EXECUTIVE SUMMARY
- MNI BRIEF: More EZ Consumers View Wages as Inflation Driver
- MNI ISRAEL: Axios-PM To Hold Security Cabinet Talks On Deal To End Lebanon Conflict
- MNI US DATA: Rare Improvement In Labor Differential
- MNI US DATA: Surprisingly Low Job Openings On Possible Hurricane Hit
US
MNI US TSYS: Testing Post-JOLTS Data Highs Around the Close
- Treasuries have drifted back to near post-JOLTS data related highs in late trade, initial impetus for second half rebound was the strong 7Y note auction that stopped 2bp through with 4.215% high yield vs. WI of 4.235%.
- The Dec'24 10Y contract is trading at 110-22 (-.5) vs. this morning's 110-09.5 low, 10Y yield tapped 4.3365% high. Curves remain mildly steeper (2s10s +1.514 at 15.312, 5s30s +.036 at 41.045) with short end outperforming, 5s to 10s +/-.5 around steady at the moment.
- Futures had gapped higher following this morning's surprisingly low JOLTS job openings with possible hurricane impact, whilst quit rates on balance point to a still low level having declined after a reasonable upward revision. Additionally, job openings surprised lower with 7443k (cons 8000k) in September after a downward revised 7861k (initial 8040k) in Aug.
- Meanwhile, within the surprisingly strong Conference Board consumer survey for October (confidence at 108.7 vs cons 99.5 after 99.2), the labor differential improved for the first time in eight months.
- Cross asset look: Gold climbs to new all-time high 2773.12, crude mildly weaker following yesterday's fall (WTI -.17 at 67.21) while the DJIA lags gains in S&P Eminis and Nasdaq.
- Focus turns to Wednesday's ADP employment data, GDP and Pending Home Sales, not to mention Friday's headline NFP for October.
NEWS
MNI BRIEF: More EZ Consumers View Wages as Inflation Driver
Euro area consumers have increasingly identified wages as a primary driver of inflation, according to extended data from the ECB’s Consumer Expectations Survey published as an Economic Bulletin Tuesday. When asked to pinpoint the main cause of the inflation surge in 2022-2023, survey participants in both June 2023 and March 2024 could select from three options: wages, corporate profits, and “other inputs,” which included energy and raw material costs.
MNI EU-UK: Competition Cooperation Agreement Talks Conclude, But No Sign Of 'Reset'
The UK gov't has released a statement confirming that technical talks on the EU-UK Competition Cooperation Agreement have concluded. The statement claims "This agreement is aimed at improving cooperation between the UK’s and EU’s competition authorities, allowing for greater dialogue between the Competition and Markets Authority in the UK and European Commission and the National Competition Authorities of the EU Member States."
MNI ISRAEL: Axios-PM To Hold Security Cabinet Talks On Deal To End Lebanon Conflict
Barak Ravid at Axios posts on X: "Prime Minister Netanyahu will hold a discussion this evening with the participation of several ministers and senior officials in the defense establishment regarding the [talks] for a political settlement to end the war in Lebanon, according to two sources who comment on the matter". As has been the case during Israel's war on Hamas in Gaza, the Netanyahu gov't has set out its stall with regard to its objectives in its war in Lebanon namely the destruction of Hezbollah.
MNI ISRAEL: Def Min-Hezbollah Maintains Only 20% Of Pre-War Missile Capabilities
Speaking at the Israeli Defence Force's Northern Command base in Safed, Defence Minister Yoav Gallant claims "I estimate the remaining capacity of the missiles and rockets to be in the order of 20% [from before the war], and also it is not organized in the way that it used to be organized, in a way that [Hezbollah] could fire [large] volleys,".
(BBG) "Israeli Minister: War With Hezbollah Will Be Over by Year End: The war with Hezbollah will likely be over by the end of December, Israeli Finance Minister Bezalel Smotrich says in a press briefing on Tuesday regarding the 2025 budget."
OVERNIGHT DATA
MNI US DATA: Surprisingly Low Job Openings On Possible Hurricane Hit
Job openings surprise lower with possible hurricane impact, whilst quit rates on balance point to a still low level having declined after a reasonable upward revision. Job openings surprised lower with 7443k (cons 8000k) in September after a downward revised 7861k (initial 8040k) in Aug.
- The decline on the month was led by a 325k drop in openings in the South which could be hurricane-related.
- The rate to unemployed dipped fractionally to 1.09 from a downward revised 1.10 (initial 1.13). It was more notably biased higher by the large 281k decline in unemployment from the September payrolls report.
- It leaves a ratio to unemployed little changed from July’s 1.08 that had marked the lowest since May-2021. It clearly remains low by recent standards, below the 1.19 seen in 2019 although is still a little elevated compared to earlier pre-pandemic years such as the 1.00 averaged in 2017-18.
- Quits rate: 1.93% after an upward revised 2.00% (initial 1.94). 2019 av 2.33, 2017-18 av 2.20.
- Private quits: 2.12% after 2.21% (initial 2.15). 2019 av 2.59, 2017-18 av 2.45.
- The decline after upward revisions leaves the same story as we thought last month: outside of the depths of the pandemic, these are the lowest quit rates since late 2014/early 2015.
MNI US DATA: Rare Improvement In Labor Differential
Within the surprisingly strong Conference Board consumer survey for October (confidence at 108.7 vs cons 99.5 after 99.2), the labor differential improved for the first time in eight months.
- The differential increased to 18.3 from an almost unrevised 12.7 in September (initial 12.6) which had marked the lowest since Mar 2021.
- It technically leaves it at the highest since June although it’s still on the low side historically (for instance, averaged 33 in 2019) and offers trend upside risk to the unemployment rate of 4.05% in September.
- Jobs plentiful 35.1 after an upward revised 31.3 (highest since Jun) and jobs hard to get 16.8 after an upward revised 18.6% (fully reverses prior increase but only back to Aug).
MNI US DATA: FHFA and S&P CoreLogic House Prices Surprise Stronger
Two main house price series were stronger than expected in August which helped see only moderate cooling in Y/Y inflation rates.
- The FHFA national series increased 0.3% M/M (sa, cons 0.1) after an upward revised 0.2% (initial 0.1).
- The S&P CoreLogic 20-city series increased 0.35% M/M (sa, cons 0.20) after an almost unrevised 0.25% (initial 0.27).
- Annual growth rates are still moderating, with the FHFA at 4.2% Y/Y and S&P CoreLogic at 5.2% Y/Y for lows since Jun 2023 and Oct 2023 respectively.
- They remain relatively robust and don’t point to that much further cooling in CPI housing with OER inflation currently running at 5.2% Y/Y as of September, although the recent run rate for the FHFA is more of note at circa 2% annualized.
- Private rent measures remain a little cooler, with Zwillow rents for example at 3.4% Y/Y vs CPI tenants rents inflation of 4.8% Y/Y.
MNI US DATA: Atlanta Fed GDPNow Trimmed To 2.8% In Final Q3 Estimate
The final Atlanta GDPNow estimate is for Q3 real GDP growth of 2.8% annualized in tomorrow’s advance release, lowered from the 3.3% on Oct 25. Bloomberg consensus looks for 3.0%. It points to only limited moderation from a strong 3.0% in Q2 that had come from strong domestic demand growth of 2.8pps as a stock build (1.1pp) was mostly offset by a heavy net trade drag (-0.9pp).
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA down 106.27 points (-0.25%) at 42279.61
S&P E-Mini Future up 17.5 points (0.3%) at 5879
Nasdaq up 177.2 points (1%) at 18745.31
US 10-Yr yield is down 1.2 bps at 4.2701%
US Dec 10-Yr futures are up 1.5/32 at 110-24
EURUSD up 0.0003 (0.03%) at 1.0814
USDJPY up 0.14 (0.09%) at 153.44
WTI Crude Oil (front-month) down $0.18 (-0.27%) at $67.20
Gold is up $30.25 (1.1%) at $2772.52
European bourses closing levels:
EuroStoxx 50 down 19.81 points (-0.4%) at 4950.02
FTSE 100 down 66.01 points (-0.8%) at 8219.61
German DAX down 53.55 points (-0.27%) at 19478.07
French CAC 40 down 45.83 points (-0.61%) at 7511.11
US TREASURY FUTURES CLOSE
3M10Y +0.755, -32.988 (L: -37.426 / H: -25.569)
2Y10Y +1.538, 15.336 (L: 12.839 / H: 18.079)
2Y30Y +1.545, 40.052 (L: 37.568 / H: 42.592)
5Y30Y +0.488, 41.497 (L: 39.516 / H: 42.411)
Current futures levels:
Dec 2-Yr futures up 1/32 at 103-2.5 (L: 102-31 / H: 103-03.375)
Dec 5-Yr futures up 1.25/32 at 107-15.75 (L: 107-06.25 / H: 107-16.25)
Dec 10-Yr futures up 2/32 at 110-24.5 (L: 110-09.5 / H: 110-26)
Dec 30-Yr futures up 2/32 at 117-23 (L: 116-24 / H: 117-29)
Dec Ultra futures up 6/32 at 124-24 (L: 123-14 / H: 124-29)
MNI US 10YR FUTURE TECHS: (Z4) Southbound
- RES 4: 113-12 Low Sep 3 and a recent breakout point
- RES 3: 112-31 50-day EMA
- RES 2: 112-22 High Oct 16 and a key short-term resistance
- RES 1: 111-14/112-05+ High Oct 25 / 20-day EMA
- PRICE: 110-12 @ 16:43 GMT Oct 29
- SUP 1: 110-09+ Low Oct 29
- SUP 2: 110-00 Round number support
- SUP 3: 109-17+ Low Jul 5 (cont)
- SUP 4: 109-12+ 2.0% 10-dma envelope
The trend condition in Treasuries remains bearish and the contract has traded lower again Tuesday. This week’s move reinforces the bear theme and maintains the bearish price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position too. Sights are on the 110-00 handle. Initial key resistance has been defined at 112-22, the Oct 16 high.
SOFR FUTURES CLOSE
Dec 24 +0.025 at 95.630
Mar 25 +0.020 at 95.965
Jun 25 +0.030 at 96.205
Sep 25 +0.025 at 96.340
Red Pack (Dec 25-Sep 26) +0.020 to +0.025
Green Pack (Dec 26-Sep 27) +0.005 to +0.015
Blue Pack (Dec 27-Sep 28) +0.010 to +0.015
Gold Pack (Dec 28-Sep 29) +0.010 to +0.015
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M -0.01081 to 4.69649 (-0.01081/ wk)
- 3M -0.01547 to 4.58917 (-0.01547/wk)
- 6M -0.01802 to 4.41270 (-0.01802/wk)
- 12M -0.00823 to 4.14467 (-0.00823/wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.82% (-0.01), volume: $2.194T
- Broad General Collateral Rate (BGCR): 4.81% (-0.01), volume: $791B
- Tri-Party General Collateral Rate (TGCR): 4.81% (-0.01), volume: $757B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.83% (+0.00), volume: $104B
- Daily Overnight Bank Funding Rate: 4.83% (+0.00), volume: $267B
FED Reverse Repo Operation:
RRP usage recedes to $244.841B from $251.032B prior, compares to new multi year low of $202.798B from Thursday, October 24, '24. Number of counterparties slips to 58 from 67 prior.
MNI PIPELINE: $1.25B Beacon Funding 30Y Launched; $1B Belgium Expected Wednesday
- Date $MM Issuer (Priced *, Launch #)
- 10/29 $1.25B #Beacon Funding Trust (LIBMUT) 30Y +175
- 10/29 $1B Newell Brands $500M 5.5NCL, $500M 7.5NCL
- 10/29 $850M #Hyundai Capital AM 3Y +80 (SOFR leg dropped)
- 10/29 $500M #Synovus 6NC5 +205
- 10/29 $500M Swedish Export Credit 2.5Y SOFR+35
- 10/29 $500M #Centerpoint Energy 30.5NC5.25 6.7%
- 10/29 $Benchmark Horizon Mutual investor calls
- 10/29 $Benchmark Marsh & McLennan investor calls
- Rolled to Wednesday:
- 10/30 $1B Garda World Security Corp 8NC3
- 10/30 $1B Kingdom of Belgium WNG 10Y +64
MNI BONDS: EGBs-GILTS CASH CLOSE: Broad Weakness Ahead Of Euro CPI, UK Budget
European yields rose Tuesday, with a second consecutive session of Gilt underperformance vs Bund.
- Most of the session's weakness came overnight, led by Bunds after they had strengthened Monday - but there was no clear trigger for the move.
- Much lower than expected US job openings data saw a global core FI rally in early Europeaan afternoon trade,but the impact eventually reversed as potentially mitigating factors such as hurricane effects were considered (and US consumer confidence came in strong).
- The European data calendar was relatively light: The UK saw growth in loan approvals alongside a softening in mortgage rates in September, though consumer credit remains dampened.
- The UK and German curves bear steepened through the 10Y segment, with 30Y instruments outperforming. Periphery EGB spreads were slightly wider, led by Italy and Greece.
- The UK budget release is Wednesday's highlight - MNI's Preview is here (link). Also garnering attention will be the start of the Eurozone October flash inflation round with Spain and Germany (MNI's Preview is here - link), as well as the first read of Q3 eurozone GDP.
Closing Yields / 10-Yr Periphery EGB Spreads To Germany
- Germany: The 2-Yr yield is up 4.2bps at 2.142%, 5-Yr is up 5.7bps at 2.159%, 10-Yr is up 5.1bps at 2.337%, and 30-Yr is up 3.4bps at 2.63%.
- UK: The 2-Yr yield is up 5.1bps at 4.259%, 5-Yr is up 5.7bps at 4.19%, 10-Yr is up 6.1bps at 4.315%, and 30-Yr is up 3.9bps at 4.791%.
- Italian BTP spread up 2bps at 122.6bps / Spanish up 0.4bps at 69.9bps
MNI FOREX: AUDUSD Extends losing Streak, UK Budget Keeps GBP in Focus
- Despite some intra-day volatility for US yields amid a mixed set of data releases, the curve remains close to unchanged levels on Tuesday. The USD index has held steady in sympathy, as markets await not only the advanced reading of US GDP tomorrow, but Friday’s release of the US employment report.
- EURUSD tried lower, briefly reaching 1.0769, before reversing those losses back to 1,08 ahead of the APAC crossover. In similar vein, market participants are lacking conviction given the upcoming Eurozone inflation releases and the next week’s US election.
- Both AUD and NZD are the poorest performers, keeping a string of losing sessions in lay. For AUDUSD, a bear cycle remains intact and the clearance of multiple supports has bolstered a bearish theme. The pair now targets 0.6490, the 76.4% retracement of the Aug 5 - Sep 30 bull leg.
- GBPUSD has edged higher Tuesday to briefly breach the Monday and Friday highs at 1.3001 and 1.2999 respectively. Pre-setting and squaring ahead of the Wednesday budget may be responsible here - and further spot strength and a close above the 1.30 handle would expose 1.3067, the 50-day EMA, as the next upside target.
- GBP strength in the crosses remains evident in EURGBP's brief show below the 0.83 handle today. The break lower in the cross is clearly meeting some support into the 0.8295 bear trigger, a level that could come into focus should tomorrow's Budget prove GBP positive - potentially via less aggressive BoE rate cut pricing as a result of sped-up infrastructure spending, or a less punitive shift in the tax regime.
WEDNESDAY DATA CALENDAR
| Date | ET | Impact | Period | Release | Prior | Consensus | |
| 30/10/2024 | 0700 | ** | 25-Oct | MBA Mortgage Applications w/w | -6.7 | -- | % |
| 30/10/2024 | 0815 | *** | Sep | ADP Private Payrolls | 143 | 98 | (k) |
| 30/10/2024 | 0830 | *** | Q3 | GDP annualized QQ | 3.0 | 3.0 | % |
| 30/10/2024 | 0830 | ** | Sep | Advance Goods Trade Gap | -94.3 | -96.0 | USD (b) |
| 30/10/2024 | 0830 | ** | Sep | Advance Retail Inventories | 0.5 | -- | % |
| 30/10/2024 | 0830 | ** | Sep | Advance Wholesale Inventories | 0.1 | -- | % |
| 30/10/2024 | 0830 | *** | Q4 | Ave Month 10Y for Upcoming Qtr | 40.0 | -- | USD (b) |
| 30/10/2024 | 0830 | *** | Q4 | Ave Month 20Y for Upcoming Qtr | 14.0 | -- | USD (b) |
| 30/10/2024 | 0830 | *** | Q4 | Ave Month 30Y for Upcoming Qtr | 23.0 | -- | USD (b) |
| 30/10/2024 | 1000 | ** | Sep | NAR Pending Home Sales | 70.6 | -- | |
| 30/10/2024 | 1000 | ** | Sep | Previous Pending Home Sales Index Revised, m/m | -- | -- | |
| 30/10/2024 | 1030 | ** | 25-Oct | Crude Oil Stocks ex. SPR w/w | -- | -- | bbl (m) |
| 30/10/2024 | 1030 | ** | 25-Oct | Distillate Stocks w/w change | -- | -- | bbl (m) |
| 30/10/2024 | 1030 | ** | 25-Oct | Gasoline Stocks w/w change | -- | -- | bbl (m) |