Highlights:
- Treasuries remain under pressure as Trump trade dictates sentiment
- Tuesday light on data, heavy on speakers
- MNI release 2024 Presidential Election Policy Tracker
US TSYS: Bonds Tick Lower, Rate Cuts Cool, Trump Election Odds Gain
- Treasuries followed continued sell-off in Bunds and Gilts overnight. Little off late overnight lows, Treasuries are back near late July levels as projected rate cuts into early 2025 continue to cool. Current projected cuts vs. late Monday levels (*): Nov'24 cumulative -22.0bp (-23.3bp), Dec'24 -40.5bp (-41.0bp), Jan'25 -58.1bp (-60.1bp).
- The Dec'24 10Y futures contract is currently -5 at 111-11.5 vs. 111-09 low, heavier volumes with TYZ4 over 455k at the moment.
- TYZ4 is nearing round number technical support of 111-00 (July 22 low), 10Y yield +.0060 at 4.2017% vs. 4.2176% high. Curves running mildly flatter: 2s10s -.332 at 15.845, 5s30s -.974 at 50.133.
- Aside from carry-over pressure from EGB sovereign, corporate issuance and higher crude prices (WTI +.73 at 71.29), trading desks citing increased odds of a Trump election win (underpinning inflation concerns) for latest selling.
- Pick-up in economic data with regional Fed mfg activity from Philadelphia (0830ET) and Richmond Fed (1000ET).
- Scheduled Fed speaker has Philly Fed president Harker making open remarks at a Fin-tech conference at 1000ET (no Q&A). ECB governing council member Mario Centeno will discuss inflation convergence at a Peterson Economics Inst conference at 0900ET.
MNI POLITICAL RISK - 2024 Presidential Election Policy Tracker
This tracker offers a comprehensive summary of the policy proposed by Vice President Kamala Harris and Former President Donald Trump on the 2024 campaign trail. Where possible, each policy is accompanied by a nonpartisan costing and a score on the likelihood of the policy becoming law.
- The tracker covers a range of policies related to taxation, tariffs, banking, energy, defense, foreign policy and domestic issues like immigration, women's reproductive rights, and healthcare.
Please find the full article attached below: 2024 Policy Policy Tracker
BOC: MNI BoC Preview - Oct'24: Touch and Go
- The BoC is mostly priced to ramp up its easing pace with a 50bp cut on Wednesday after three consecutive 25bp cuts having started cutting in June
- We think it’s a closer call with another 25bp cut than the 45bp priced implies, but narrowly go with a 50bp cut this month with the market presenting an opportunity to step rates closer to higher estimates of neutral and trim elevated real rates
- If the Governing Council does opt for a 50bp cut, we expect an attempt at downplaying odds of a second 50bp cut in December to avoid an overly large FI rally and CAD depreciation.
Full Preview including exclusive analysis, summary of sell-side views and MNI Policy coverage here: https://mni.marketnews.com/3BTzNPh
EUROPE ISSUANCE UPDATE:
Italy dual-tranche syndication: Final terms
- E10bln (MNI had expected E7-10bln) of the new Nov-31 BTP. Books in excess of E99bln, spread set at 3.45% Jul-31 BTP +7bps (guidance was +9bps area).
- E3bln tap of the 4.30% Oct-54 BTP. Books in excess of E101bln, spread set at 4.50% Oct-53 BTP +9bps (guidance was +12bps area).
UK auction review
- GBP900mln of the 0.625% Mar-45 linker. Avg yield 1.328% (bid-to-cover 3.57x).
Germany auction review
- E5bln (E4.162bln allotted) of the 2.00% Dec-26 Schatz. Avg yield 2.16% (bid-to-offer 2.17x; bid-to-cover 2.61x).
FOREX: Trump Odds Continue to Dictate Sentiment
- The JPY is weaker for a second session, with AUD/JPY breaking through last week's highs to narrow the gap with 101.42 - the next notable resistance at the Oct07 high. The US yield curve remains a defining factor, with the short-end providing the lever for risk-on/risk-off. Yesterday's pushing through 4.00% for the 2yr yield has spilled over into Tuesday trade, pressing to a new high of 4.0516% this morning.
- Positioning for the two key risk events in the coming weeks - the US Presidential election and the UK Budget - is playing a key part here, with Kashkari's comments late yesterday ("If the deficit goes to the moon, then rates will be higher") neatly summarising the market's views of the expansionary policies from both the potential Harris and Trump administrations when the victor takes office next year.
- Pressure on EUR/USD present into the Monday close has abated somewhat, with the pair off lows and aided higher by an ECB sources report from the MNI Policy team, which reported that ECB officials currently view market pricing for six consecutive cuts as slightly exaggerated barring a change in circumstances. As a result, EUR/USD has neared 1.0850 resistance, but progress through the 1.0872 200-dma will be needed to signal any near-term reversal.
- Tuesday trade will remain characterised by sentiment, with the data schedule again quieter. The speaker calendar if far busier, with appearances due from ECB's Centeno, Knot, Lagarde, Villeroy, Rehn and Panetta all on the docket, as well as Fed's Harker, BoE's Bailey & Breeden.
COMMODITIES: Gold Conditions Firmly Bullish After Hitting Fresh Record High
- WTI futures remain softer following last week’s sell-off. A continuation lower would threaten the recent bullish theme and expose support at $66.33, the Oct 1 low, and $64.61, the Sep 10 low and a key support. For bulls, a resumption of gains would instead refocus attention on the key short-term resistance at $78.46, the Oct 8 high. Clearance of this level would resume to the recent uptrend. Initial resistance is at $72.07, the 50-day EMA.
- Gold bulls remain in the driver’s seat. Last week’s climb resulted in a break of $2685.6, the Sep 26 high, confirming a resumption of the primary uptrend. The yellow metal has also cleared $2700.0, reinforcing current trend conditions. Sights are on $2767.1 next, a Fibonacci projection. Firm support is $2652.2, the 20-day EMA. A clear break of this EMA would signal scope for a deeper retracement.
EQUITIES: Bear Threat in Eurostoxx 50 Futures Remains Present
- A bear threat in Eurostoxx 50 futures remains present. The contract traded sharply lower on Oct 15 and has recently pierced support around the 50-day EMA, at 4947.57. A clear break of this average would undermine a recent bullish theme and highlight a stronger reversal. This would open 4884.06, a Fibonacci retracement. Key resistance and the bull trigger is unchanged at 5106.00, the Sep 30 high. Clearance of this level resumes the uptrend.
- S&P E-Minis trend conditions are unchanged and signals remain bullish. Fresh cycle highs confirm a resumption of the primary uptrend and maintain the bullish price sequence of higher highs and higher lows. Note that moving average studies are in a bull-mode setup, highlighting a dominant uptrend. Sights are on 5961.00, a Fibonacci projection. Initial support to watch is 5824.43, the 20-day EMA.
| Date | GMT/Local | Impact | Country | Event |
| 22/10/2024 | 0600/0700 | *** |  GB | Public Sector Finances |
| 22/10/2024 | 0900/1000 | * | GB | Index Linked Gilt Outright Auction Result |
| 22/10/2024 | 1230/0830 | * |  CA | Industrial Product and Raw Material Price Index |
| 22/10/2024 | 1230/0830 | ** |  US | Philadelphia Fed Nonmanufacturing Index |
| 22/10/2024 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 22/10/2024 | 1325/1425 | GB | BOE's Bailey address at Bloomberg Global Regulatory Forum | |
| 22/10/2024 | 1345/1445 | GB | BOE's Greene fireside chat with Josh Lipsky | |
| 22/10/2024 | 1400/1000 | ** | US | Richmond Fed Survey |
| 22/10/2024 | 1400/1600 |  EU | ECB's Lagarde in conversation with Francine Lacqua | |
| 22/10/2024 | 1500/1700 | EU | ECB's Lane in fireside chat at Seminar of Bank of New York | |
| 22/10/2024 | 1530/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 22/10/2024 | 1915/2115 | EU | ECB's Lagarde in panel discussion on cross border payments | |
| 22/10/2024 | 2000/2200 | EU | ECB's Lane at Columbia University seminar | |
| 22/10/2024 | 2015/2115 | GB | BOE's Breeden panellist at G20 cross-border payments event | |
| 23/10/2024 | 0900/1000 | ** | GB | Gilt Outright Auction Result |
| 23/10/2024 | 1100/0700 | ** | US | MBA Weekly Applications Index |
| 23/10/2024 | - | EU | ECB's Lagarde and Cipollone in G20 FMs and CB Governors meeting | |
| 23/10/2024 | 1300/1400 | GB | BOE's Breeden panellist at IIF meeting | |
| 23/10/2024 | 1300/0900 | US | Fed Governor Michelle Bowman | |
| 23/10/2024 | 1345/0945 | CA | BOC Monetary Policy Report | |
| 23/10/2024 | 1345/0945 | *** | CA | Bank of Canada Policy Decision |
| 23/10/2024 | 1400/1600 | ** | EU | Consumer Confidence Indicator (p) |
| 23/10/2024 | 1400/1000 | *** | US | NAR existing home sales |
| 23/10/2024 | 1400/1600 | EU | ECB's Lane participates in growth talk at IIF Meeting | |
| 23/10/2024 | 1400/1600 | EU | ECB's Lagarde Speech at Atlantic Council event | |
| 23/10/2024 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 23/10/2024 | 1430/1030 | CA | BOC Governor Press Conference | |
| 23/10/2024 | 1430/1630 | EU | ECB's Cipollone in panel by Bretton Woods Committee | |
| 23/10/2024 | 1600/1200 | US | Richmond Fed's Tom Barkin | |
| 23/10/2024 | 1700/1300 | ** | US | US Treasury Auction Result for 20 Year Bond |
| 23/10/2024 | 2030/2130 | GB | ECB's Bailey at IIF meeting | |
| 24/10/2024 | 2200/0900 | *** |  AU | Judo Bank Flash Australia PMI |
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