FED: Dallas's Logan Reiterates Reluctance To Ease
Dallas Fed's Logan (hawk, non-2025 FOMC voter) repeats several previous comments that confirm her - last week she made a very subtle hint that she would consider hiking rates under a certain scenario and unsurprisingly after the CPI data she continues to sound willing to wait a long time before considering easing. Key headlines from her event below:
- "LOGAN: EVEN IF INFLATION EASES, DOESN'T MEAN ROOM TO CUT RATES" - BBG
- "FED'S LOGAN: WE'RE IN GOOD POSITION RIGHT NOW TO WATCH THE DATA"
- "FED'S LOGAN: NEXT COUPLE MONTHS OF INFLATION DATA WILL BE PRETTY IMPORTANT - RTRS
- "LOGAN: FED'S 2% INFLATION TARGET IS NOT UP FOR DISCUSSION" -BBG
- LOGAN: LEVEL OF LONG-RATES IS A KEY FACTOR IN ASSESSING FINANCIAL CONDITIONS" -RTRS
Recall on Feb 6 Logan said: "In some scenarios, it will soon be appropriate to resume reducing the federal funds target range. In other scenarios, we'll need to hold rates at least at the current level for quite some time." Note the "at least", which is about as far as you can go to implying potential rate hikes are possible without explicitly saying so.
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USDJPY TECHS: Corrective Pullback
- RES 4: 160.00 Round number resistance
- RES 3: 159.45 High Jul 12
- RES 2: 159.26 0.618 proj of the Sep 16 - Nov 15 - Dec 3 price swing
- RES 1: 158.87 High Jan 10
- PRICE: 156.43 @ 20:36 GMT Jan 15
- SUP 1: 155.95 Low Jan 15
- SUP 2: 154.71 50-day EMA
- SUP 3: 154.44 Low Dec 19
- SUP 4: 153.16 Low Dec 17
The trend condition in USDJPY is unchanged, it remains bullish and the latest move lower is considered corrective. The pair has traded through the 20-day EMA and an extension lower would signal scope for a deeper retracement. The next support to watch is 154.71, the 50-day EMA. A return higher and a breach of 158.87, the Jan 10 high, would confirm a resumption of the uptrend and open 159.45, the Jul 12 ‘24 high.
US TSYS: Rates Rally After Core CPI Misses Estimates, First Cut Targets July
- Treasuries are trading near the top end of the session range after gapping higher this morning on slightly lower than expected Core & Supercore CPI data.
- Across core categories, below-expected figures in the aggregates were reported: core goods (0.05% vs 0.12% expected, 0.31% prior) and core services (0.27% vs 0.30% expected, 0.28% prior) were each a touch under analyst expectations.
- NY Fed’s Williams (permanent voter) said Treasury yields haven’t been driven by inflation expectations and that yields instead reflect economic strength and fiscal uncertainty. There have been somewhat mixed views of FOMC members on long end yield drivers recently.
- Mar'25 10Y futures are trading at 108-09.5 (+30) after the bell vs. 107-16.5 pre-data, session high at 108-13, still below initial technical resistance at 108-17.5/109-06 (20-day EMA / High Dec 31). Curves Curves mixed however: 2s10s -3.416 at 38.723, 5s30s +5.544 at 43.118.
- Projected rate cuts through mid-2025 moved forward on the calendar with July now fully pricing in a 25bp cut. Current vs. this morning levels* as follows: Jan'25 steady at -0.7bp, Mar'25 at -7.4bp (-4.9bp), May'25 -13.5bp (-10.3bp), Jun'25 -22.9bp (-17.7bp), Jul'25 at -27.2bp (-21.7bp).
- Focus turns to a slew of data on Thursday: Weekly Jobless Claims, Retail Sales, Import/Export Indexes and regional Fed services and business outlooks all at 0830ET. Business Inventories and NAHB Housing Market Index at 1000ET. No scheduled Fed speakers as yet - Fed enters Blackout period Friday at midnight.
AUSSIE 3-YEAR TECHS: (H5) Trend Structure Remains Bearish
- RES 3: 97.190 - High May 5 2023
- RES 2: 96.730/932 - High Sep 17 / 76.4% of Mar-Nov ‘23 bear leg
- RES 1: 96.190/360 High Dec 31 / High Dec 11
- PRICE: 96.060 @ 20:02 GMT Jan 15
- SUP 1: 95.830 - 1.000 proj of the Dec 11 - 20 - 31 price swing
- SUP 2: 95.760 - Low 14 Nov ‘24
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
A bear cycle in Aussie 3-yr futures remains intact and short-term gains are considered corrective. The recent move down reinforces the bear theme and the contract has traded through the December low. A deeper sell-off would refocus attention on 95.760, the 14 Nov ‘24 low. On the upside, a reversal higher would instead signal scope for an extension towards 96.360, the Dec 11 high. Further out, the key resistance is at 96.730, the Sep 17 high.
