US: MNI POLITICAL RISK - US Daily Brief
- US President Joe Biden has made an unscheduled trip to Kyiv today to meet with Ukrainian President Volodymyr Zelenskyy ahead of the anniversary of Russia's invasion of Ukraine.
- The visit comes at a critical moment for Ukraine with Russia preparing a new large-scale offensive and Western support for Ukraine seen as faltering slightly amid a struggle to overcome military hardware shortfalls, a failure of EU diplomats to alight on a 10th sanctions package, and domestic resistance within the US more vocally opposed providing Ukraine with a "blank cheque."
- Vice President Kamala Harris and Secretary of State Antony Blinken have warned that China is contemplating providing material assistance to Russia.
- Blinken declined to detail specific assistance China may provide to Russia but said, “there are various kinds of lethal assistance that they are at least contemplating providing, to include weapons.”
- The GOP has taken steps to formally distance itself from a much-reported plan proposed by Senator Rick Scott (R-FL) to “sunset” all federal programmes every five years.
- Poll of the Day: The “FairTax Act,” a proposal from conservative House Republicans to overhaul the taxation system and dissolve the IRS, is unpopular with a large majority of voters.
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Historical bullets
JGB TECHS: (H3) Extends Bounce Off Lows
- RES 3: 151.13 - High Mar 3
- RES 2: 149.75/150.81 - High Nov 11 / High Aug 5
- RES 1: 147.64/148.79 Low Dec 6 / High Nov 16
- PRICE: 146.96 @ 15:48 GMT Jan 20
- SUP 1: 144.15 - Low Jan 13
- SUP 2: 144.02 - 2.0% Lower Bollinger Band
- SUP 3: 143.88 - 1.0% 10-dma envelope
JGBs bounced sharply Wednesday and extended gains into the weekly close on the back of the unchanged BoJ rate decision. The rally puts prices well above recent lows, although the overarching downtrend remains intact for now. First resistance sits at 147.64 as well as 148.79, the Nov 16 high. Vol band support remains below at 144.02 and 143.88 below.
USDCAD TECHS: Pierces The 50-Day EMA
- RES 4: 1.3751 High Nov 4
- RES 3: 1.3705 Dec 16 and the bull trigger
- RES 2: 1.3665 High Jan 6
- RES 1: 1.3521 High Jan 19
- PRICE: 1.3411 @ 16:28 GMT Jan 20
- SUP 1: 1.3322 Low Jan 13
- SUP 2: 1.3317 Low Nov 24 / 25
- SUP 3: 1.3226 Low Nov 15 and bear trigger
- SUP 4: 1.3205 61.8% retracement of the Aug 11 - Oct 13 rally
USDCAD pulled away from recent highs, but largely respected the recent range Friday. Nonetheless, this week’s move higher has resulted in a print above 1.3500, the 50-day EMA. A clear breach of this area of resistance would signal potential for a stronger recovery near-term and open 1.3665, the Jan 6 high. Key resistance is at 1.3705, the Dec 16 high. Key short-term support has been defined at 1.3322, the Jan 13 low. A break would resume recent bearish activity.
US TSYS: Risk Buoyed Ahead Fed Blackout
Tsys weaker across the board but off midday lows after the bell, 30YY +.0943 at 3.6555% vs. 3.6646% high, yield curves bear steepening (2s10s +4.530 at -69.177. Decent volumes (TYH3 >1.2M) on a relatively subdued session w/ the Federal Reserve heading into policy blackout at midnight (through Feb 2).
- Sole data point underscored move: Existing home sales fell by less than expected in December, -1.5% M/M (cons -3.4%) after -7.9% M/M, faring better than the latest slide in pending home sales. It left an 18% decline on the year for the sharpest annual decline since 2008.
- While Bonds dragging short end rates lower, market expectation for 25bp hike at next FOMC on Feb 1 stable: Fed funds implied hike for Feb'23 25.8bp, Mar'23 cumulative steady 45.1bp to 4.783%, May'23 steady at 55.6bp to 4.888%, terminal dips slightly to 4.890% in Jun'23.
- No concerted headline driver, Bond weakness more tied to concerted commentary from various central bank officials (not just Fed) on improved global outlook in past couple weeks lending to intermediate-long end pressure on those growth prospects.
- Risk buoyed by dovish comments from Fed Gov Waller, favoring another downshift at the next meeting ending February 1 to a 25bp rate hike but anticipates continued tightening going forward.
