EXECUTIVE SUMMARY
- MNI: Fed’s Cook-Easing Appropriate With Disinflation On Track
- MNI FED: Gov Bowman Takes Hawkish Interpretation Of Recent Data
- MNI SECURITY: White House Envoy Hochstein To Travel To Lebanon For Ceasefire Talks
- MNI EU: Politico-EP Committees To Approve New COM, Setting Stage For 1 Dec Start
- MNI ISRAEL: US Envoy Holds 2nd Day Of Talks In Beirut Ahead Of Netanyahu Meeting
- MNI US DATA: Slide In Mortgage Applications Pauses Despite Higher Rates
US
MNI: Fed’s Cook-Easing Appropriate With Disinflation On Track
U.S. inflation is gradually coming down to the Federal Reserve’s 2% target in a way that should allow policymakers to keep cutting interest rates, although the pace and timing of further easing are not yet determined, Fed Governor Lisa Cook said Wednesday. “The totality of the data suggests that a disinflationary trajectory is still in place and that the labor market is gradually cooling,” Cook said in prepared remarks. “It likely will be appropriate to move the policy rate toward a more neutral stance over time.”
MNI FED: Gov Bowman Takes Hawkish Interpretation Of Recent Data
Fed Gov Bowman takes a typically hawkish stance toward monetary policy, in a speech titled "Approaching Policymaking Pragmatically" (link). That "pragmatism", she says, is consistent with "a flexible, data-dependent approach, providing the Committee with optionality in deciding future policy adjustments." If anything, it seems like many on the FOMC have moved more toward her viewpoint since her dissent to September's 50bp rate cut, which blunts any market reaction to her comments.
NEWS
MNI SECURITY: White House Envoy Hochstein To Travel To Lebanon For Ceasefire Talks
Barak Ravid at Axios reporting that US President Joe Biden's Middle East Envoy, Amos Hochstein "will soon fly to Beirut for talks on the cease-fire agreement, according to a senior American." Ravid's comments come after conflicting reportsthat Hochstein's trip had been delayed pending clarity on the Lebanese position regarding the cease-fire agreement.
MNI US: Trump Taps Up Former Acting AG Whitaker As NATO Ambassador
US President-elect Donald Trump has nominated former Acting Attorney General Matthew Whitaker to serve as his ambassador to NATO. Whitaker will assume the role during a period of heightened tensions with Russia and uncertainty about the future of the alliance under Trump.
MNI EU: Politico-EP Committees To Approve New COM, Setting Stage For 1 Dec Start
Politico reports that the European Parliament is set to approve the seven pending Commissioners-designate that will allow the new European Commission to take office on 1 December according to four EP and political officials. Bitter disagreements between the two largest political groups in the parliament - the centre-right European People's Party (EPP) and the centre-left Socialists and Democrats (S&D) - held up approval of the six nominated Executive Vice Presidents (Kaja Kallas, Raffaele Fitto, Roxana Mînzatu, Stéphane Séjourné, Teresa Ribera and Henna Virkkunen) and Hungary's Olivér Várhelyi.
MNI UKRAINE: Reports-Ukraine Fires Anglo-French Storm Shadow Missiles Into Russia
Reports hitting wires claiming that Ukraine has fired up to 12 Anglo-French Storm Shadow long-range missiles into Russia. This comes just a day after Ukraine for the first time fired US-made ATACMS missiles into the Bryansk oblast of Russia. Mikey Smith at The Mirror posts on X: "MOD not commenting on reports of Storm Shadow missile fragments being found across the border in Russia."
MNI ISRAEL: US Envoy Holds 2nd Day Of Talks In Beirut Ahead Of Netanyahu Meeting
Senior US envoy Amos Hochstein is set to engage in a second day of talks with Lebanese officials in Beirut in an effort to reach an agreement on a ceasefire between Hezbollah and Hamas amid major airstrikes against targets across Lebanon. As NYT notes, Hochstein has rarely made two-day trips to Middle Eastern cities meaning that his overnight stay in Beirut could be an indicator that a draft ceasefire is honing into view. Indeed, a post from Axios' Barak Ravid could hint at progress, claiming that "A senior Israeli official said that the American envoy Amos Hochstein will arrive in Israel tonight from Lebanon. He will meet with Prime Minister Netanyahu tomorrow to discuss the ceasefire agreement in Lebanon."
MNI MIDEAST: Turkey Not Presenting Themselves As Mediators In Israel-Hamas Talks
Barak Ravid at Axios posts on X: "An Israeli official with direct knowledge of the Shin Bet director talks in Turkey said the Turkish intelligence chief didn't present a proposal for a ceasefire and didn't propose direct Turkish mediation between Israel and Hamas over a hostage deal." There had been international speculation that following Qatar's suspension of its role as a mediator between Israel and Hamas in seeking a ceasefire deal in Gaza, that Turkey could take up the role. Reports emerged in Israeli media claiming that Hamas' political wing had moved its base of operations from Doha to the Turkish capital, Ankara.
MNI IRAN: IAEA Board Meets, Focus On Possible E3 Censure Resolution
Wires reporting comments from International Atomic Energy Agency (IAEA) Director General Rafael Mariano Grossi at the Board of Governors meeting taking place in Vienna. Says that Iran has accepted the IAEA's request to stop uranium enrichment at 60% purity, and that the IAEA confirms Iran's compliance. Grossi 'urges restraint' to avoid escalating tensions.
MNI US TSYS: Geopol Tensions Continue to Buffet Rates, 20Y Bond Sale Tailed Again
- Treasuries held moderately weaker after the bell, off session lows as geopolitical tensions between Russia and Ukraine continued to buffet markets. After the bell, TYZ4 trades at 109-20.5 (-6.5), 10Y yield +.0138 ast 4.410%, inside the technicals: with resistance above at 110-12 (20-day EMA) vs. initial support at 108-30 (Low Nov 15).
- Curves flattened (2s10s -1.610 to 9.550) while projected rate cuts into early 2025 recede vs. late Tuesday levels (*) : Dec'24 cumulative -13.9bp (-14.8bp), Jan'25 -20.8bp (-21.2bp), Mar'25 -34.8bp (-35.6bp), May'25 -43.1bp (-42.5bp).
- Rates traded lower coming into the NY session amid chatter that Russia was open to a cease fire agreement with Ukraine. Reports that Ukraine fired another barrage of missiles at Russia, however, plus mildly hawkish comments from Fed Gov Cook, saw rates bounce off lows.
- What little support there was quickly reversed after the $13B 20Y bond auction (912810UD8) tailed again: 4.680% high yield vs. 4.649% WI; 2.34x bid-to-cover vs. prior month's 2.51x (lowest since May). Indirect take-up climbed to 69.47% vs. 67.87% last month; direct bidder take-up fell to new low of 7.92% vs. 17.64% prior; primary dealer take-up surged to 22.61% (highest since May 2021) vs. 14.48% prior.
- Equity markets eagerly await Nvidia's Q3 earnings after the close (around 1620ET). In the past five quarters, Nvidia sales have beaten consensus by an average of about $1.8 billion, according to data compiled by Bloomberg.
OVERNIGHT DATA
MNI US DATA: Slide In Mortgage Applications Pauses Despite Higher Rates
MBA composite mortgage applications increased 1.7% (sa) last week after 0.5% the week prior, showing some marginal resilience after previously large declines in refi-applications in particular following the bounce in mortgage rates.
- New purchase applications increased 2.0% after 1.9% whilst refis increased 1.8% after -1.5%. They do however remain -9% and -54% below early Oct/late Sep recent highs respectively.
- The 30Y conforming mortgage rate increased another 4bps to 6.90% in the latest week, up 76bps from the September lows around 6.14%.
MNI CANADA: Can-US Yield Differentials Extend Lift Off Recent Lows
BoC-dated OIS continues to show circa 33bp of cuts for the Dec 11 meeting, keeping to similar figures seen after yesterday’s stronger-than-expected CPI release vs ~36bp prior.
- Can-US yield differentials lift a little higher on the day though, currently at session highs of -105bp from -107bp at yesterday’s close. It compares with -110bp pre-CAD CPI and a fresh multi-decade low close of -118bp earlier in the month (last lower 1997).
- Analysts that we have seen are still split down the middle over a second 50bp cut or a reversion to a 25bp clip pace in Dec.
- This week’s IPPI (tomorrow, Nov 21) and especially retail sales data (Nov 22) could see some reaction, but main macro drivers are still to come with GDP for Q3 (Nov 29) and the jobs report for Nov (Dec 6).
- BoC Dep Gov Mendes is set to speak before those major releases on Nov 26, with "Inflation at 2%: the role of monetary policy going forward".
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA up 90.05 points (0.21%) at 43356.35
S&P E-Mini Future down 11 points (-0.19%) at 5928.5
Nasdaq down 72.1 points (-0.4%) at 18916.57
US 10-Yr yield is up 1.4 bps at 4.41%
US Dec 10-Yr futures are down 6.5/32 at 109-20.5
EURUSD down 0.0059 (-0.56%) at 1.0537
USDJPY up 0.79 (0.51%) at 155.45
WTI Crude Oil (front-month) down $0.52 (-0.75%) at $68.87
Gold is up $16.6 (0.63%) at $2648.59
European bourses closing levels:
EuroStoxx 50 down 21.52 points (-0.45%) at 4729.71
FTSE 100 down 13.95 points (-0.17%) at 8085.07
German DAX down 55.53 points (-0.29%) at 19004.78
French CAC 40 down 31.19 points (-0.43%) at 7198.45
US TREASURY FUTURES CLOSE
3M10Y -0.386, -13.449 (L: -15.806 / H: -10.629)
2Y10Y -1.397, 9.763 (L: 8.679 / H: 12.899)
2Y30Y -1.509, 28.221 (L: 27.061 / H: 31.809)
5Y30Y -0.16, 31.599 (L: 31.009 / H: 33.421)
Current futures levels:
Dec 2-Yr futures down 2.375/32 at 102-19.875 (L: 102-19.625 / H: 102-22.25)
Dec 5-Yr futures down 4.25/32 at 106-20.75 (L: 106-18.25 / H: 106-24.75)
Dec 10-Yr futures down 6.5/32 at 109-20.5 (L: 109-14.5 / H: 109-26)
Dec 30-Yr futures down 15/32 at 116-14 (L: 116-03 / H: 116-29)
Dec Ultra futures down 21/32 at 122-22 (L: 122-03 / H: 123-07)
MNI US 10YR FUTURE TECHS: (Z4) Bearish Trend Condition
- RES 4: 112-22 High Oct 16 and a key short-term resistance
- RES 3: 111-17+ 50-day EMA
- RES 2: 111-14+ High Oct 25
- RES 1: 110-12 20-day EMA
- PRICE: 109-21 @ 1355 ET Nov 20
- SUP 1: 108-30/18+ Low Nov 15 / 1.236 proj of Oct 1 - 10 - 16 swing
- SUP 2: 108-03 1.382 proj of the Oct 1 - 10 - 16 price swing
- SUP 3: 108-00 Round number support
- SUP 4: 107-17 2.0% 10-dma envelope
The trend condition in Treasuries is unchanged, it remains bearish and short-term gains are considered corrective. Moving average studies are in a bear-mode set-up, highlighting a clear downtrend and bearish market sentiment. Sights are on 108-18+ next, a Fibonacci projection. Further out, the focus is on the 108-00 handle. Initial firm resistance is unchanged at the 20-day EMA. The average is at 110-10+.
SOFR FUTURTES CLOSE
Dec 24 -0.013 at 95.525
Mar 25 -0.020 at 95.755
Jun 25 -0.035 at 95.935
Sep 25 -0.045 at 96.045
Red Pack (Dec 25-Sep 26) -0.055 to -0.04
Green Pack (Dec 26-Sep 27) -0.035 to -0.03
Blue Pack (Dec 27-Sep 28) -0.03 to -0.03
Gold Pack (Dec 28-Sep 29) -0.035 to -0.025
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M -0.00408 to 4.59513 (-0.01532/wk)
- 3M -0.00635 to 4.51379 (+0.02266/wk)
- 6M -0.00721 to 4.42324 (+0.03133/wk)
- 12M -0.02297 to 4.26102 (+0.01859/wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.57% (+0.00), volume: $2.275T
- Broad General Collateral Rate (BGCR): 4.56% (+0.00), volume: $812B
- Tri-Party General Collateral Rate (TGCR): 4.56% (+0.00), volume: $780B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.58% (+0.00), volume: $99B
- Daily Overnight Bank Funding Rate: 4.58% (+0.00), volume: $269B
FED Reverse Repo Operation
RRP usage climbs up to $217.793B this afternoon from $200.664B Tuesday. Compares to $144.243B on Tuesday, November 5 -- the lowest since May 6, 2021. The number of counterparties rises to 64 from 62 prior.
MNI PIPELINE: US$ Corporate Issuance Roundup: $3.55B AppLovin Debt Leads
$3.55B AppLovin 4Pt issuance leads today's $15.75B corporate issuance, still waiting for Principle Life 5Y to launch.
- Date $MM Issuer (Priced *, Launch #)
- 11/20 $3.55B #AppLovin $1B 5Y +85, $1B 7Y +105, $1B 10Y +112.5, $550M 30Y +137.5
- 11/20 $3.5B #International Development Assn (IDA) 5Y SOFR+47
- 11/20 $2.25B #State Street Bank & Trust $1.15B 2Y +28, $300M 2Y SOFR+46, $800M 5Y +50
- 11/20 $2B #BP Capital $400M 2027 tap +37.5, $650M 5Y +60, $950M 2034 tap +87.5
- 11/20 $2B #Commonwealth Bank of Australia (CBA) $1.3B 2Y +28, $700M 2Y SOFR+46
- 11/20 $1B #Blackstone Private Credit Fund $400M 5Y +160, $600M 10Y +190
- 11/20 $850M #Smurfit Westrock Financing 10Y +100
- 11/20 $600M #Adani 20Y +7.45%
- 11/20 $Benchmark Principle Life 5Y +90
MNI BONDS: EGBs-GILTS CASH CLOSE: Gilts, OATs Underperform
Gilts underperformed core EGBs Wednesday, but OATs fared yet worse.
- Geopolitics played a key role in market movements for a 2nd consecutive session. A Reuters report suggesting Russia's Putin is open to discussing a Ukraine ceasefire deal with US President-Elect Trump weighed slightly on core FI ahead of the cash bond open.
- We then got a marginally firmer-than-expected UK CPI report, which helped translate into UK FI underperformance of peers on the day.
- In mid-afternoon, news that Ukraine fired a UK-made missile into Russia sparked a bounce in safe-haven FI. While the move subsided, periphery EGB spreads moved and remained wider.
- BoE's Ramsden was typically dovish in his comments toward the cash close; Gilt futures ticked up but overall there was little reaction.
- In data, Eurozone Q3 negotiated wages picked up as expected (5.4% Y/Y) though the ECB are likely to look through this uptick.
- The UK and German curves both twist steepened on the day. OAT spreads narrowed from session wides but still finished 1.6bp further outside Bunds (and underperforming periphery EGBs), on continued concerns around the 2025 budget.
- Thursday's schedule includes UK public sector finances and Euro consumer confidence, with several central bank speakers including BoE's Mann and ECB's Lane.
Closing Yields / 10-Yr Periphery EGB Spreads To Germany
- Germany: The 2-Yr yield is down 0.8bps at 2.131%, 5-Yr is up 0.7bps at 2.178%, 10-Yr is up 1.3bps at 2.351%, and 30-Yr is up 0.9bps at 2.55%.
- UK: The 2-Yr yield is down 0.4bps at 4.405%, 5-Yr is up 0.3bps at 4.323%, 10-Yr is up 2.7bps at 4.469%, and 30-Yr is up 5.2bps at 4.921%.
- Italian BTP spread up 1.4bps at 122.8bps / Spanish up 0.4bps at 71.1bps
MNI FOREX: Greenback on Front Foot, USD Index Rises 0.5%
- After two sessions of declines to start the week, the greenback traded on a much firmer footing on Wednesday. The Ice dollar index has risen half a percent, and its recovery bolsters the underlying bullish trend for the greenback, seen both in the lead up to the election and gathering momentum in its aftermath.
- While the Scandinavian currencies are the weakest in G10, the Euro weakness has been most notable across the majors. EURUSD topside has been capped at the prior breakdown point of 1.06 and todays steady grind lower saw the pair come within 10 pips of the post-election lows at 1.0497. While the pair remains vulnerable to further downside, the 2023 lows at 1.0448 will remain a short-term focus, especially ahead of Friday’s Eurozone PMI data.
- Additionally, EURCAD continued its decline following Tuesday’s Canada inflation data. The cross is now approaching the post-election lows at 1.4712 and further downside momentum would turn the focus to the June lows around the 1.4600 mark. Retail sales data in Canada is also scheduled on Friday.
- GBP weakness through to the London close picked up slightly, with GBPUSD touching a new pullback low, but perhaps more notably GBP/JPY erasing the entirety of the day's early gains at the close to trade flat. BOE’s Ramsden comments erred dovish, however were broadly in line with his expected stance, keeping him in the 'gradual' MPC camp for now, but seeing a risk of a requirement for faster cuts.
- USDJPY extended its recovery off the Tuesday lows, reaching an intra-day peak of 155.89. However, softer equity markets prompted a pullback towards 155.25 ahead of the APAC crossover. Moving average studies are in a bull-mode position highlighting a dominant uptrend and sights are on 156.75 and 156.88 next, a Fibonacci projection.
THURSDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 21/11/2024 | 0700/0700 | *** |  GB | Public Sector Finances |
| 21/11/2024 | 0745/0845 | ** |  FR | Manufacturing Sentiment |
| 21/11/2024 | 0830/0930 |  EU | ECB's Cipollone at ECRB meeting | |
| 21/11/2024 | 1100/0600 | *** |  TR | Turkey Benchmark Rate |
| 21/11/2024 | 1100/1100 | ** | GB | CBI Industrial Trends |
| 21/11/2024 | 1330/0830 | *** |  US | Jobless Claims |
| 21/11/2024 | 1330/0830 | * |  CA | Industrial Product and Raw Material Price Index |
| 21/11/2024 | 1330/0830 | ** | US | Philadelphia Fed Manufacturing Index |
| 21/11/2024 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 21/11/2024 | 1345/0845 | US | Cleveland Fed's Beth Hammack | |
| 21/11/2024 | 1400/1400 | GB | BOE Mann fireside chat with Brown Brothers Harriman | |
| 21/11/2024 | 1500/1600 | ** | EU | Consumer Confidence Indicator (p) |
| 21/11/2024 | 1500/1000 | *** | US | NAR existing home sales |
| 21/11/2024 | 1500/1000 | * | US | Services Revenues |
| 21/11/2024 | 1530/1030 | ** | US | Natural Gas Stocks |
| 21/11/2024 | 1530/1630 | EU | ECB's Lane in panel on macroeconomic effects of geopolitical uncertainty | |
| 21/11/2024 | 1530/1630 | EU | ECB's Elderson at the University of Cyprus | |
| 21/11/2024 | 1600/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 21/11/2024 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 21/11/2024 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 21/11/2024 | 1730/1230 | US | Chicago Fed's Austan Goolsbee | |
| 21/11/2024 | 1800/1300 | ** | US | US Treasury Auction Result for TIPS 10 Year Note |
| 21/11/2024 | 2140/1640 | US | Fed Vice Chair Michael Barr | |
| 22/11/2024 | 2200/0900 | *** |  AU | Judo Bank Flash Australia PMI |
| 22/11/2024 | 2330/0830 | *** |  JP | CPI |
| 22/11/2024 | 0001/0001 | ** | GB | Gfk Monthly Consumer Confidence |
| 22/11/2024 | 0030/0930 | ** | JP | Jibun Bank Flash Japan PMI |