EXECUTIVE SUMMARY
- MNI BoE Review - November 2024: Case 2 the Prevailing View
- MNI US: Trump Likely To Tap Up Lighthizer To Head Up USTR Again
- MNI US: Trump Likely To Appoint Gov Burgum As 'Energy Tsar'
- MNI BRIEF: China Oct CPI Slows For 2nd Month To 0.3% Y/Y
- MNI US DATA: Consumer Sentiment Firmed Ahead Of US Election
US
MNI US TSYS: Curves Twist Flatter Day After FOMC Rate Cut, SLOOS & Fed Speak Tuesday
- Treasuries look to finish mixed Friday, curves twisting flatter (2s10s -7.467 at 4.961; 5s30s -7.229 at 28.347) as short end rates trade weaker the day after the Fed delivered a 25bp cut to maintain the federal funds rate in a target range of 4.5-4.75%.
- Currently, the Dec'24 10Y contract trades +.5 at 110-06.5, well off midmorning high of 110-19.5 after the U.Mich consumer sentiment improved by more than expected in the preliminary November report at 73.0 (cons 71.0) after 70.5, still highest since April.
- There is a big caveat that the survey period ran up to Nov 4 and will have missed the presidential election results. Consumer sentiment showed markedly differing levels by political party, with democrats at 94.9 vs republicans 57.9 ahead of the election.
- The US dollar came firmly back into favor Friday as Trump trades gained renewed confidence, aided by the cleaner positioning following the sharp post-election reversals seen late Wednesday and across Thursday’s session.
- No data Monday in observance of Veterans Day holiday. Cash FI markets closed but open on Globex, NYSE and Nasdaq open as well. Fed speakers resume Tuesday in addition to the Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS).
NEWS
MNI US: Trump Likely To Tap Up Lighthizer To Head Up USTR Again
US President-elect Donald Trump is likely to tap up his first term US Trade Representative, Robert Lighthizer, to again head the USTS, according to reporting from the Financial Times. The USTR posting is one of the most closely scrutinized Trump cabinet appointments considering the breadth of tariffs proposed by Trump on the campaign trail. FT notes it is uncertain if Lighthizer will accept the position as he has petitioned for both Commerce and Treasury Secretary, although the latter likely to go a prominent financier such as hedge fund managers Scott Bessent and John Paulson.
MNI US: Trump Likely To Appoint Gov Burgum As 'Energy Tsar'
The Financial Times reporting that US President-elect Donald Trump is considering tapping North Dakota governor Doug Burgum (R-ND) as ‘energy tsar’ in his second term administration, a position that may oversee an expanded energy portfolio. Burgum governs a key oil drilling state and, similar to Trump, has expressed an ambition to accelerate hydrocarbon production. Burgum, who also ran in the Republican primary and was considered a frontrunner for Trump’s running mate before the selection of Senator JD Vance (R-OH), would be tasked with overseeing an overhaul of environmental regulation and permitting to boost hydrocarbon production – one of Trump’s day one priorities.
MNI FRANCE: Macron Approval Hits New Low Amid Election Fallout & Budget Woes
President Emmanuel Macron has recorded his lowest-ever approval rating with pollster Elabe in the latest survey published in Les Echos. Macron's approval in November stands at 21%, the lowest with Elabe since his election in 2017 and the lowest with any pollster since an 18% approval rating recorded in November 2018 around the outbreak of the gilets jaunes protests. Macron's November approval is down 1% from October, with 73% of respondents saying that they do not trust the president. Forty-eight per cent of respondents said they do not trust Macron 'at all', just 3% off the high recorded at the peak of the gilets jaunes crisis.
MNI BoE Review - November 2024: Case 2 the Prevailing View
The MPC voted 8-1 to cut Bank Rate by 25bp to 4.75% (with only external member Catherine Mann dissenting, preferring to leave Bank Rate on hold). The decision was as expected (although we and other market participants had seen a good chance that Greene and Pill would join Mann). A further cut in December is looking unlikely but it appears as though Mann is the only MPC member (based on currently available data) who may not vote for another 25bp cut in February.
MNI SECURITY: Zelenskyy 'Reassured' By Call With US President-Elect Trump
Axios reporting that Ukrainian President Volodymyr Zelenskyy was "somewhat reassured" by what he heard from US President-elect Donald Trump in a call today that notably came before a call with Russian President Vladimir Putin. Axios: "The call between Trump and Zelensky lasted around 25 minutes, according to the sources who were briefed on its details. After Zelensky congratulated Trump, the president-elect said he will support Ukraine, but didn't go into details."
BBG: "Boeing Is Said to Weigh $6 Billion Sale of Navigation-Aid Unit:
Boeing Co. is exploring a sale of its Jeppesen navigation unit as the planemaker draws up a list of assets it could shed to help lighten its $58 billion debt load, according to people familiar with the matter. The company is working with an adviser on the potential sale of the provider of interactive flight plans, said the people, who asked not to be identified discussing confidential matters."
OVERNIGHT DATA
MNI US DATA: Consumer Sentiment Firmed Ahead Of US Election
- U.Mich consumer sentiment improved by more than expected in the preliminary November report at 73.0 (cons 71.0) after 70.5, still highest since April. There is a big caveat that the survey period ran up to Nov 4 and will have missed the presidential election results. Consumer sentiment showed markedly differing levels by political party, with democrats at 94.9 vs republicans 57.9 ahead of the election.
- Inflation expectations were mixed, with the 1Y surprising a tenth lower at 2.6% for a fresh low since Dec 2020 and the 5-10Y surprising a tenth higher at 3.1% but remaining within its 2.9-3.1% typical range.
- Note that the preliminary release for the 5-10Y has previously printed 3.1% three times in the year to Oct but was revised down to 3.0% on two of those occasions.
MNI BRIEF: China Oct CPI Slows For 2nd Month To 0.3% Y/Y
China's Consumer Price Index rose 0.3% y/y in October, slowing from September's 0.4% and underperforming expectations by 10 basis points, however, core CPI rebounded slightly to 0.2%, data from the National Bureau of Statistics showed Saturday. Food prices rose 2.9% y/y, decelerating 0.4 percentage points from September as weather conditions improved. Non-food prices fell 0.3% y/y, expanding from the previous 0.2% decline, led by a 10.7% fall in gasoline prices.
- On a monthly basis, CPI fell 0.3%, slowing from September's 0.0%. PPI declined 2.9% y/y, expanding from last month’s 2.8% fall to hit near one-year low and marking the 25th consecutive negative read, missing the market consensus of a 2.5% fall. PPI fell 0.1% m/m, narrowing from September's 0.6% drop, as domestic demand for some industrial products recovered amid the introduction of additional pro-growth policies.
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA up 314.47 points (0.72%) at 44048.47
S&P E-Mini Future up 23 points (0.38%) at 6027
Nasdaq up 9.1 points (0%) at 19280.6
US 10-Yr yield is down 1.6 bps at 4.3101%
US Dec 10-Yr futures are up 1.5/32 at 110-7.5
EURUSD down 0.0092 (-0.85%) at 1.0713
USDJPY down 0.25 (-0.16%) at 152.69
WTI Crude Oil (front-month) down $1.84 (-2.54%) at $70.52
Gold is down $18.98 (-0.7%) at $2687.94
European bourses closing levels:
EuroStoxx 50 down 49.2 points (-1.01%) at 4802.76
FTSE 100 down 68.35 points (-0.84%) at 8072.39
German DAX down 147.04 points (-0.76%) at 19215.48
French CAC 40 down 86.93 points (-1.17%) at 7338.67
US TREASURY FUTURES CLOSE
3M10Y -0.554, -22.943 (L: -27.537 / H: -20.378)
2Y10Y -7.856, 4.572 (L: 4.542 / H: 13.754)
2Y30Y -11.361, 21.464 (L: 21.35 / H: 34.199)
5Y30Y -7.528, 28.048 (L: 27.966 / H: 36.584)
Current futures levels:
Dec 2-Yr futures down 2.5/32 at 102-24 (L: 102-23.625 / H: 102-29.125)
Dec 5-Yr futures down 2.25/32 at 106-31.25 (L: 106-30.5 / H: 107-08.25)
Dec 10-Yr futures up 1.5/32 at 110-7.5 (L: 110-03.5 / H: 110-19.5)
Dec 30-Yr futures up 22/32 at 117-25 (L: 116-30 / H: 118-11)
Dec Ultra futures up 40/32 at 125-9 (L: 123-25 / H: 125-27)
MNI US 10YR FUTURE TECHS: (Z4) Corrective Bounce
- RES 4: 112-22 High Oct 16 and a key short-term resistance
- RES 3: 112-05+ 50-day EMA
- RES 2: 111-14+ High Oct 25
- RES 1: 110-21+/111-03+High Nov 6 / 20-day EMA
- PRICE: 110-11+ @ 11:14+ GMT Nov 8
- SUP 1: 109-07 Low Nov 6 and the bear trigger
- SUP 2: 109-05 76.4% retracement of the Apr - Sep bull cycle (cont)
- SUP 3: 109-00 Round number support
- SUP 4: 108-15 2.0% 10-dma envelope
A bear cycle in Treasuries remains in play and Wednesday's move lower reinforces current conditions. The recovery Thursday, above 110-00, is considered corrective. A resumption of the bear leg would open 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 111-03+, the 20-day EMA.
SOFR FUTURES CLOSE
Dec 24 -0.025 at 95.570
Mar 25 -0.055 at 95.810
Jun 25 -0.065 at 95.995
Sep 25 -0.060 at 96.105
Red Pack (Dec 25-Sep 26) -0.05 to -0.02
Green Pack (Dec 26-Sep 27) -0.015 to +0.005
Blue Pack (Dec 27-Sep 28) +0.010 to +0.025
Gold Pack (Dec 28-Sep 29) +0.030 to +0.035
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M -0.00566 to 4.61648 (-0.03552/ wk)
- 3M -0.00546 to 4.51617 (-0.03812/wk)
- 6M -0.00932 to 4.40107 (-0.01091/wk)
- 12M -0.02789 to 4.21872 (+0.02768/wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.82% (+0.01), volume: $2.266T
- Broad General Collateral Rate (BGCR): 4.82% (+0.01), volume: $807B
- Tri-Party General Collateral Rate (TGCR): 4.82% (+0.01), volume: $784B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.83% (+0.00), volume: $102B
- Daily Overnight Bank Funding Rate: 4.83% (+0.00), volume: $285B
FED Reverse Repo Operation:
RRP usage inches up to $163.621B from $159.002B Thursday - this after usage fell to $143.243B on Tuesday -- the lowest since May 6, 2021. The number of counterparties steady at 56 prior.
MNI PIPELINE: US$ Issuance Roundup
- Date $MM Issuer (Priced *, Launch #)
- 11/08 $650M #Athene Global 7Y +108
- 11/08 $550M *Oncor Electric WNG 5Y +52
- Expected next week:
- 11/12 $Benchmark People's Republic of China 3Y, 5Y estimated at up to $2B between the two tranches. Bbg writes the sale will take place in Riyadh as China looks to deepen financial ties with Saudi Arabia.
- A long list of bookrunners includes: BOC, BKCOMM, Agricultural Bank of China, BofA, CCB, CICC, C, CA-CIB, DB, FAB, GS, HSBC, ICBC, JPM, Mizuho, StanChart
EGBS: Bund futures remain underpinned after a lack of upside surprises in China’s latest stimulus package. Futures are +85 at 132.27, climbing above Wednesday’s post US election high of 132.22 late Friday to October 30 levels.
- German political and fiscal risk provided the fundamental catalyst for the latest leg of the swap spread tightening move on Thursday, as speculation surrounding the potential for higher issuance and a debt brake tweak increased.
- The removal of fiscal hawk Lindner has shifted the probability distribution a little, even with the fiscally conservative Merz’s CDU in the best position to lead the next government.
- Ultimately, our political risk team has pointed to relatively low odds of a debt brake tweak, given current expectations surrounding the next government.
- Back to swap spreads; 10-Year Bund vs. 3-month Euribor ASW has briefly traded back to 0bp after yesterday’s clean break below. While valuation constraints are helping limit further tightening in Schatz spreads, sell-side names generally remain cautious when it comes to spreads further out the curve.
MNI FOREX: Greenback Finishes Week on Front Foot, AUD & EM FX Sharply Lower
- The US dollar came firmly back into favour Friday as Trump trades gained renewed confidence, aided by the cleaner positioning following the sharp post-election reversals seen late Wednesday and across Thursday’s session.
- Accordingly, AUDUSD is the notable underperformer, declining 1.7% and erasing the entirety of yesterday’s advance in the process. The moves come amid a marginally disappointing China stimulus announcement and despite the ongoing strength for US equity benchmarks, highlighting the specific sentiment towards the greenback.
- Similar sentiment has been prominent across emerging market currencies and a sharp 2.5% bounce for USDMXN into the close is evidence of the peso’s significant volatility this week, which traded in a 5% range.
- Overall, the euro has weakened roughly 1.25% against the dollar this week, primarily driven by this more optimistic USD price action in anticipation of a Donald Trump led administration. However, the single currency has shown relative underperformance across G10, largely owing to Eurozone growth concerns and an escalating political crisis in Germany. Bearish technical conditions dominate, signalling scope for an extension towards 1.0666, the Jun 26 low.
- The single currency weakness can also be seen through the lens of EURGBP, which looks set to close at its lowest level since April 2022. 0.8300 marks a multi-year inflection point for the cross and will be monitored closely in coming sessions.
- Next week’s focus will be on US inflation data, as well as a plethora of China and Uk economic data releases.
MONDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 11/11/2024 | 0700/0800 | *** |  NO | CPI Norway |
| 11/11/2024 | - | *** |  CN | Money Supply |
| 11/11/2024 | - | *** | CN | New Loans |
| 11/11/2024 | - | *** | CN | Social Financing |
| 11/11/2024 | - |  GB | DMO quarterly investors/GEMM consultation |