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Approaching Friday Highs In Continued Reversal

US EURODLR FUTURES
  • EDs hit session highs across the curve, with +0.065-0.08 gains from the red pack onwards in a further unwinding of late Friday’s sharp cheapening, now nearing last week’s highs especially around EDZ3.
  • Unclear on exact driver of latest moves higher unless delayed impact with US coming in to European moves, but it sees a pulling forward for peak implied yields to equal in EDZ2-EDH3, followed by ~25bp of cuts through EDZ2/EDZ3, holding last week’s reversal of the initial post Sep FOMC flattening.
  • Bostic (’24 voter) kickstarts proceedings but potentially limited impact (opening remarks, Sep 28 he favors a 75bp hike in Nov, 50bp in Dec to a moderately restrictive 4.25-4.5% year-end), before ISM mfg headlines the session.

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