STIR FUTURES: Fed Hike Path Waiting On Data
May-27 2022 10:16
- Little change in Fed hike expectations overnight, hanging onto yesterday’s reversal of a further softening.
- FOMC-dated Fed Funds price 52bp for Jun, 99bp for Jul, 133bp for Sep and 180bp to year-end, close to post-May FOMC lows for further out meetings.
- No Fedspeak scheduled today with an eye instead on a range of data, including the core PCE deflator expected at an unchanged +0.3% M/M in April as the wedge between CPI of +0.57% M/M grows due to shelter and airfares strength.
Source: Bloomberg
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OUTLOOK: Wed Data Calendar, Trade Bal, Pending Home Sales, 2Y FRN/5Y Note Sales
Apr-27 2022 10:15
- US Data/Speaker Calendar (prior, estimate)
- Apr-27 0700 MBA Mortgage Applications (-5.0%, --)
- Apr-27 0830 Advance Goods Trade Balance (-$106.3B rev, -$105.0B)
- Apr-27 0830 Wholesale Inventories MoM (2.5%, 1.5%)
- Apr-27 0830 Retail Inventories MoM (1.1%, 1.4%)
- Apr-27 1000 Pending Home Sales MoM (-4.1%, -1.0%); YoY (-5.4%, -8.1%)
- Apr-27 1130 US Tsy $24B 2Y FRN note auction (91282CEL1); $30B 119D bills
- Apr-27 1300 US Tsy 49B 5Y Note auction (91282CEN7)
CEE: Bulgarian PM: We Won't Give Into 'Racketeering' On Russian Gas
Apr-27 2022 10:11
Bulgarian Prime Minister Kiril Petkov has stated that his gov't 'will not give into such racketeering' from Russia on its halting of gas supplies over currency dispute.
- Petkov called the actions of Russia 'one-sided blackmail' as the Bulgarian energy ministry confirmed that supplies of natural gas from Russia have been physically halted.
- Petkov stated that his gov't would be re-evaluating its contracts with Russia, but that this poses no threat to gas supplies to Serbia and Hungary, with his energy minister stating "Regarding Serbia and Hungary – Bulgaria is a loyal partner to all neighbouring countries. Bulgaria is not Russia"
Price Signal Summary - USD Continues To Appreciate
Apr-27 2022 10:09
- In the equity space, S&P E-Minis remain vulnerable and yesterday’s sell–off reinforces the current bearish theme. The focus is on; 4129.50, Mar 15 low and 4094.25, Feb 24 and a bear trigger. A break of the latter support would represent an important technical break and strengthen bearish conditions. EUROSTOXX 50 futures remain vulnerable and yesterday’s weakness reinforces the bearish threat. MA studies continue to highlight a bearish trend condition. The focus is on 3551,60 the 61.8% retracement of the Mar 7 - 29 rally.
- In FX, EURUSD remains in a clear downtrend and is trading lower again, today. Recent weakness has resulted in a break of 1.0758, the Apr 14 low and a short-term bear trigger. This confirmed a resumption of the downtrend and opens 1.0577 next, the lower band of the 2.0% 10-dma envelope. GBPUSD remains under pressure following the recent impulsive move lower. The focus is on 1.2495 next, 61.8% retracement of the Mar 2020 - Jan 21 bull leg. USDJPY is unchanged and trend conditions remain bullish. Recent consolidation appears to be a bull flag formation. The focus is on 129.44 next, 0.764 projection of the Feb 24 - Mar 28 - 31 price swing. Sights are also on the psychological 130.00 handle. The DXY remains in a clear uptrend and suggests the USD is likely to appreciate further in the near-term. The recent breach of 100.00 was a positive development and bulls haven’t looked back. Furthermore moving average studies are in a bull-mode, highlighting current sentiment. The daily condition is overbought, however this is not affecting the trend - for now. The focus is on the next key resistance at 102.99, the Mar 20 2020 high.
- On the commodity front, Gold remains vulnerable. The pullback from last week’s high of $1998.4 (Apr 18), highlights a bearish threat and attention is on key support that lies at $1890.2, the Mar 29 low. This has been probed, a break would open $1878.4, the Feb 24 low. In the Oil space, WTI futures recovered from Monday’s low of $95.28. Futures remain vulnerable despite these gains and a resumption of weakness would open $92.60, the Apr 11 low.
- The broader trend condition in the FI space remains bearish. Bund futures potential is for a test, and break, of the 153.00 handle next. Recent gains are considered corrective. Resistance is at 156.29, the 20-day EMA. Gilts traded higher again Tuesday. This suggests scope for a stronger recovery near-term. Futures traded and closed above the 20-day EMA yesterday. Furthermore, price has also breached a trendline resistance drawn from the Mar 1 high. An extension would open the 120.00 handle and 121.11, the 50-day EMA. Initial supp is 118.27, Apr 25 low.
