MACRO ANALYSIS: Eurozone Joins US In Approaching Pre-Pandemic Beveridge Curves
- As noted yesterday, the Eurozone vacancy rate eased a tenth to 2.5% (sa) in the flash Q3 release in a further move towards levels seen shortly prior to the pandemic (2019av 2.35%).
- It continues what has been a steadier pullback from the post-pandemic jump in vacancy rates relative to the US, albeit having increased to a lesser extent originally.
- Impressively, the decline in Eurozone vacancy rates has yet to be met by a rise in the unemployment rate, which has held at series lows of 6.3% since August according to the Eurostat series.
- That’s in contrast to the US where the unemployment rate has increased 0.7pp from historical lows of 3.43% in Apr 2023 to 4.15% in latest data for October. That does of course need an important caveat that a large part of this has come from an immigration-driven influx of labor supply.
- However, despite their recent differences, both the US and the Eurozone appear to be more earnestly approaching points on Beveridge curves seen in the ten years prior to the pandemic.
- That could potentially mark an end to the steep curves seen in recent years and see greater increases in the unemployment rate should vacancy rates continue to normalize towards longer-term averages.
- The next US JOLTS report for October is released on Dec 3 although Eurozone data is less timely with only the full Q3 release set for Dec 16 (leaving attention on the Indeed job postings index in the interim for an idea of a rough trend in overall postings in select countries).
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USDJPY TECHS: Correction Concludes
- RES 4: 153.40 61.8% retracement of the Jul 3 - Sep 16 bear leg
- RES 3: 151.94 Low Jul 25
- RES 2: 150.76 50.0% retracement of the Jul 3 - Sep 16 bear leg
- RES 1: 150.50 High Oct 21
- PRICE: 150.48 @ 17:17 BST Oct 21
- SUP 1: 148.30/147.28 Low Oct 10 / 50-day EMA
- SUP 2: 145.92 Low Oct 4
- SUP 3: 143.43/141.65 Low Oct 2 / Low Sep 30
- SUP 4: 140.45 Low Sep 18
Weakness off last week’s highs in USD/JPY has proved corrective, with the price bouncing hard on Monday. This puts prices back above the Y150.00 handle and narrows the gap with next - and most notable - resistance at 150.76, the 50.0% retracement of the downleg posted off the July 3rd high. Initial firm support to watch is 147.28, the 50-day EMA. Clearance of this level would signal a reversal.
EURJPY TECHS: Monitoring Resistance
- RES 4: 166.53 High Jul 31
- RES 3: 165.00 Round number resistance
- RES 2: 163.89 High Aug 15 and a reversal trigger
- RES 1: 163.61 High Oct 10
- PRICE: 162.87 @ 17:23 BST Oct 21
- SUP 1: 161.87 20-day EMA
- SUP 2: 158.11/155.15 Low Sep 30 / Low Sep 16
- SUP 3: 154.42 Low Aug 5 and the bear trigger
- SUP 4: 153.87 Low Dec 14 ‘23
EURJPY is unchanged and remains closer to its latest highs. A medium-term bearish trend condition is intact and a reversal lower would open 158.11, the Sep 30 low, and the first important support. Note that the cross continues to trade close to two key resistance points - 163.49, the Sep 27 high (pierced) and 163.89, the Aug 15 high. Clearance of both levels would highlight a potential reversal.
US TSYS: Late SOFR/Treaury Option Roundup
Option desks reported consistently better downside SOFR and Treasury puts Monday. Underlying futures holding narrow range near second half lows after tracking EGBs lower earlier, curves steeper with bonds underperforming. Projected rate cuts recede vs. this morning's levels (*): Nov'24 cumulative -22.3bp (-23.0bp), Dec'24 -40.1bp (-42.7bp), Jan'25 -57.6bp (-60.1bp). Highlight trade includes:
- SOFR Options:
- +35,000 2QZ4 96.00/96.25 put spds, 5.0-5.25
- 5,900 3QM5 95.00/95.50/96.00 put flys ref 96.415
- Block, 5,000 0QZ4 96.00/96.12/96.37 broken put flys ref 96.54
- 4,000 SFRM5 96.62/97.00/97.12/97.50 call condors ref 96.28
- 3,500 SFRH5 95.87/0QH5 96.25 put spds
- Block, +10,000 SFRZ4 95.37/95.62/95.87 put flys, 11.0
- 3,000 SFRH5 95.12/95.50 put spds vs. 2QH5 95.50/96.00 put spds
- Block, 12,000 SFRZ4 95.06/95.18 put spds, 0.25
- Treasury Options:
- +50,000 TYX4 111.75 puts, 26 ref 111-17.5
- 3,000 TYX4 111.25/111.5/112 put trees, 12 ref 111-18
- +12,000 TYX4 111/111.5 put spds 11 vs. 111-17/0.25%
- 2,000 TYX4 111.75/112.25 2x1 put spds ref 111-19
- over 4,000 TYX4 112 puts, 26 ref 111-21.5
- 3,600 USZ4 116 puts, 60 ref 119-05
- over 11,600 TYZ4 110.5 puts, 34 ref 111-25
- 4,000 TYX4 111.5/112 put spds, 14 ref 111-24.5
- 4,500 USX4 116.5 puts, 1 ref 119-10
- 2,000 TYZ4 110/112 put spds, 45 ref 111-25.5
- 2,000 USZ4 118/119 put spds, 29 ref 119-11
- 4,300 TYX4 111.5 puts, 6
- 6,000 FVX4 107.5/107.75 2x1 put spds, 0.5 ref 108-10
- 3,700 FVX 108.5 calls
