CHILE: CLP Supported By Hawkish BCCh Minutes, Traders Survey Due Tomorrow
* The Chilean peso is broadly unchanged against the dollar in early trade Thursday, after outperfo...
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US TSY FUTURES: New lows for Tnotes, Yield levels are in Focus
- US Tnotes found some support at the 4.80% Mark Yesterday, and while the street wait on the US CPI Tomorrow, PPI Today, some desks will again be watching the 4.80% level, tested a 4.8026% high and a 107.06 low in TYH5.
Looking further out and in case of upside traction in Yield, most Investors will be eyeing the big 5% level:
- 4.8500% = 106.30.
- 4.9000% = 106.20.
- 4.9500% = 106.10.
- 5.0000% = 106.00+.
- 5.0187% = 105.28+ (2023 high and highest since July 07).
(Chart source: MNI/Bloomberg):
STIR: Short Setting Dominated In Most SOFR Futures On Monday
OI data suggests short setting dominated through the SOFR greens on Monday, with only limited pockets of net long cover seen in that area of the strip.
- Net long cover then became more prominent in the blues,
- Hawkish adjustments continued in the wake of Friday’s NFP release, with a bid in energy commodities adding further weight.
| 13-Jan-25 | 10-Jan-25 | Daily OI Change |
| Daily OI Change In Packs |
SFRZ4 | 1,087,770 | 1,098,794 | -11,024 | Whites | +48,958 |
SFRH5 | 1,198,588 | 1,184,367 | +14,221 | Reds | +85,777 |
SFRM5 | 1,065,028 | 1,030,324 | +34,704 | Greens | +32,256 |
SFRU5 | 821,991 | 810,934 | +11,057 | Blues | -11,195 |
SFRZ5 | 1,024,840 | 994,376 | +30,464 |
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SFRH6 | 670,335 | 639,796 | +30,539 |
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SFRM6 | 655,656 | 645,320 | +10,336 |
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SFRU6 | 631,967 | 617,529 | +14,438 |
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SFRZ6 | 751,998 | 734,804 | +17,194 |
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SFRH7 | 493,360 | 483,230 | +10,130 |
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SFRM7 | 401,384 | 392,266 | +9,118 |
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SFRU7 | 287,516 | 291,702 | -4,186 |
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SFRZ7 | 269,851 | 280,884 | -11,033 |
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SFRH8 | 216,396 | 219,902 | -3,506 |
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SFRM8 | 176,637 | 173,450 | +3,187 |
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SFRU8 | 105,922 | 105,765 | +157 |
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US INFLATION: PPI Details Key As Ever To PCE Readthrough
Besides setting the tone for Wednesday's CPI data, the December PPI report (0830ET Tuesday) will help shape expectations for the monthly PCE print which is due out on Jan 31, two days after the FOMC decision.
- In contrast to CPI expectations, core sequential PPI readings are seen slightly hotter in December than November. In particular, ex-food/energy/trade is seen picking up to 0.3% M/M from 0.1% prior (0.05% unrounded). Headline Final Demand PPI is seen at 0.4% M/M for a second consecutive month.
- Initial pre-PPI estimates point to core PCE inflation at ~0.20% M/M, softer than CPI in outright terms but on a relative basis an acceleration from the softer 0.115% in Nov. Analyst estimates we've seen range from 0.18% (Goldman) to 0.27% (Deutsche), with a median 0.20% and mean 0.21%.
- To give a sense of expectations by PCE-translated PPI categories, for which health care services, portfolio management and domestic airfares will be the focus:
- Nomura is a above consensus seeing a 0.24% M/M PCE print (with core CPI at 0.27%), and note in particular PPI domestic airfares and portfolio management /investment advice prices rising on an NSA basis by by 2.0% and 1.5% M/M respectively.
- Citi, which is in line with consensus on core PCE at 0.20% and core CPI at 0.23%, sees PPI ex-food/energy/trade up 0.3% M/M (in line with consensus) "mainly because of certain financial services components such as portfolio management."
- As we note in our CPI preview, Fed leadership is likely to discount the signal from a surprising PCE print if it's driven by categories such as portfolio management.
