MNI ASIA OPEN: Jackson Live?

EXECUTIVE SUMMARY

• MNI Jackson Hole Preview: Powell May Clarify But Not Pre-Commit
• MNI FED: Jackson Hole Media Schedule Features Mainly Hawks
• MNI CANADA: Right-Wing People's Party Polling Second In Alberta
• BLINKEN: NO DEADLINE ON WORK TO HELP AMERICANS, AFGHAN ALLIES, Bbg
• BLINKEN: DEVELOPING PLANS FOR AIDING DEPARTURES AFTER AUG. 31, Bbg
• EU WILL DISCUSS THURSDAY REIMPOSING TRAVEL RESTRICTIONS ON U.S., Bbg

MNI Jackson Hole Preview: Powell May Clarify But Not Pre-Commit

Without reaching FOMC consensus since an indecisive July meeting, it doesn't make sense for Powell to 'pre-commit' to a taper timeline at Jackson Hole.

• Instead, expect to hear Powell repeat many recent talking points, and provide more clarity on some issues surrounding policy normalization.
• MNI's Preview of Jackson Hole includes a media schedule for the event, sell-side analysis, a run-down of recent Fed communications, and our policy team's interview with ex-Fed officials on what to watch for at the symposium.

FED: Jackson Hole Media Schedule Features Mainly Hawks

The usual FOMC President Jackson Hole media rounds are coming into focus, with basically all hawks being featured in TV interviews based on the scheduled interviews we are aware of so far:

Thursday:

• 0730ET KC's George (Bloomberg)
• 0830ET StL's Bullard (CNBC)
• 1030ET Dallas' Kaplan (CNBC)
• 2000ET Full Jackson Hole Agenda Released

Friday:

• 0730ET Atlanta's Bostic (CNBC)
• 0815ET Philadelphia's Harker (CNBC)
• 0830ET Atlanta's Bostic (Bloomberg)
• 0900ET Philadelphia's Harker (Bloomberg)
• 0900ET Cleveland's Mester (CNBC)
• 0915ET Dallas' Kaplan (Bloomberg)
• 0930ET StL's Bullard (Bloomberg)
• 1000ET Chair Powell Speaks On "The Economic Outlook" (text released)
• 1300ET Cleveland's Mester (Bloomberg)

CANADA

POLITICS: The right-wing People's Party of Canada (PPC) is polling in second place in the western province of Alberta according to the latest Mainstreet Research provincial-level opinion poll.

• Alberta, Mainstreet Research poll: Conservatives: 44.5% (-3), PPC: 16.1% (+4), Liberals: 16.0% (-2), NDP: 14.3% (-3), Greens: 5.9% (+3). +/- vs. 20-22 August 2021. Fieldwork: 24 August 2021
• While the 44.5% support garnered by the Conservatives in this poll, if reflected in the final result, would result in the party winning the majority of ridings in the oil-producing province, it would mark a significant decline in the vote share achieved in 2019. In that year's election, the Conservatives won 69% of the vote.
• A strong PPC showing could also provide a boost to the Liberals and New Democratic Party in the small number of marginal ridings in Alberta in the cities of Edmonton and Calgary by drawing support from the Conservatives.
• The PPC are polling around 4-6% in most nationwide polls, although the prospect of winning numerous seats in Canada's first-past-the-post electoral system is low. The party's best prospect is in Quebec, where leader Maxime Bernier is contesting the Conservative-held Beauce riding.

OVERNIGHT DATA

• US JUL DURABLE NEW ORDERS -0.1%; EX-TRANSPORTATION +0.7%
  
• US JUN DURABLE GDS NEW ORDERS REV TO +0.8%
• US JUL NONDEF CAP GDS ORDERS EX-AIR +0.0% V JUN +1.0%

• US MBA: MARKET COMPOSITE +1.6% SA THRU AUG 20 WK
• US MBA: REFIS +1% SA; PURCH INDEX +3% SA THRU AUG 20 WK
• US MBA: UNADJ PURCHASE INDEX -16% VS YEAR-EARLIER LEVEL
• US MBA: 30-YR CONFORMING MORTGAGE RATE 3.03% VS 3.06% PREV

• CANADA JULY FLASH WHOLESALE SALES -2%

MARKET SNAPSHOT

• DJIA up 71.5 points (0.2%) at 35438.35
• S&P E-Mini Future up 11.5 points (0.26%) at 4493.75
• Nasdaq up 26.9 points (0.2%) at 15046.3
• US 10-Yr yield is up 4.4 bps at 1.3373%
• US Sep 10Y are down 10.5/32 at 133-21
• EURUSD up 0.0016 (0.14%) at 1.1771
• USDJPY up 0.36 (0.33%) at 110.01
• WTI Crude Oil (front-month) up $0.77 (1.14%) at $68.31
• Gold is down $10.56 (-0.59%) at $1792.29

• EuroStoxx 50 up 3.04 points (0.07%) at 4181.12
• FTSE 100 up 24.34 points (0.34%) at 7150.12
• German DAX down 45.19 points (-0.28%) at 15860.66
• French CAC 40 up 12.17 points (0.18%) at 6676.48

US TSYS: Hawks Have Say Ahead Fed Chair Powell on Friday

• Ongoing mkt risk tied to covid (EU WILL DISCUSS THURSDAY REIMPOSING TRAVEL RESTRICTIONS ON U.S., Bbg) and Afghan pullout persist, so why the continued risk-on tone as equities made new highs (ESU1 4497.25)?
• Possibly do to speculation over the KC Fed hosted Jackson Hole eco-symposium scheduled for Friday. Deemed a non-event by some even before it was annc will be remote -- is now generating a lot of buzz with multiple Fed speakers doing interviews on Bbg and CNBC starting Thu morning (KC Fed George kicks things off at 0730ET. Nine hawkish leaning to one degree or another will speak before Fed chair Powell formally gives his presentation at 1000ET Fri (no Q&A).
• Midmorning sell-off accelerated as 10s broke through first support: 133-20: 50D EMA. Aside from the block sales in 5s, 10Y ultras and 30s, sell-side desks report fast$ accts selling in 5s ahead $61B note auction and swap-tied selling in the intermediates. Talk of sell-stops from weak longs and insurance portfolio selling in the long end.
• Tsy futures holding near session lows, little react after $61B 5Y note (91282CCW9) auction tails slightly: .03bp w/ high yield of 0.831% vs. 0.828% WI.
• The 2-Yr yield is up 1.8bps at 0.2406%, 5-Yr is up 1.8bps at 0.8145%, 10-Yr is up 4.4bps at 1.3373%, and 30-Yr is up 3.9bps at 1.955%.

MONTH-END EXTENSIONS: PRELIMINARY Barclays/Bbg Extension Estimates for US

Preliminary forecast summary compared to avg increase for prior year and same time in 2020. TIPS 0.07Y.

US TSY FUTURES CLOSE

• 3M10Y +5.727, 129.504 (L: 122.133 / H: 129.842)
• 2Y10Y +3.596, 110.516 (L: 103.73 / H: 110.516)
• 2Y30Y +2.065, 171.241 (L: 165.74 / H: 172.097)
• 5Y30Y +1.075, 112.867 (L: 110.71 / H: 114.119)
• Current futures levels:
• Sep 2Y up 0.25/32 at 110-8.25 (L: 110-07.5 / H: 110-08.37)
• Sep 5Y down 4.75/32 at 123-27 (L: 123-25.75 / H: 124-01)
• Sep 10Y down 13/32 at 133-18.5 (L: 133-17.5 / H: 134-01.5)
• Sep 30Y down 1-3/32 at 163-30 (L: 163-24 / H: 165-05)
• Sep Ultra 30Y down 1-27/32 at 197-29 (L: 197-12 / H: 199-29)

US TSY FUTURES: Quarterly Futures Roll Near Half Complete

Late session roll update: impressive surge in efforts to roll positions from Sep out to Dec ahead first notice next week Tuesday (Dec futures take lead quarterly position). Percentage complete at or near 50% across much of the curve, 2s and 10s lagging despite the impressive volume. Current lvls:

• TUU/TUZ 732,000 from 5.0 to 5.38, 5.12 last; 46% complete
• FVU/FVZ 1,803,000 from 14.5-15.25, 14.75 last; 50% complete
• TYU/TYZ 1,392,000 from 18.0 to 18.5, 18.25 last; 42% complete
• UXYU/UXYZ 494,900, 1-28.5 last; 54% complete
• USU/USZ 339,600 from 1-17.25 to 1-17.75, 1-17.25 last; 50% complete
• WNU/WNZ 386,600, 1-22.75 last; 48% complete

US EURODOLLAR FUTURES CLOSE

• Sep 21 steady at 99.870
• Dec 21 +0.005 at 99.810
• Mar 22 +0.005 at 99.840
• Jun 22 +0.005 at 99.800
• Red Pack (Sep 22-Jun 23) -0.02 to steady
• Green Pack (Sep 23-Jun 24) -0.065 to -0.035
• Blue Pack (Sep 24-Jun 25) -0.08 to -0.075
• Gold Pack (Sep 25-Jun 26) -0.085 to -0.08

Short Term Rates

US DOLLAR LIBOR: Latest Settles

• O/N -0.00125 at 0.07638% (-0.00100/wk)
• 1 Month -0.00100 to 0.08788% (+0.00200/wk)
• 3 Month +0.00200 to 0.12375% (-0.00462/wk) ** (Record Low: 0.11800% on 6/14)
• 6 Month +0.00000 to 0.15800% (+0.00537/wk)
• 1 Year +0.00062 to 0.23750% (+0.00088/wk)

• Daily Effective Fed Funds Rate: 0.09% volume: $66B
• Daily Overnight Bank Funding Rate: 0.08% volume: $255B

• Secured Overnight Financing Rate (SOFR): 0.05%, $923B
• Broad General Collateral Rate (BGCR): 0.05%, $391B
• Tri-Party General Collateral Rate (TGCR): 0.05%, $363B
• (rate, volume levels reflect prior session)

• Tsy 10Y-22.5Y, $1.401B accepted vs. $4.404B submission
• Next scheduled purchases
• Thu 8/26 1010-1030ET: Tsy 0Y-2.25Y, appr $12.425B
• Fri 8/27 1010-1030ET: Tsy 22.5Y-30Y, appr $2.025B

FED: REVERSE REPO OPERATION, New Record High

NY Fed reverse repo usage climbs to NEW RECORD of 1,147.089B from 77 counter-parties vs. $1,129.737B Tuesday. Prior record high of $1,135.697B set Monday, Aug 23.

PIPELINE: $1B Municipality Finance Priced

Corporate issuance probably limited to the two below. Issuance has dried up after a healthy start to the month: $89.72 mostly in the first two weeks, a far cry from $204.5B in August 2020. Issuance expected to pick up in September again.

• Date $MM Issuer (Priced *, Launch #)
• 08/25 $1B *Municipality Finance (KUNTA) WNG 5Y +2
• 08/25 $600M *China Merchants $300M 2Y FRN/SOFR+50, 5Y +55

FOREX: JPY Weakens As Dollar Holds Steady Before Jackson Hole

• With US equities grinding higher on Wednesday, the Japanese Yen retreated with USDJPY (+0.35%) regaining the 110 handle.
• For bulls, key near-term resistance is unchanged at 110.80, Aug 11 high. A break would ease bearish concerns and instead open key resistance at 111.66, Jul 2 high.
• Firmer risk sentiment evidenced by an extension of the commodities recovery kept Aussie and Kiwi underpinned, rising between 0.3-0.4%.
• EURUSD and GBPUSD have taken out Tuesday's best levels as we approach the close, sending the dollar index into minor negative territory.
• The mixed G10 performance has left the dollar index broadly unchanged for the session as markets await the Jackson Hole Symposium where MNI expect to hear Powell repeat many recent talking points, and provide more clarity on some issues surrounding policy normalization, without pre-committing to a taper timeline.
• The consolidation of most recent oil gains lent further support to NOK topping the G10 pile against the greenback.
• Tomorrow markets will receive ECB Monetary Policy Meeting Accounts, followed by the second reading of Q2 US GDP. Fed's George, Bullard and Kaplan are currently on Thursday's speaker schedule.