MNI (LONDON) - Highlights:
- Regional readings pooint to downside risk for national German CPI
- EUR offered, Bunds supported as EZ inflation adds to ECB easing bias
- Data picks up, with weekly jobless claims data again a highlight
US TSYS: Off Germany CPI Highs, GDP/PCE Revisions and Claims Ahead
- Treasuries have moved off session highs seen after a string of soft regional German CPI prints ahead of the national release at 0800ET.
- Today's focus is firmly on GDP/PCE revisions and jobless claims at 0830ET, whilst the 7Y auction provides later interest after yesterday's 5Y tailed by 0.3bps but with better underlying details.
- Cash yields are 0.5-1.5bp lower today, with 5s leading declines.
- 2s10s at -3.2bps holds its shift to just shy of disinversion seen since Tuesday's new 2Y benchmark. 2s10s briefly disinverted on Aug 5 - the day after last month's payrolls - for the first time since mid-2022.
- TYZ4 at 114-04 (+ 01+) is off a high of 114-07 that remained within yesterday's 114-09. Bloomberg still shows U4 as most active but volumes are now far higher for the Z4.
- Next main resistance is seen at 114-19+ (Aug 21 high) which also corresponds today with yields at the 3.75% mark.
- Data: Q2 GDP/PCE 2nd release (0830ET), Weekly jobless claims (0830ET), Adv goods trade bal Jul (0830ET), Wholesale/retail inventories Jul p/Jul (0830ET), Pending home sales (1000ET)
- Fedspeak: Bostic on economic outlook (1530ET)
- Note/bond issuance: US Tsy $44B 7Y note sale - 91282CLJ8 (1300ET)
- Bill issuance: US Tsy $85B 4-week, $80bn 8-week bill sales (1130ET)
STIR: Fed Rates Back Little Changed With 0830ET Data In Focus
- Fed Funds implied rates are little changed for near-term meetings, with indication of softer German CPI unwinding an earlier modest increase.
- Cumulative cuts from 5.33% effective: 34bp Sep, 68bp Nov, 103bp Dec, 132bp Jan and 194bp June.
- Bostic ('24 voter) yesterday clarified on what some had taken to be dovish comments last week. He thinks it "may be time" to cut but he's still looking for additional data to support lowering rates next month. He reiterated his timeline for anticipated cuts had moved up after inflation fell more quickly than he expected and the unemployment rate increased more rapidly, but he remained cautious. "I don't want us to be in a situation where we cut and then we have to raise rates again,"
- Today's near-term rates focus is squarely around 0830ET data with GDP/PCE revisions for Q2 and weekly jobless claims, continuing claims covering the payrolls reference period.
STIR: OI Points To Limited, Mixed Positioning Swings In SOFR Futures
SOFR futures were -1.0 to +1.0 at Wednesday's settlement, with OI data pointing to a mix of net short setting, long setting and long cover.
- We didn't see any particularly meaningful shifts in net pack positioning, with net long setting in SFRU4 providing the standout in individual contract terms,
- Fed Funds futures were relatively steady on the day, continuing to point to a little over 100bp of cuts through the Dec FOMC.
EUROPE ISSUANCE UPDATE:
Finland auction results
- E100mln of the 2.875% Apr-29 RFGB. Avg yield 2.483% (bid-to-cover 6.51x).
- E301mln of the 0.50% Sep-29 RFGB. Avg yield 2.492% (bid-to-cover 5.65x).
11:49:34
Italy auction results
- E4.5bln of the 3.00% Oct-29 BTP. Avg yield 3.08% (bid-to-cover 1.48x).
- E3.25bln of the 3.85% Feb-35 BTP. Avg yield 3.68% (bid-to-cover 1.62x).
- E1.5bln of the 1.05% Apr-32 CCTeu. Avg yield 4.94% (bid-to-cover 1.92x).
EU: Foreign Ministers Meet In Brussels As Hungary Snubbed
EU foreign ministers hold an informal meeting today (29 Aug) in Brussels in a notable snub to the gov't of Hungarian PM Viktor Orban. This meeting was due to take place in Budapest, but last month European Commission High Representative for Foreign Affairs and Security Policy Josep Borrell announced that a concurrent gathering of foreign ministers would take place in Brussels, effectively wresting control of the hosting duties (and agenda setting) from Hungary.
- Orban's visit to Russia earlier in 2024 and consistent objection to EU sanctions and support packages for Ukraine have left many EU contemporaries exasperated. Politico reports that a meeting of eurozone finance ministers set for 13 Sep in Budapest could also be moved to Brussels in a further blow to the Hungarian presidency of the Council of the European Union.
- Aside from the EU-Hungary bickering, main topics of conversation between ministers will be the war in Ukraine (Foreign Minister Dmytro Kuleba will be attending, seeking approval to use long-range weaponry against Russia), EU-Turkey relations (Foreign Minister Hakan Fidan joins for lunch), the situation in the Middle East, and post-election tensions in Venezuela.
- Earlier Borrell said he has started the process to ask member states if they want to impose sanctions on 'some Israeli ministers'. Follows the Israeli military action in theWest Bank and the ministers in question being hardline ultranationalists Finance Minister Bezalel Smotrich and National Security Itamar Ben Gvir. With unanimity needed chances of passage are slim, but the fact sanctions are being discussed is a notable development.
FOREX: EUR Sinks as German Regions Point to Disappointing National Print
- The single currency is softer early Thursday as regional German CPIs followed Spanish inflation data in disappointing to the downside, suggesting the national German inflation print later today will come in below forecast. EUR/USD trades below $1.11 as a result, and EURGBP has also fallen 0.3% on the day. A negative close in the cross today would extend the losing streak to seven sessions, with the cross revisiting the lows seen across July below the 0.8400 mark. The extension down reinforces the bearish significance of the recent break of the 50-day EMA. Furthermore, the cross has cleared all key retracement points of the rally between Jul 17 - Aug 8.
- CHF similarly trades poorly, partially unwinding a small part of the recent strength and allowing for a bounce off the multi-month low printed in USD/CHF earlier this week. Speculation around SNB involvement and persistent bullish options positioning in the CHF has helped trigger and oversold condition in USD/CHF in recent weeks, which is modestly reversing into the Thursday NY crossover.
- NZD trades well, dragging AUD with it, and helping NZD/USD press 0.63. A clearance above the handle would be the first since January - with the more solid commodities backdrop (iron ore, gold and silver higher) and bounce off lows for equities adding to the theme.
- A raft of US data crosses later today, with the secondary reading of Q2 US GDP due alongside initial jobless claims data for the latest week, and July retail inventories. Pending home sales are set to follow. ECB's Lane and Nagel are set to speak as well as another appearance from Fed's Bostic, who spoke late yesterday.
OPTIONS: Expiries for Aug29 NY cut 1000ET (Source DTCC)
- AUD/USD: $0.6485(A$3.2bln)
- AUD/NZD: N$1.0920(A$2.0bln)
EQUITIES: Bullish Theme in E-Mini S&P Intact Despite Moderate Pullback Wednesday
- Eurostoxx 50 futures are holding on to their latest gains. The contract has recently pierced the 50-day EMA, at 4877.69. An extension higher would undermine the recent bearish theme and highlight a stronger reversal. Sights are on 4951.00 next, the Jul 31 high. For bears, a reversal lower would refocus attention on the bear trigger at 4494.00, the Aug 5 low. Initial support lies at 4854.57, the 20-day EMA.
- A bullish theme S&P E-Minis is intact and the contract traded to a fresh cycle high Monday. Price has recently cleared 5600.75, Aug 1 high, signalling scope for an extension towards key resistance and the bull trigger at 5721.25, the Jul 16 high. A break would resume the primary uptrend. Support to watch lies at 5508.99, the 50-day EMA. A clear breach of it is required to instead highlight a potential bearish threat. The latest move lower appears corrective.
COMMODITIES: Trend Conditions in Gold Unchanged and Bullish
- WTI futures have recovered from their recent lows and the contract traded sharply higher Monday. However, price has pulled back from its latest highs and again traded lower yesterday. A resumption of gains would refocus attention on key resistance at $78.54, the Aug 12 high. Clearance of this level would highlight a stronger bullish reversal. For bears, an extension lower would once again expose the $70.88 key support.
- Trend conditions in Gold are unchanged and remain bullish. The recent breach of $2483.7, the Jul 17 high, confirmed a resumption of the primary uptrend. Note that moving average studies are still in a bull-mode set-up and this highlights a dominant uptrend. The focus is on a climb towards $2536.4 next, a Fibonacci projection. Initial support to watch lies at $2475.3, the 20-day EMA. Short-term weakness would be considered corrective.
| Date | GMT/Local | Impact | Country | Event |
| 29/08/2024 | 1200/1400 | *** |  DE | HICP (p) |
| 29/08/2024 | 1230/0830 | *** |  US | Jobless Claims |
| 29/08/2024 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 29/08/2024 | 1230/0830 | *** | US | GDP |
| 29/08/2024 | 1230/0830 | * |  CA | Current account |
| 29/08/2024 | 1230/0830 | * | CA | Payroll employment |
| 29/08/2024 | 1230/0830 | ** | US | Advance Trade, Advance Business Inventories |
| 29/08/2024 | 1400/1000 | ** | US | NAR Pending Home Sales |
| 29/08/2024 | 1430/1030 | ** | US | Natural Gas Stocks |
| 29/08/2024 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 29/08/2024 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 29/08/2024 | 1700/1300 | ** | US | US Treasury Auction Result for 7 Year Note |
| 29/08/2024 | 1930/1530 | US | Atlanta Fed's Raphael Bostic | |
| 30/08/2024 | 2330/0830 | ** |  JP | Tokyo CPI |
| 30/08/2024 | 2330/0830 | * | JP | Labor Force Survey |
| 30/08/2024 | 2350/0850 | * | JP | Retail Sales (p) |
| 30/08/2024 | 2350/0850 | ** | JP | Industrial Production |
| 30/08/2024 | 0030/1030 | ** |  AU | Retail Trade |
| 30/08/2024 | 0600/0800 | ** | DE | Retail Sales |
| 30/08/2024 | 0600/0800 | ** | DE | Import/Export Prices |
| 30/08/2024 | 0630/0730 |  GB | UK DMO to release FQ3 issuance calendar | |
| 30/08/2024 | 0645/0845 | *** |  FR | HICP (p) |
| 30/08/2024 | 0645/0845 | ** | FR | PPI |
| 30/08/2024 | 0645/0845 | *** | FR | GDP (f) |
| 30/08/2024 | 0645/0845 | ** | FR | Consumer Spending |
| 30/08/2024 | 0700/0900 | ** |  CH | KOF Economic Barometer |
| 30/08/2024 | 0705/0905 |  EU | ECB's Schnabel at Ragnar Nurkse Lecture | |
| 30/08/2024 | 0735/0935 | EU | ECB's Schnabel in panel at Ragnar Nurkse | |
| 30/08/2024 | 0755/0955 | ** | DE | Unemployment |
| 30/08/2024 | 0800/1000 | ** |  IT | ISTAT Business Confidence |
| 30/08/2024 | 0800/1000 | ** | IT | ISTAT Consumer Confidence |
| 30/08/2024 | 0830/0930 | ** | GB | BOE M4 |
| 30/08/2024 | 0830/0930 | ** | GB | BOE Lending to Individuals |
| 30/08/2024 | 0900/1100 | *** | EU | HICP (p) |
| 30/08/2024 | 0900/1100 | ** | EU | Unemployment |
| 30/08/2024 | 0900/1100 | *** | IT | HICP (p) |
| 30/08/2024 | 1230/0830 | *** | US | Personal Income and Consumption |
| 30/08/2024 | 1230/0830 | *** | CA | GDP - Canadian Economic Accounts |
| 30/08/2024 | 1230/0830 | *** | CA | Gross Domestic Product by Industry |
| 30/08/2024 | 1230/0830 | *** | CA | CA GDP by Industry and GDP Canadian Economic Accounts Combined |
| 30/08/2024 | 1230/0830 | *** | CA | Gross Domestic Product by Industry |
| 30/08/2024 | 1345/0945 | *** | US | MNI Chicago PMI |
| 30/08/2024 | 1400/1000 | ** | US | U. Mich. Survey of Consumers |
| 30/08/2024 | 1500/1100 | CA | Finance Dept monthly Fiscal Monitor (expected) | |
| 30/08/2024 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
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