MNI ASIA MARKETS ANALYSIS: Off Lows, German Debt Scheme Denied

HIGHLIGHTS

• EVANS BACKS RATES AROUND 4.5% IN `23 AND ON HOLD FOR SOME TIME, Bbg
• GERMANY BACKS JOINT EU DEBT FOR LOANS TO TACKLE ENERGY CRISIS, Bbg early session
• GERMAN GOVT SOURCE REJECTS REPORT SAYING BERLIN BACKS JOINT EU DEBT FOR LOANS TO EASE ENERGY CRISIS, Reuters later in session

Key links: MNI: Fed's Evans Sees Rates Holding Above 4.5% By Early 2023 / MNI US Employment Insight, Oct'22: Fourth 75bp Hike Almost A Done Deal / MNI INSIGHT: Fed Sees Fin. Stability As Separate From Rates / MNI: Fed’s Brainard Sees Restrictive Policy For Some Time

US Tsys: FI Off Lows, Germany Debt Scheme Denied

Tsys and stock indexes rebounded off session lows after headline hit that Germany denies backing "joint EU debt for loans to ease energy crisis" Rtrs -- FI and stocks sold off early on headline German WOULD back the debt scheme.

• Otherwise, quiet session on VERY light volumes (TYZ2<445k; USZ2<85k) due to Columbus Day US bank holiday - full session for Globex, however, while holiday's in Japan, Korea, and Canada contributing to thin markets.
• No data on the day (focus on Sep FOMC minutes Wednesday and CPI Thursday) while Chicago Fed Evans and Fed VC Brainard both made comments on policy at Chicago Fed NABE bank conf on the day. Little react to Evans, but Brainard came off slightly dovish: "the combined effect of concurrent global tightening is larger than the sum of its parts" while the "Federal Reserve takes into account the spillovers of higher interest rates, a stronger dollar, and weaker demand from foreign economies into the United States".
• The 2-Yr yield is unchanged at 4.3078%, 5-Yr is unchanged at 4.1423%, 10-Yr is unchanged at 3.8814%, and 30-Yr is unchanged at 3.8417%.

SHORT TERM RATES

US DOLLAR LIBOR: Latest settlements:

• 1M +0.00314 to 3.31671% (+0.17086 total last wk)
• 3M +0.01043 to 3.91914% (+0.15400 total last wk) * / **
• 6M +0.04272 to 4.42743% (+0.15271 total last wk)
• 12M +0.05371 to 5.0500% (+0.21572 total last wk)
• * Record Low 0.11413% on 9/12/21; ** New 14Y high: 3.91914% on 10/10/22

EURODOLLAR/SOFR/TREASURY OPTIONS SUMMARY

• SOFR Options:
  • 10,000 SFRV2 95.43/95.56 2x1 put spds
  • 10,000 SFRV2 95.43 puts
  • 2,000 SFRX2 95.81/95.93/96.06 call flys
  • 1,050 SFRZ2 96.00/96.12/96.25/96.37 call condors
  • Block, 4,000 SFRZ2 96.00/96.25 call spds, 1.75 ref 95.535
  • 4,000 SFRZ2 97.75 calls
• Eurodollar Options:
  • 7,500 EDH3 94.37/95.12/95.62 put flys
  • 4,000 Dec 95.18/95.37 3x2 put spds
  • 6,300 EDZ2 95.50/95.75 call spds
  • 8,000 EDZ2 95.12/95.37 put spds
• Treasury Options:
  • 4,000 TYX2 115 calls, 2
  • 2,000 TYZ2 106 puts, 18
  • 3,000 TYZ 110/111 put spds, 27
  • 3,100 FVZ 111.5/112.5 call spds
  • 3,000 TYZ2 107.5/110/112.5 put flys

Late Equity Roundup: Off Lows, Nothing Fundamental

Stock indexes still weaker in late trade, but off session lows, bouncing w/ Tsys after headline Germany denies backing "joint EU debt for loans to ease energy crisis" Rtrs (FI and stocks sold off early on headline German WOULD back the debt scheme).

That said, Information Technology and Energy sectors continue to underperform. Currently, SPX eminis trade -13.5 (-0.37%) at 3640; DJIA -25.66 (0.09%) at 29320.12; Nasdaq -57.3 (-0.5%) at 10594.1.

• SPX leading/lagging sectors: Carry-over weakness in Information Technology (-1.19%) as semiconductor makers feel pressure from Pres Biden's new export measures to China. Energy (-2.07%) as crude traded lower (WTI -1.40 at 91.24). Leaders: Utilities (+0.64%) w/gas, electric and independent power names evenly paired, Consumer Staples (+0.57%) and Industrials (+0.50%).
• Dow Industrials Leaders/Laggers: Amgen (AMGN) +3.69 at 232.72, Merck (MRK) +2.76 at 90.36, Boeing (BA) +1.49 at 131.28. Laggers: United Health (UNH) -6.39 at 498.46, Microsoft (MSFT) -4.95 at 229.29, Salesforce Inc (CRM) -5.06 at 145.23

E-MINI S&P (Z2): Broader Trend Direction Remains Down

• RES 4: 4234.25 High Aug 26
• RES 3: 4175.00 High Sep 13 and a key resistance
• RES 2: 3908.86 50-day EMA
• RES 1: 3820.00 High Oct 5
• PRICE: 3625.00 @ 1430ET Oct 10
• SUP 1: 3571.75 Low Oct 3 and the bear trigger
• SUP 2: 3558.97 1.382 proj of the Aug 16 - Sep 7 - 13 price swing
• SUP 3: 3506.38 1.50 proj of the Aug 16 - Sep 7 - 13 price swing
• SUP 4: 3453.78 1.618 proj of the Aug 16 - Sep 7 - 13 price swing

S&P E-Minis remains below last week’s high of 3820.00 on Oct 5. This level marks a key resistance, where a break is required to reinstate a short-term bullish theme. The broader trend remains down and attention is on the bear trigger at 3571.75, the Oct 3 low. A break of this level would confirm a resumption of the broader downtrend and open 3558.97, a Fibonacci projection.

COMMODITIES: Crude Oil Pulls Back After Last Week's Stellar Gains

• Crude oil retraces some of last week’s stellar gains, falling -2% in what are seen as overbought markets after its 17% gain.
• Earlier in the session, Exxon is said to weigh the takeover Denbury, the US’s largest carbon-dioxide pipeline network, which Bloomberg reports as being potentially the biggest carbon-management investment since the Inflation Reduction Act passed in August and its large tax incentives for burying carbon dioxide.
• WTI is -1.9% at $90.93, pulling back from an intraday high of $93.64 that now forms initial resistance but remaining above initial support at $79.14 (Sep 30 low).
• Most active strikes in CLX2 have been $85/bbl puts today.
• Brent is -2.0% at $95.98, down from an overnight high of $98.75 that also forms resistance but again not troubling support.
• Gold is -1.5% at $1669.5 on a largely one way decline today as USD strength extended. It easily cleared support at 1695.2 (former trendline resistance) to open 1659.7 (Oct 3 low).

Tuesday Data Calendar

Date	GMT/Local	Impact	Flag	Country	Event
11/10/2022	2301/0001	*		UK	BRC-KPMG Shop Sales Monitor
11/10/2022	2330/1030			AU	Westpac-MI Consumer Sentiment
11/10/2022	0030/1130			AU	NAB Business Survey
11/10/2022	0600/0700	***		UK	Labour Market Survey
11/10/2022	0800/1000	*		IT	Industrial Production
11/10/2022	0900/1000	*		UK	Index Linked Gilt Outright Auction Result
11/10/2022	1000/0600	**		US	NFIB Small Business Optimism Index
11/10/2022	-			EU	ECB Panetta IMF/World Bank Annual Meetings
11/10/2022	1245/1445			EU	ECB Lane Keynote Speech
11/10/2022	1400/1000	**		US	IBD/TIPP Optimism Index
11/10/2022	1530/1130			US	Philadelphia Fed's Patrick Harker
11/10/2022	1530/1130	*		US	US Treasury Auction Result for 13 Week Bill
11/10/2022	1530/1130	*		US	US Treasury Auction Result for 26 Week Bill
11/10/2022	1600/1200			US	Cleveland Fed's Loretta Mester
11/10/2022	1700/1300	***		US	US Note 03 Year Treasury Auction Result
11/10/2022	1800/1900			UK	BOE Cunliffe Panels IIF Annual Meeting
11/10/2022	1800/2000			EU	ECB Lane NY Fed Fireside Chat
11/10/2022	1835/1935			UK	BOE Bailey in Conversation w. Tim Adams at IIF Meeting