EXECUTIVE SUMMARY
- MNI FED: Powell Repeats That FOMC In No "Hurry" To Lower Rates
- MNI US: Incoming Sen Maj Ldr-Expect 'Aggressive Schedule' To Approve Trump Nominees
- MNI US DATA: Jobless Claims Quietly Edge Lower, Hurricane Effects Still Evident
- MNI US DATA: PPI Momentum Waning, But Pipeline Inflation Remains Uncomfortably High
- MNI US DATA: PPI Portfolio Management, Airfares Point To Upped PCE Estimates
US
MNI FED: Powell Repeats That FOMC In No "Hurry" To Lower Rates
Chair Powell's speech today (link) contains several quotes that sound similar to what he said at last week's press conference. As such, nothing really "new", but by the same token there is nothing dovish here, which may help explain the hawkish market reaction:
- "The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully. " Powell last week: "we think that the right way to find neutral, if you will, is carefully, patiently"... "Nothing in the economic data suggests that the Committee has any need to be in a hurry to get there." [to neutral]
- Powell today: "we feel like the story is very consistent with inflation, continuing to come down on a bumpy path over the next couple of years and settling around two percent". Powell last week: "With labor market conditions in rough balance and inflation expectations well anchored, I expect inflation to continue to come down toward our 2 percent objective, albeit on a sometimes-bumpy path."
Powell gives us an early read on the Fed's core PCE estimate for October (which presumably includes PPI today). Suggests a core PCE reading in the high 0.2s% M/M, consistent with the sell-side post-PPI estimates we've seen today.
- "Estimates based on the consumer price index and other data released this week indicate that total PCE prices rose 2.3 percent over the 12 months ending in October and that, excluding the volatile food and energy categories, core PCE prices rose 2.8 percent."
NEWS
MNI US: Incoming Sen Maj Ldr-Expect 'Aggressive Schedule' To Approve Trump Nominees
In his first comments on the Senate Floor since being elected leader of the Senate Republican Conference and as such the next majority leader, minority whip John Thune (R-SD) says "The floor priority for the start of the year will be confirming President Trump's nominees and members should expect an aggressive schedule until those nominees are confirmed."
MNI US: Gaetz, Hegseth & Gabbard Picks Could Spur Move To Recess Appointments
President-Elect Donald Trump's picks for the offices of Attorney General, Secretary of Defense, and Director of National Intelligence could spur action in the Senate to enable recess appointments given the controversial nature of each of the candidates.
- AG nominee Matt Gaetz resigned from Congress late on 13 Nov, effectively ending a House Ethics Panel investigation into his conduct amid allegations of illegal drug use and sexual misconduct. Gaetz has been one of the most outspoken House members in recent years and was a key figure in the ouster of former Speaker Kevin McCarthy. As the FT reports "Gaetz’s proposed appointment as attorney-general comes as Trump vows to overhaul the US Department of Justice in retaliation for the criminal investigations and indictments launched against him by federal prosecutors in recent years."
- Former Democrat Rep. Tulsi Gabbard's nomination to sit at the top of the US Intelligence Community has raised some concerns among moderates given her previous comments that Russian President Vladimir Putin's "legitimate security concerns" with regards to Ukraine and NATO should be addressed, and that Syrian President Bashar al-Assad is not an "enemy" of the US.
- Alongside Fox presenter and former soldier Pete Hegseth as Secretary of Defense, all three are seen above all as Trump loyalists who will be more willing to carry out the demands of the incoming president.
- These appointments stand in contrast to Trump's first-term Cabinet picks, where key offices went to candidates perceived to have more relevant experience for the role.
MNI ISRAEL: Energy Min-Deal w/Hezbollah Closer Than At Any Point Since Start Of War
Speaking to Reuters, Israeli Energy Minister Eli Cohen has said that the gov't is "at a point that we are closer to an arrangement [with Hezbollah] than we have been since the start of the war,” Cohen goes on to say that a key red line for Israel is that the IDF retains the freedom to renew hostilities if Hezbollah is seen to be returning to border regions where they could pose a threat to Israeli communities. Cohen: “We will be less forgiving than in the past over attempts to create strongholds in territory near Israel. That’s how we will be, and so that is certainly how we will act,”
MNI IRAN: Tehran Looks To Signal Openess To Talks w/E3 Amid IAEA Nuclear Plant Visit
Reuters report comments attributed to an unnamed senior Iranian official following talks between Foreign Minister Abbas Araghchi and International Atomic Energy Agency (IAEA) Director General Rafael Mariano Grossi in Tehran earlier today. Claims the Iranian gov't 'plans to send a message to the E3 (France, Germany, UK) via Grossi that Tehran is serious about resolving a nuclear standoff.' Adds Iran 'has a renewed determination to take confidence-building steps [and] remove sanctions'. The official says Grossi 'will deliver a message on Tehran's behalf that pressure [on Iran] will have the opposite effect [than intended]'.
MNI UKRAINE: EUR5bn Boost For Kyiv As European Foreign Mins Set For 19 Nov Meeting
Reuters report that the foreign ministers of Poland, France, Germany, the UK, Italy, and Ukraine are set to meet in Warsaw on 19 November. Reuters: "The assembly aims to discuss pressing issues, including the re-election of Donald Trump as U.S. president, based on information provided by two anonymous sources. The agenda will also encompass significant topics, such as the ongoing conflict in Ukraine and the broader political landscape across Europe."
RTRS "EXCLUSIVE-TRUMP TRANSITION PLANS TO KILL $7,500 CONSUMER TAX CREDIT FOR EVS-SOURCES ... TESLA REPRESENTATIVES SUPPORT ENDING EV SUBSIDY-SOURCES"
"FTC PLANS TO INVESTIGATE MICROSOFT’S CLOUD BUSINESS", FT
US TSYS
MNI US TSYS: Surprising Hawkish React to Chair Powell Prepared Comments
- Treasury futures (and stocks as well) traded weaker as prepared text from Chairman Powell's comments on economy from Dallas aired. Powell Q&A underway with futures bouncing slightly.
- Curves flattened sharply with 2s-10s leading the sell-off: 2s10s -7.150 at 8.976 vs. 17.491 high this morning.
- Flattening has in turn sapped projected rate cuts into early 2025 that had moderated slightly from Wednesday highs earlier. Current levels vs. this morning (*) : Dec'24 cumulative -16.4bp (-19.8bp), Jan'25 -23.9bp (-27.8bp), Mar'25 -38.2bp (-42.4bp), May'25 -43.8bp (-49.9bp).
- The Dec'24 10Y contract trades -2.5 at 109-11 vs. 109-04 low earlier - through technical support of 109-04 (76.4% of Apr - Sep bull cycle (cont)). Next support level at 109-00 followed by 108-27+ (Low Jun 3 (cont)).
OVERNIGHT DATA
MNI US DATA: PPI Portfolio Management, Airfares Point To Upped PCE Estimates
The PPI categories that feed into PCE look to have been more elevated than expected in October, both outright and versus most of their CPI equivalents. Airfares came in at 3.2% M/M (1.1% prior), portfolio management 3.6% (0.7% prior), medical care 0.2% (same as prior), health care services meanwhile jumped to 0.5% (0.0% prior) - a 9-month high.
- Auto insurance printed 0.1% (0.3% prior), however, and the individual categories of health care services may be less inflationary than the broader proxy may suggest (hospital inpatient services unexpectedly dropped 0.4%).
- Overall though -and especially given airfares and portfolio management - we would guess this would slightly bias up estimates of core PCE coming into the day, which looked clustered in the low 0.20% to 0.25% area.
- Here is a chart of the rough contribution to core PCE from select PPI components - note the uptick:
MNI US DATA: PPI Momentum Waning, But Pipeline Inflation Remains Uncomfortably High
October's producer price report was slightly hotter than expected, but the longer-term signal depends on one's perspective. Core PPI momentum is slowing and there is little in the report to deter the Fed from cutting rates again in December, but overall pipeline price inflation appears to be stalling at an uncomfortably high level.
- Final demand PPI picked up slightly in October 0.2% M/M from 0.1% prior, with ex-food and energy up to 0.3% from 0.2%. The headline figure was in-line but on the "hot" side due to a 0.1pp upward revision to September, while ex-food/energy was 0.1pp above expected. The standout aggregate result though was an acceleration in core (ex-food/energy/trade services) to 0.3%, a 3-month high, from 0.1% prior.
- The rise in core was a little above expected (0.2% survey), and leaves the Y/Y rate at 3.5% - a continuation of the steady re-acceleration from 2023 lows of 2.5%.
- Notably final demand goods inflation rose for the first time in 3 months (0.1%), boosted by food prices - though even ex-food/energy, the 0.3% M/M growth was the highest since April. And as we'd noted in our CPI preview, core goods are likely to become an increasingly prevalent issue for the 2025-26 inflation outlook should a broad increase in tariffs materialize as expected: the trend direction of core PPI inflation tracks core import prices, in which disinflation has been reversing since early 2024.
- The positive news from a disinflationary perspective is that this is well below the 7+% rates of late 2021 and early 2022. And despite the M/M and Y/Y pickup, core momentum is slowing overall: the 3-month average of the annualized monthly rate of core PPI fell to 2.5% from 2.9%, with the 6-month rate at 2.9% (from 3.3% prior), both 10-month lows.
- Additionally, some of the "heat" came from the volatile portfolio management category which contributed over one-third of the rise in final demand services inflation.
- As we highlighted earlier, some of the key PPI categories that feed into PCE including passenger airfares and portfolio management, were higher than what we think most analysts had been assuming - potentially tipping the balance of the October core PCE estimate toward an unrounded 0.3% M/M vs 0.2% (most forecasts had been clustered between 0.21-0.25% post-CPI).
- So there is nothing here that will give the Fed reason to avoid a December pause, even if it could make that decision a little closer. But the broader picture is that progress in pipeline price disinflation has been limited, and not particularly adding to confidence that PCE is headed sustainably back to 2%.
MNI US DATA: Jobless Claims Quietly Edge Lower, Hurricane Effects Still Evident
Initial jobless claims fell in the Nov 9 week for the 4th week in the past 5, by 4k to a 28-week low of 217k and below the 220k expected. The 4-week moving average downshifted 6k to 221k, a 25-week low. On a non-seasonally adjusted basis, claims ticked up 11k to 212k.
- Continuing claims in the Nov 2 week meanwhile dipped 11k to 1,873k - that's in line with expectations though the prior week was revised down 8k.
- Initial claims from states hit by Helene/Milton (Florida, Georgia, South Carolina, North Carolina, Tennessee and Virginia) continue to edge lower: after peaking at 36.1k on Oct 5, they are now down at 22.3k, basically where they were in mid-September.
- However, continuing claims rose again sharply in those states through the week of Oct 25: up 7.8k, after having fallen 5.6k the prior week. At 145.9k, they are up 17k from mid-September and the highest level since early August. Understandably, this is above the usual seasonal pattern of claims in those states (see chart), but the reduction in initial claims in subsequent weeks offers evidence that this will be temporary.
- There continues to be only faint evidence of much of a lingering effect from Boeing strikes / Michigan auto shutdowns.
- Overall this is a solid report that shows no new weakness in labor market conditions through early November.
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA down 206.21 points (-0.47%) at 43752.32
S&P E-Mini Future down 38.5 points (-0.64%) at 5978
Nasdaq down 129.4 points (-0.7%) at 19100.42
US 10-Yr yield is down 2.2 bps at 4.4295%
US Dec 10-Yr futures are steady at at 109-13.5 at 109-13.5
EURUSD down 0.0037 (-0.35%) at 1.0526
USDJPY up 0.76 (0.49%) at 156.23
WTI Crude Oil (front-month) up $0.21 (0.31%) at $68.64
Gold is down $4.62 (-0.18%) at $2567.99
European bourses closing levels:
EuroStoxx 50 up 93.19 points (1.97%) at 4833.53
FTSE 100 up 40.86 points (0.51%) at 8071.19
German DAX up 260.59 points (1.37%) at 19263.7
French CAC 40 up 94.97 points (1.32%) at 7311.8
US TREASURY FUTURES CLOSE
3M10Y -3.863, -9.098 (L: -11.926 / H: -2.933)
2Y10Y -7.223, 8.903 (L: 7.597 / H: 17.491)
2Y30Y -10.324, 24.259 (L: 21.957 / H: 35.57)
5Y30Y -6.215, 26.529 (L: 24.746 / H: 33.337)
Current futures levels:
Dec 2-Yr futures down 3.25/32 at 102-19.125 (L: 102-17 / H: 102-24.625)
Dec 5-Yr futures down 2.5/32 at 106-15.75 (L: 106-10.75 / H: 106-24.5)
Dec 10-Yr futures steady at at 109-13.5 (L: 109-04 / H: 109-25)
Dec 30-Yr futures up 20/32 at 116-15 (L: 115-15 / H: 116-31)
Dec Ultra futures up 32/32 at 123-2 (L: 121-14 / H: 123-20)
MNI US 10YR FUTURE TECHS: (Z4) Bears Remain In The Driver’s Seat
- RES 4: 112-22 High Oct 16 and a key short-term resistance
- RES 3: 111-26 50-day EMA
- RES 2: 111-14+ High Oct 25
- RES 1: 110-21/23 20-day EMA / Intraday High
- PRICE: 109-20 @ 1215 ET Nov 14
- SUP 1: 109-06/05 Intraday low / 76.4% of Apr - Sep bull cycle (cont)
- SUP 2: 109-00 Round number support
- SUP 3: 108-27+ Low Jun 3 (cont)
- SUP 4: 107-25+ 2.0% 10-dma envelope
The trend condition in Treasuries remains bearish and the contract has traded to a fresh cycle low, today. Recent weakness reinforces a bearish condition and note that moving average studies are in a bear-mode set-up, highlighting a clear downtrend. Sights are on 109-05 next, the 76.4% retracement of the Apr - Sep bull cycle (cont). The 109-00 handle remains exposed too. Initial firm resistance is seen at 110-21, the 20-day EMA.
SOFR FUTURES CLOSE
Dec 24 -0.065 at 95.550
Mar 25 -0.070 at 95.780
Jun 25 -0.070 at 95.945
Sep 25 -0.060 at 96.035
Red Pack (Dec 25-Sep 26) -0.045 to -0.02
Green Pack (Dec 26-Sep 27) -0.015 to -0.005
Blue Pack (Dec 27-Sep 28) steadysteady0 to +0.010
Gold Pack (Dec 28-Sep 29) +0.015 to +0.025
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M +0.00119 to 4.61048 (-0.00600/wk)
- 3M -0.03807 to 4.48539 (-0.03078/wk)
- 6M -0.01534 to 4.38573 (-0.01534/wk)
- 12M -0.07225 to 4.24454 (+0.02582/wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.59% (-0.01), volume: $2.233T
- Broad General Collateral Rate (BGCR): 4.58% (+0.00), volume: $820B
- Tri-Party General Collateral Rate (TGCR): 4.58% (+0.00), volume: $788B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.58% (+0.00), volume: $105B
- Daily Overnight Bank Funding Rate: 4.58% (+0.00), volume: $287B
FED Reverse Repo Operation
RRP usage recedes to $214.509B from $238.106B Wednesday. Compares to $144.243B on Tuesday, November 5 -- the lowest since May 6, 2021. The number of counterparties falls to 51 from 66 prior.
MNI PIPELINE: $1.25B Dominion Energy Launched
- Date $MM Issuer (Priced *, Launch #)
- 11/14 $1.25B #Dominion Energy 30.5NC10.25 6.625%
- 11/14 $1B #El Salvador 30Y 9.65%
- 11/14 $1B #SocGen PerpNC5.5 8.125%
- 11/14 $750M #Ares Strategic Income +3Y +165
- 11/14 $700M #Singapore Power 5Y +45
- 11/14 $500M #Zions WNG 11NC10 +240
- 11/14 $Benchmark Natwest PerpNC10 7.30%
- 11/14 $Benchmark Consolidated Edison WNG 3Y SOFR+52, +10Y +70, +30Y +95
EGBS
MNI BONDS: EGBs-GILTS CASH CLOSE: Rate Cut Pricing Ratchets Up
EGBs and Gilts enjoyed a late rally Thursday, with modest early weakness giving way.
- While there was relatively little in the way of European macro developments (Eurozone industrial production and Q3 GDP were not market movers), and the US data leaned hawkish (above-expected PPI, below-expected jobless claims), EGBs and Gilts rallied late to close stronger as the US dollar moved from session highs and US equities retraced.
- Rate cut expectations ratcheted up: vs Wednesday's close, there's now 10bp more ECB cuts projected through September 2025 (a cumulative 144bp from current levels) and 6bp more for the BOE (63bp from current levels).
- The belly outperformed on a twist-steepeniUK curve, with the German curve bull steepening.
- Periphery EGB spreads fell sharply, with the move accelerating into the close as European equities held on to early gains.
- BOE's Bailey speaks after the cash close. Friday's early highlight is UK monthly activity data, with appearances later in the session by ECB's Lane and Panetta.
Closing Yields / 10-Yr Periphery EGB Spreads To Germany
- Germany: The 2-Yr yield is down 6.3bps at 2.102%, 5-Yr is down 5.1bps at 2.168%, 10-Yr is down 4.9bps at 2.341%, and 30-Yr is down 0.7bps at 2.566%.
- UK: The 2-Yr yield is down 6.3bps at 4.423%, 5-Yr is down 6.6bps at 4.345%, 10-Yr is down 3.7bps at 4.483%, and 30-Yr is up 0.8bps at 4.919%.
- Italian BTP spread down 3.6bps at 120.4bps / Spanish down 1.9bps at 70.7bps
MNI FOREX: EURUSD Briefly Pierces Below 1.05 Mark Before Recovering
- Sentiment early Thursday matched that of recent sessions, with the greenback extending its most recent rally and EURUSD making steady progress towards the 1.05 mark. Following a brief print at 1.0497, sentiment reversed course, and the single currency traded on a more positive footing for the remainder of the session, trading close to unchanged around 1.0560 as we approach the APAC crossover.
- It was a similar story across the major pairs, with Scandinavian FX outperforming and JPY and CHF the moderate laggards.
- For USDJPY, we reached as high as 156.24 as the bull cycle extends. This week’s gains have resulted in a breach of resistance at 154.71, the Nov 07 high, to confirm a resumption of the uptrend and maintain the price sequence of higher highs and higher lows. Sights are on 156.67, a Fibonacci retracement.
- BoJ policy and the FX approach of the Japanese authorities becomes key here, with markets re-entering levels at which the Japanese authorities intervened in currency markets.
- USDCAD is also a standout, having extended above the psychological 1.4000 level. The persistence of greenback strength in the aftermath of the softer US supercore CPI did prompt USDCAD to rise above the 2022 highs on Wednesday, a breach of key medium-term resistance. Immediate attention is on 1.4034, the 1.00 projection of the Oct 17 - Nov 1 - 6 price swing. Further topside momentum would place the focus on 1.4188, 2.0% 10-dma envelope.
- Chinese activity data is due overnight before UK GDP and US retail sales headline the Friday data calendar.
FRIDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 15/11/2024 | 0700/0800 | ** |  SE | Unemployment |
| 15/11/2024 | 0700/0700 | ** |  GB | UK Monthly GDP |
| 15/11/2024 | 0700/0700 | *** | GB | GDP First Estimate |
| 15/11/2024 | 0700/0700 | ** | GB | Index of Services |
| 15/11/2024 | 0700/0700 | *** | GB | Index of Production |
| 15/11/2024 | 0700/0700 | ** | GB | Output in the Construction Industry |
| 15/11/2024 | 0700/0700 | ** | GB | Trade Balance |
| 15/11/2024 | 0730/0730 | GB | DMO to publish FQ4 (Jan-Mar) gilt operations calendar | |
| 15/11/2024 | 0745/0845 | *** |  FR | HICP (f) |
| 15/11/2024 | 0800/0900 | * |  CH | CH Flash GDP |
| 15/11/2024 | 0900/1000 | ** |  IT | Italy Final HICP |
| 15/11/2024 | 1330/0830 | ** |  US | Import/Export Price Index |
| 15/11/2024 | 1330/0830 | ** |  CA | Monthly Survey of Manufacturing |
| 15/11/2024 | 1330/0830 | ** | CA | Wholesale Trade |
| 15/11/2024 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 15/11/2024 | 1330/0830 | *** | US | Retail Sales |
| 15/11/2024 | 1330/0830 | ** | US | Empire State Manufacturing Survey |
| 15/11/2024 | 1400/0900 | * | CA | CREA Existing Home Sales |
| 15/11/2024 | 1415/0915 | *** | US | Industrial Production |
| 15/11/2024 | 1500/1000 | * | US | Business Inventories |
| 15/11/2024 | 1500/1600 |  EU | ECB's Lane at seminar on Fragmenting Trading System | |
| 15/11/2024 | 1515/1615 | EU | ECB's Cipollone in discussion on productivity |