MARKET INSIGHT: What to Watch: July FOMC Minutes, Retail Sales, 20Y Bond Sale
Aug-17 12:06
Tsys futures under pressure, extending overnight lows last few minutes after initial selloff on jump in UK CPI (+0.6% MoM; +10.1 YoY) renews rate hike expectations. Yield curves steepening (2s10s +1.004 at -45.157, but off -42.169 high) as expectations for additional hikes climb (rate cut hopes for late 2023 evaporating).
- Markets looking toward this afternoon's July FOMC minutes release at 1400ET for voting member guidance mindset.
- Upcoming data at 0830ET:
- Retail Sales Advance MoM (1.0%, 0.1%); Ex Auto MoM (1.0, -0.1%)
- Ex Auto and Gas (0.7%, 0.4%); Control Group (0.8%, 0.6%) followed by:
- Business Inventories (1.4%, 1.4%) at 1000ET
- Fed speakers: Double billing from Fed Gov Bowman today:
- On tech/innovation financial services, text, Q&A, livestreamed at 0930ET; and again at 1420ET at Arkansas Women's Comm meeting, also livestreamed.
- Treasury auctions:
- $30B 119D bill CMB auction at 1130ET
- $15B 20Y Bond (912810TK4) at 1300ET.
- Equity earnings: Stocks weaker (ESU2 -36.25 at 4271.5) part on extended rate hike pricing and after Target (TGT) earnings miss (irony) -$0.39 vs. $0.725 est. Meanwhile, Lowe's Group (LOW) beat: $4.67 vs $4.611 est; Analog Devices (ADI) beat: $2.52 vs. $2.442 est.
- After the close: Synopsys (SNPS) $2.038 est; Cisco (CSCO) $0.816 est; Bath and Body Works (BBBI) $0.446 est.
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US TSYS: Repo Reference Rates
Jul-18 12:04
- Secured Overnight Financing Rate (SOFR): 1.54%, $950B
- Broad General Collateral Rate (BGCR): 1.51%, $368B
- Tri-Party General Collateral Rate (TGCR): 1.51%, $359B
- (rate, volume levels reflect prior session)
CANADA: USDCAD Decline Plateaus
Jul-18 11:52
- The steady decline in USDCAD overnight appears to have plateaued with the pair -0.4% at 1.2983, leaving CAD firmly mid-pack of the majors as Can-US yield differentials offer reduced support after being trimmed notably last week.
- Coming just before the surprise front-loaded 100bp hike from the BoC on Wed, latest CFTC net spec data for Tue showed largely steady CAD net longs, at 2.5% of OI, compared to reduced but still solid net shorts of -26% for AUD and -12% for NZD.
- Technicals see the recent pullback as corrective, with resistance at 1.3166 (3.0% upper Bollinger band) after last week clearing key resistance at 1.3084 (Jul 5 high).
ITALY: Draghi Confidence Vote Announced for Friday, Alongside Expectations
Jul-18 11:50
Bloomberg cites ANSA as reporting that the Italian parliament are to hold a confidence vote on Wednesday after Draghi's speech and address.
That's inline with expectations and inline with the piece we sent last week:
- "Draghi is expected to address both houses of parliament on Wednesday as he presents plans for government, which would usually be put to the vote in both chambers."
- "Italian Prime Minister Mario Draghi is preparing to resign definitively in parliament next Wednesday without a clear sign of support from restive parties upon which his governing coalition depends, something which he thinks is very unlikely"
