COPPER TECHS: (K5) Corrective Pullback

ERZ5 98.25/98.625cs vs 97.75p, bought the cs for -0.75 in 8k (ref 98.05).

House price gains were steady-to-strong at the end of 2024 according to two of the major aggregate indices.

• The FHFA's index was up 4.7% Y/Y (SA) in December, roughly within the range of the previous five months, albeit with some sign of momentum picking up toward year-end (6.3% 3M/3M annualized).
• The S&P CoreLogic 20-city index showed similar dynamics, up 4.5% Y/Y in December, putting the 3M/3M annual rate at 4.7%.
• As such prices ended 2024 at fresh seasonally-adjusted highs, up over 50% from pre-pandemic levels.
• Of course, this comes alongside some of the lowest transaction volumes for decades for existing home sales, with no imminent sign of activity turning higher.
• That means that price discovery in the housing market has been limited. That could change if unemployment picks up sharply or if mortgage rates start coming down.

Fresh demand for core global FI markets during the NY morning has underpinned gilts, with futures trading to fresh session highs of 93.17.

• Bulls now eye the Feb 13 high (93.50). a break there would reintroduce some momentum to the bullish technical cycle.
• Futures roll activity continues to prop up volumes, latest estimates point to ~77% roll completion ahead of Thursday’s first notice for H5.
• Yields now 6-7bp lower across the curve, 5s outperform.
• UK paper lags the bid in Tsys but comfortably outperforms Bunds across the curve given the prospect of increased fiscal spending in Germany.
• Little of note in terms of market-moving UK news.
• GBP STIRs trade in sympathy with the bid in wider core global FI.
• BoE-dated OIS moves to price ~57bp of cuts through year-end vs. ~52bp late yesterday, but that contract sticks comfortably within the multi-week range.
• SONIA futures flat to +7.0