STIR: Effective Fed Funds Rate
- FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 5.33% volume: $104B
- Daily Overnight Bank Funding Rate: 5.32% volume: $267B
- Earlier Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 5.31%, $1.420T
- Broad General Collateral Rate (BGCR): 5.30%, $572B
- Tri-Party General Collateral Rate (TGCR): 5.30%, $561B
- (rate, volume levels reflect prior session)
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JGB TECHS: (U3) Bought-on-Dips Theme Returns
- RES 3: 151.26 - High Mar 3 2022
- RES 2: 149.75/150.81 - High Nov 11 / High Aug 5 2022
- RES 1: 149.21/53 High May 12 / High Mar 22
- PRICE: 146.72 @ 15:25 BST Aug 11
- SUP 1: 146.23 - Low Aug 03
- SUP 2: 146.11 - Low Feb 22
- SUP 3: 144.15 - Low Jan 13
JGBs returned higher again Wednesday close, bouncing off the recent pullback lows. The phase of weakness that began Monday has since reversed, steering markets clear of a test of key support at the 146.11 low on the continuation contract - last printed back in February. The previous buy-on-dips theme appears to have returned, but any return higher will initially target the May 12 high of 149.21. Clearance of these levels would highlight an important break.
USDCAD TECHS: Trend Direction Remains Up
- RES 4: 1.3655 High May 26 and a key resistance
- RES 3: 1.3585 High Jun 1
- RES 2: 1.3523 76.4% retracement of the May 26 - Jul 14 downleg
- RES 1: 1.3502 High Aug 8
- PRICE: 1.3416 @ 15:42 BST Aug 11
- SUP 1: 1.3364 Low Aug 8
- SUP 2: 1.3310 20-day EMA
- SUP 3: 1.3266 Low Aug 2
- SUP 4: 1.3151 Low Jul 31
USDCAD short-term conditions remain bullish and the pair is trading closer to its recent highs. This week’s gains have resulted in a breach of key short-term resistance at 1.3387, the Jul 7 high. The break strengthens bullish conditions and paves the way for a climb towards 1.3523, a Fibonacci retracement point. Key support has been defined at 1.3093, the Jul 14 low. Initial firm support to watch is 1.3310, the 20-day EMA.
US OUTLOOK/OPINION: CIBC Stand Out At Hawkish End Of Analyst Spectrum
Standing out amongst analysts and with market pricing just 3bps of hikes for the September FOMC decision, CIBC maintained their 25bp hike call despite "unambiguously good news" on the inflation front.
- For the past two months core inflation has been at a pace broadly consistent with the Fed's target of 2%. This is unambiguously good news but policymakers will want to see pace maintained and more encouraging forward-looking information.
- CIBC maintain their call for a Sept rate hike given the FOMC is looking to assess the "totality of the data".
- There is still one more CPI print and an employment reading before the September FOMC decision, and firmness in either or both could tilt the odds more in favour of a final hike.
- Within the core services ex. shelter group, airfares sustained their negative momentum with a second 8.1% m/m drop. This is a volatile category and creates some upside risk for future months particularly given that the recent rebound in oil prices could show up in a recovery in airfares in the next report.
