppt to headline CPI
- Within services, maintenance and repairs of vehicles contributed +0.03ppt.
- Telephone equipment and services was soft: due both to sorter mobile phone equipment and also bundled telecomms services (impacting both NEIG and services).
- Within cultural services, the entire downside contribution (worth 0.06ppt to headline CPI) came from "Cinemas, theatres, concerts" which only rose 0.1%Y/Y (down from 7.0%Y/Y in August). The average for that over the past 12 months is now 3.6%Y/Y - so there is some scope for that to rebound next month.
- And within catering services, there is further strength within canteens - which are now up 9.4%Y/Y but have rise 8.7% cumulatively since June (and were negative last year). In contrast "restaurants and cafes" - which we pointed out have not shown any major rises - saw another 4.1%Y/Y print and have now consistently shown 3.9-4.2%Y/Y prints since February and are not responding to wholesale food price increases yet. This suggests to us there is weak pricing power for restaurants with consumers choosing not to eat out as much if prices go up further.
STIR: Sharp Dovish Repricing At Front Of SONIA Curve Following Soft CPI
White/Red SONIA futures opened up 7.0-8.5 ticks before taking another leg higher, currently +9.0 (Z5) to +12.0 (M6, U6) . SFIU6 is now at 96.645, its highest since the start of July.
- The September inflation report was softer-than-expected.
- Core CPI was 3.52% Y/Y, two tenths below consensus and down from 3.59% in August. Food and non-alcoholic beverages presented the largest downside surprise, which is significant given the MPC’s focus on food inflation as a driver of inflation expectations and inflation persistence.
- SONIA-dated OIS now price an indicative ~10bps of cuts priced through November (according to Bloomberg data), around 7bps more dovish than yesterday’s close.
- There are now 61bps of easing priced through the next 12 months, up from just below 50bps yesterday.
- A reminder that October flash PMI data is still to come this week, due on Friday morning.
- There aren’t any more BOE speakers scheduled this week, but we judge there is now an increasing prospect of Governor Bailey (the key swing voter in our view), voting for a Q4 cut.
| Meeting Date | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| Nov-25 | 3.871 | -9.7 |
| Dec-25 | 3.796 | -17.2 |
| Feb-26 | 3.652 | -31.6 |
| Mar-26 | 3.589 | -37.9 |
| Apr-26 | 3.483 | -48.5 |
| Jun-26 | 3.444 | -52.4 |
| Jul-26 | 3.385 | -58.4 |
| Sep-26 | 3.362 | -60.6 |
| Source: MNI/Bloomberg Finance L.P |
EQUITY TECHS: E-MINI S&P: (Z5) Trading Above Support
- RES 4: 6850.87 1.618 proj of the Aug 1 - 15 - 20 price swing
- RES 3: 6831.38 2.500 proj of the Aug 20 - 28 - Sep 2 price swing
- RES 2: 6819.25 1.500 proj of the Aug 1 - 15 - 20 price swing
- RES 1: 6812.25 High Sep 9 and the bull trigger
- PRICE: 6784.8 @ 07:25 BST Oct 22
- SUP 1: 6621.99 50-day EMA
- SUP 2: 6540.25 Low Oct 10 and a key short-term support
- SUP 3: 6506.50 Low Sep 5
- SUP 4: 6427.00 Low Sep 2
The trend condition in S&P E-Minis remains bullish and the contract is trading above support at the 50-day EMA. The average, currently at 6627.92, has been pierced but remains intact - for now. Note that the Oct 10 low of 6540.25 marks the key short-term support. Clearance of this level would undermine a bull theme. Moving average studies remain in a bull-mode position, highlighting a dominant uptrend. The bull trigger is 6812.25, the Oct 9 high.
