EXECUTIVE SUMMARY
- MNI US: Election Viewing Guide
- MNI Fed Preview - Nov 2024: Analyst Outlook
- MNI US DATA: Durable Goods And Factory Activity Still Soft If Stable Going Into Q4
US
FED: MNI Fed Preview - Nov 2024: Analyst Outlook
Based on the 31 previews of the November FOMC meeting seen by MNI, analysts are unanimous that the Fed will cut by 25bp in both November and December. However all acknowledge uncertainties over the rate path in 2025, depending on both incoming data and the US election outcome. PDF Here (link)
NEWS
MNI US: Election Viewing Guide
MNI's Political Risk team has published its Election Viewing Guide ahead of tomorrow's presidential election. In the article, we provide an estimated timetable of events for the US general election taking place on Tuesday 5 November as ballots are counted. As well as a guide of what times various states may call their results, we also provide analysis on key counties to watch in swing states that are likely to give the best indication as to the direction the presidency is heading in. Full article PDF attached below: MNIPOLITICALRISK-USElectionViewingGuide.pdf
MNI GERMANY: Gov't Spox-'Expect Coalition To Work Until End Of Its Term'
Reuters reporting comments from a spox for the German gov't claiming that "I expect the coalition to work until the end of its regular term". The comments come amid a flurry of headlines suggesting that the tripartite 'traffic light coalition' is on the brink of collapse and that a federal election could come sooner than the one scheduled in September 2025.
MNI US TSYS: Treasury Yields Recede Ahead Election, FOMC Event Risk
- Treasuries recovered more than half of Friday's sell-off Monday, trimmed gains after September's final report on Manufacturers’ Shipments, Inventories, and Orders showed continued weakness in recent demand for manufacturing orders and durable goods production.
- At the moment, the Dec'24 10Y futures contract trades +11 at 110-12, 10Y yield -.0788 at 4.3049%, curves flatter: 2s10s -4.154 at 13.050, 5s30s -2.332 at 32.829.
- Treasuries extended lows after the $58B 3Y note auction tailed 0.7bp: 4.152% high yield vs. 4.145% WI; 2.60x bid-to-cover vs. 2.45x prior. Peripheral stats see indirect take-up rebounds 70.62% vs. 56.87% prior; direct bidder take-up falls to new low of 9.62% vs. 23.97% prior; primary dealer take-up 19.75% vs. 19.17% prior.
- Option desks reported better SOFR/Treasury put option volumes for the most part Monday, carry over from overnight as accounts continued to hedge or cover downside risk ahead of Tuesday's Presidential election and Thursday's FOMC rate announcement. Underlying futures remain firmer after midmorning gains trimmed.
- Projected rate cuts into early 2025 have receded from this morning's highs (*): Nov'24 cumulative at -24.6bp, Dec'24 -45.3bp (-45.8bp), Jan'25 -59.2bp (-60.3bp), Mar'25 -75.6bp (-77.1bp).
OVERNIGHT DATA
MNI US DATA: Durable Goods And Factory Activity Still Soft If Stable Going Into Q4
September's final report on Manufacturers’ Shipments, Inventories, and Orders showed continued weakness in recent demand for manufacturing orders and durable goods production, reaffirming that US industrial activity remains soft if stable. Manufacturing orders fell for the 4th month in 5 in September, at -0.5% M/M SA as expected. With August orders revised sharply lower (-0.8% vs -0.2%), the level of orders in nominal seasonally-adjusted terms remains below year-ago levels.
MNI: US SEP FACTORY ORDERS -0.5%; EX-TRANSPORT NEW ORDERS +0.1%
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA down 240.91 points (-0.57%) at 41812.67
S&P E-Mini Future down 14 points (-0.24%) at 5744.25
Nasdaq down 42.5 points (-0.2%) at 18197.39
US 10-Yr yield is down 8.1 bps at 4.3029%
US Dec 10-Yr futures are up 11/32 at 110-12
EURUSD up 0.0043 (0.4%) at 1.0877
USDJPY down 0.85 (-0.56%) at 152.16
WTI Crude Oil (front-month) up $2.18 (3.14%) at $71.67
Gold is up $0.7 (0.03%) at $2737.23
European bourses closing levels:
EuroStoxx 50 down 25.65 points (-0.53%) at 4852.1
FTSE 100 up 7.09 points (0.09%) at 8184.24
German DAX down 107.12 points (-0.56%) at 19147.85
French CAC 40 down 37.4 points (-0.5%) at 7371.71
US TREASURY FUTURES CLOSE
3M10Y -9.058, -23.671 (L: -25.138 / H: -19.903)
2Y10Y -4.563, 12.641 (L: 11.688 / H: 14.701)
2Y30Y -5.519, 31.24 (L: 30.577 / H: 34.583)
5Y30Y -2.649, 32.512 (L: 31.875 / H: 35.348)
Current futures levels:
Dec 2-Yr futures up 1.375/32 at 102-30.125 (L: 102-29.375 / H: 103-01)
Dec 5-Yr futures up 5.75/32 at 107-6.25 (L: 107-03.25 / H: 107-12.75)
Dec 10-Yr futures up 11/32 at 110-12 (L: 110-07 / H: 110-21.5)
Dec 30-Yr futures up 31/32 at 117-25 (L: 117-09 / H: 118-10)
Dec Ultra futures up 46/32 at 125-11 (L: 124-14 / H: 125-30)
US 10YR FUTURE TECHS: (Z4) Bear Cycle Remains In Play
- RES 4: 112-22 High Oct 16 and a key short-term resistance
- RES 3: 112-16+ 50-day EMA
- RES 2: 112-07 High Oct 21
- RES 1: 110-30/111-19+ High Nov 1 / 20-day EMA
- PRICE: 110-14 @ 1240 ET Nov 4
- SUP 1: 109-27+ Low Nov 1
- SUP 2: 109-15 Low Jul 1
- SUP 3: 109-05 76.4% retracement of the Apr - Sep bull cycle
- SUP 4: 108-21+ 2.0% 10-dma envelope
A bear cycle in Treasuries remains in play and last week’s extension lower, reinforces current bearish conditions. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend. The 110-00 handle has been pierced. A continuation lower would open 109-15, the Jul 1 low. Initial firm resistance is seen at 111.19+, the 20-day EMA. Short-term gains would be considered corrective.
SOFR FUTURES CLOSE
Dec 24 steady00 at 95.630
Mar 25 +0.010 at 95.925
Jun 25 +0.020 at 96.145
Sep 25 +0.020 at 96.260
Red Pack (Dec 25-Sep 26) +0.015 to +0.025
Green Pack (Dec 26-Sep 27) +0.030 to +0.040
Blue Pack (Dec 27-Sep 28) +0.045 to +0.055
Gold Pack (Dec 28-Sep 29) +0.060 to +0.070
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M -0.01155 to 4.64045 (-0.05530 total last wk)
- 3M -0.02265 to 4.53164 (-0.05035 total last wk)
- 6M -0.03031 to 4.38167 (-0.01874 total last wk)
- 12M -0.04836 to 4.14268 (+0.03814 total last wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.86% (-0.04), volume: $2.164T
- Broad General Collateral Rate (BGCR): 4.84% (-0.01), volume: $788B
- Tri-Party General Collateral Rate (TGCR): 4.84% (-0.01), volume: $761B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.83% (+0.00), volume: $99B
- Daily Overnight Bank Funding Rate: 4.83% (+0.00), volume: $257B
FED REVERSE REPO OPERATION
RRP usage bounces to $171.885B after falling below $200B last Friday to $155.476B -- the lowest since May 6, 2021. The number of counterparties bounces to 57 from 41 prior.
MNI BONDS: EGBs-GILTS CASH CLOSE: Gilts Maintain Underperforming Theme
European bonds traded mixed Monday with long-end Gilts underperforming, ahead of a sequence of key risk events this week.
- Treasuries led an early global bid for bonds, as the recent US election-related sell-off lost some steam amid a paring back of implied probability that Donald Trump will win the American presidency.
- However the session brought little impactful data or macro headlines, keeping instruments trading within last week's ranges. Gilts underperformed Bunds, with light bear steepening in the curve (vs German twist flattening), as last week's UK fiscal developments continued to weigh.
- 10Y Gilts now trade 206bp outside Bunds, a fresh closing wide post-Oct 2022 (which was also part of a fiscal-related move).
- Periphery EGBs traded mixed. with BTP and SPGB spreads modestly tighter.
- Tuesday brings French industrial production and Spanish labor market data, along with multiple ECB speakers. The main event is the US election, though its impact is more likely to be felt on European markets early Wednesday. Later in the week we get multiple central bank decisions including the BoE and the Fed on Thursday (25bp cuts almost unanimously expected in both cases).
Closing Yields / 10-Yr Periphery EGB Spreads To Germany
- Germany: The 2-Yr yield is up 1.7bps at 2.264%, 5-Yr is up 0.3bps at 2.258%, 10-Yr is down 1bps at 2.395%, and 30-Yr is down 4.9bps at 2.582%.
- UK: The 2-Yr yield is up 0.5bps at 4.435%, 5-Yr is up 1.3bps at 4.334%, 10-Yr is up 1.3bps at 4.458%, and 30-Yr is up 2.5bps at 4.924%.
- Italian BTP spread down 0.7bps at 127.2bps / Spanish down 0.8bps at 70.8bps
MNI FOREX: USD Index Consolidates Opening Gap Lower as Presidential Election Looms
- US election odds narrowed this weekend, leaving the outcome of this week’s vote even more on a knife edge. With US 10 year yields roughly 10bps lower on the session, the USD index has held on to the majority of it’s opening gap lower, down around 0.4% as we approach the APAC crossover.
- This has created some notable gaps for the majors, most pronounced for the likes of USDJPY (-0.67%) and USDCHF (-0.78%), owing to their sensitivity to adjustments in core yields.
- USDJPY sits exactly 100 pips lower from last Friday’s close at 152.00, although the pullback appears technically corrective at this juncture with the trend condition remaining bullish. Firm support remains much further down at 148.99, the 50-day EMA, with initial support residing at 150.73 (20-day EMA).
- Slightly more moderate moves in EURUSD, although the pair did once again flirt above the 1.0900 handle for a lot of the session. Price hovers just above 1.0880, the 20-day EMA and a clear break of it would signal scope for a stronger recovery, towards the 50-day EMA at 1.0940 and the early October highs around the 1.10 mark.
- There were also some punchy range in EM, including notable recoveries for the likes of MXN and BRL following their very weak closes on Friday. USDMXN dipped as much as 1.68% to 19.96 before recovering to 20.10 in late trade, perhaps providing early signs of the likely volatility for the pair that has been such a feature of the past two US elections.
- Tuesday’s calendar highlights will be the RBA decision and US ISM Services PMI, however, market moves are likely to be contained as participants look ahead to not only the particularly consequential US election results, but the Fed and BoE decisions also later this week.
TUESDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 05/11/2024 | 0645/0745 | ** |  CH | Unemployment |
| 05/11/2024 | 0745/0845 | * |  FR | Industrial Production |
| 05/11/2024 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 05/11/2024 | - |  EU | ECB's De Guindos participate in ECOFIN Meeting | |
| 05/11/2024 | - |  US | US Presidential Election | |
| 05/11/2024 | 1330/0830 | ** | US | Trade Balance |
| 05/11/2024 | 1330/0830 | ** |  CA | International Merchandise Trade (Trade Balance) |
| 05/11/2024 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 05/11/2024 | 1430/1530 | EU | ECB's Lagarde speech at French Competition Authority's event | |
| 05/11/2024 | 1500/1000 | *** | US | ISM Non-Manufacturing Index |
| 05/11/2024 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 05/11/2024 | 1800/1300 | ** | US | US Note 10 Year Treasury Auction Result |
| 05/11/2024 | 1830/1330 | CA | BOC Minutes (Summary of Deliberations) | |
| 05/11/2024 | 1830/1930 | EU | ECB's Schnabel speech on Macroeconomic Policy | |
| 06/11/2024 | - |  SE | Riksbank Meeting |