-
Policy
Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM POLICY: -
EM Policy
EM Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM EM POLICY: -
G10 Markets
G10 Markets
Real-time insight on key fixed income and fx markets.
Launch MNI PodcastsFixed IncomeFI Markets AnalysisCentral Bank PreviewsFI PiFixed Income Technical AnalysisUS$ Credit Supply PipelineGilt Week AheadGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance CalendarsEZ/UK Bond Auction CalendarEZ/UK T-bill Auction CalendarUS Treasury Auction CalendarPolitical RiskMNI Political Risk AnalysisMNI Political Risk - US Daily BriefMNI Political Risk - The week AheadElection Previews -
Emerging Markets
Emerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
-
Commodities
Commodities
Real-time insight of oil & gas markets
-
Credit
Credit
Real time insight of credit markets
-
Data
-
Global Macro
Global Macro
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
Global MacroDM Central Bank PreviewsDM Central Bank ReviewsEM Central Bank PreviewsEM Central Bank ReviewsBalance Sheet AnalysisData AnalysisEurozone DataUK DataUS DataAPAC DataInflation InsightEmployment InsightGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance Calendars EZ/UK Bond Auction Calendar EZ/UK T-bill Auction Calendar US Treasury Auction Calendar Chart Packs -
About Us
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Real-time Actionable Insight
Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.
Free AccessMNI US MARKETS ANALYSIS - Focus Turns to Sintra
Highlights:
- Equities moderate, futures touch weekly lows ahead of NY crossover
- Spanish CPI hits double digits for first time on record
- Focus turns to Sintra forum as markets look for anti-frag tool details
US TSYS SUMMARY: Treasuries Modestly Richer With Powell ECB Panel Ahead
- Cash Tsys have largely unwound a bid following weak German state inflation and the Chinese province of Anhui going into a Covid-related lockdown, leaving Treasuries only slightly richer on the day.
- Some of this could have been down to the weakness in German inflation being focused in a temporary travel discount and helped by continued hawkish commentary from Mester in European hours ahead of a ECB panel discussion later on.
- 2YY -1.2bps at 3.097%, 5YY -2bps at 3.213%, 10YY -1.1bps at 3.160% and 30YY -0.3bps at 3.276%.
- TYU2 trades 11 ticks higher at 117-01+, above yesterday’s range but still currently well shy of the key short-term resistance defined at 118-08 (Jun 24 high). Volumes are slowed after an above average European session.
- Fedspeak: Powell (0900ET), Mester (1130ET) with prepared remarks already released – see STIR comment – and then introductory remarks from Bullard (1305ET).
- Data: Third Q1 print for GDP plus weekly MBA mortgage applications.
- Bill issuance: US Tsy $30B 119D bill CMB auction (1130ET).
STIR FUTURES: Fed Hike Expectations Waiting On Powell
- FOMC-dated Fed Funds implied hikes are back roughly where they ended yesterday, with 70bps priced for July (middle of post-FOMC range) before a cumulative 126bp for Sep and 187bp for Dec (lower end of range).
- Mester (’22 voter) speaking to CNBC earlier currently advocates a 75bp hike in July whilst seeing debate between 50bp and 75bps, whilst prepared remarks for a panel discussion at 1130ET note that long-run inflation expectations are rising and warns against complacency.
- Fedspeak focus today is on Powell’s panel discussion at the ECB forum in Sintra (0900ET). One of the more interesting data developments since Powell last spoke at testimonies last week, noting unconditional commitment to fighting inflation, was Friday’s downward revision in the U.Mich long-term inflation expectations figure from the “eye-catching” 3.3% preliminary to 3.1% final.
Source: Bloomberg
EGB/GILT SUMMARY - Busy Start, Gilt Underperforms
- A busy start for EGBs and Bund, with futures taking their cue from some of the German regional CPI misses versus last.
- It's another 223 ticks range for the German 10yr, but are well off the sessions high (147.37), with the contract trading back at 145.62, from a 145.14 low print.
- Some of the pullback has been attributed to the Spanish CPI big beat, coming at 10% vs median estimates of 8.7%, and likely some position squaring.
- Peripherals are all tighter, Greece by 4.4bps so far today.
- Gilts underperforms Bund, pushing the Gilt/Bund spread 2bp wider, but well within ranges.
- Looking ahead, German National CPI, and out of the US sees third readings for GDP, so more focus on the US PCE.
- Still plenty of speakers are left, with ECB Schnabel, Lagarde, BoE Bailey, Swati, Fed Powell, Mester and Bullard.
- Sep Bund futures (RX) up 45 ticks at 145.63 (L: 145.14 / H: 147.37)
- Germany: The 2-Yr yield is down 2.3bps at 0.934%, 5-Yr is down 4.4bps at 1.389%, 10-Yr is down 2.3bps at 1.605%, and 30-Yr is down 2.3bps at 1.805%.
- Sep Gilt futures (G) down 2 ticks at 112.13 (L: 111.85 / H: 112.66)
- UK: The 2-Yr yield is down 2.8bps at 2.088%, 5-Yr is down 1.3bps at 2.129%, 10-Yr is down 0.4bps at 2.461%, and 30-Yr is up 1.3bps at 2.725%.
- Sep BTP futures (IK) up 93 ticks at 121.12 (L: 120.58 / H: 121.83)
- Sep OAT futures (OA) up 36 ticks at 136.26 (L: 135.81 / H: 137.57)
- Italian BTP spread down 5.8bps at 187.4bps
- Spanish bond spread down 2.1bps at 107.6bps
- Portuguese PGB spread down 2.5bps at 105.1bps
- Greek bond spread down 4.9bps at 221.2bps
EUROPE OPTION FLOW SUMMARY
Eurozone:
RXQ2 151.50/152.00cs, bought for 7 in 4k
0RU2 97.75/97.375/97.25 broken p fly, bought for 10.75 in 10k
ERU2 99.625/99.375 ps, bought for 13.75 in 8k (50k in the past 2 weeks, buying back the bottom leg of condor)
ERV2 98.00/97.75ps sold at 2.5
ERZ2 98.50/98.25ps, bought for 7.25 in 4k
Bank stock
SX7E 16th Dec 100/110cs 1x1.5, traded 0.675 in 12k
GERMANY: Downside Risks to German CPI Following State Prints
- The German regional CPI readings for June saw 0.2-0.6pp decelerations across the board.
- The state readings published this morning account for 67.3% of the total June rate. Out state-weighted calculation of the German June CPI rate accounts for 67.3% of the total print and sees inflation at +7.6%, which would imply a 0.3pp slowdown from May.
- Our calculation expects substantial downside risks to the consensus forecast of inflation flatlining at +7.9% y/y in Germany's index, and the 0.1pp uptick anticipated for the harmonised print to +8.8% y/y. The release time is 1300 BST.
June y/y | May y/y | Difference | Destatis Weighting | |
North Rhine Westphalia | 7.5 | 8.1 | -0.6 | 21.7% |
Hesse | 8.1 | 8.4 | -0.3 | 7.7% |
Bavaria | 7.9 | 8.1 | -0.2 | 16.8% |
Brandenburg | 8 | 8.5 | -0.5 | 2.6% |
Baden Wuert. | 7.1 | 7.4 | -0.3 | 14.1% |
Saxony | 7.7 | 8.0 | -0.3 | 4.4% |
Total: 67.3% | ||||
Weighted average: | +7.62% y/y | for | 67.3% of total CPI |
FOREX: EUR Reverses Overnight Dip on Double Digit Spanish CPI
- Spanish inflation prompted some early price action across European assets, with the EU harmonised reading lurching higher to 10.0% from 8.5% and another record high. The release prompted EUR/USD to erase the early losses to trade just above the 1.05 handle once more, but stopping short of the 1.0536 Asia session highs.
- In contrast, German state CPIs suggest a lower-than-expected reading later today, with states representing a majority weight of the national measure putting M/M at around 0.0-0.1%, well below the 0.4% M/M consensus. The earlier release of North Rhine Westphalia data had prompted some downside in the EUR, but the Spanish release reversed the bulk of the move.
- EUR/CHF is narrowing in on both parity and the YTD lows posted in March, with 0.9972 the key support going forward. CHF strength follows the continued baking-in of rate hike expectations at the SNB, with SARON markets indicating expectations of further 50bps rate rises at both the September and December policy meetings. This would put year-end rates at +0.75%.
- AUD/USD is extending the recent streak of underperformance, putting the pair lower for a third consecutive session and within range of key supports at 0.6869 and 0.6851.
- US GDP and PCE data out later today will likely fail to move the needle, with the tertiary reading expected unchanged across the board. Instead, focus will be on the ECB's Sintra policy forum, at which ECB's Lagarde, BoE's Bailey and Fed's Powell are all due to appear. Fed's Bullard and Mester also make separate appearances.
FX OPTIONS: Expiries for Jun29 NY cut 1000ET (Source DTCC)
- EUR/USD: $1.0550(E898mln), $1.0620-25(E1.1bln), $1.0665-75(E714mln)
- GBP/USD: $1.2750(Gbp1.5bln)
- USD/JPY: Y135.00($505mln), Y136.20($715mln), Y137.50($780mln)
Price Signal Summary - FI Futures Remain Below Last Week’s Highs
- In the equity space, S&P E-Minis traded lower Tuesday and has found resistance at 3950.00, yesterday’s high. The short-term outlook remains positive though and there still appears to be scope for an extension of the current bullish cycle. A resumption of strength would open the 50-day EMA, at 4028.87. Watch initial support at 3735.00, Jun 23 low. EUROSTOXX 50 futures are holding on to the bulk of recent gains and short-term conditions suggest scope for an extension higher. The contract has recently traded above the 20-day EMA and this opens 3630.50, the 50-day EMA.
- In FX,EURUSD has pulled away from its most recent highs. This means that key resistance at 1.0618 remains intact - the top of a bear channel drawn from the Feb 10 high. The primary trend direction is down and the outlook remains bearish. A continuation lower would refocus attention on 1.0350, May 13 low and the bear trigger. A clear break of 1.0618 however would alter the picture. GBPUSD is trading slightly softer this morning. Key support and the bear trigger is unchanged at 1.1934, Jun 14 low. Resistance to watch remains 1.2406, the Jun 16 high. Both 1.1934 and 1.2406 are important short-term directional triggers. USDJPY is firmer and trend conditions remain bullish. Last week’s climb confirmed a resumption of the primary uptrend and maintains the bullish price sequence of higher highs and higher lows. The focus is on 136.88 next, the Oct 30 1998 high. Support to watch is at 133.85, the 20-day EMA.
- On the commodity front, the outlook in Gold is bearish and attention is on $1787.0, May 16 low, where a break would resume the downtrend. Key trendline resistance to watch is at $1869.20. The trendline is drawn from the Mar 8 high and a break would likely signal a reversal of the short-term trend. In the Oil space, WTI futures continue to climb. This has opened $113.49 next, the 61.8% retracement of the Jun 14 - 22 downleg and $116.58, the Jun 17 high. For bears, a reversal lower from current levels would signal the end of the recent recovery and this would refocus attention on key support at $101.53, the Jun 22 low.
- In the FI space, Bund futures have pulled back from recent highs. Key short-term resistance has been defined at 149.00, the Jun 24 high, where a break is required to signal scope for a stronger recovery - towards 150.06, 61.8% retracement of the May 12 - Jun 16 bear leg. First support lies at 144.72, Tuesday’s low. Gilts are weaker too following this week’s retracement. Resistance has been defined at 114.55, Jun 24 high where a break is required to signal scope for a stronger short-term recovery. Key support and the bear trigger lies at 109.89, the Jun 16 low.
EQUITIES: Cyclical Stocks Leading Europe Lower
- Asian markets closed lower: Japan's NIKKEI closed down 244.87 pts or -0.91% at 26804.6 and the TOPIX ended 13.81 pts lower or -0.72% at 1893.57. China's SHANGHAI closed down 47.692 pts or -1.4% at 3361.518 and the HANG SENG ended 422.08 pts lower or -1.88% at 21996.89.
- European equities are also lower, following on from Tuesday's U.S. stock weakness. Cyclical stocks are dragging on the index, including industrials and tech, with the German Dax down 169.78 pts or -1.28% at 13302.72, FTSE 100 down 33.67 pts or -0.46% at 7359.99, CAC 40 down 41.59 pts or -0.68% at 6139.11 and Euro Stoxx 50 down 27.18 pts or -0.77% at 3567.32.
- U.S. futures are finding their feet, with the Dow Jones mini up 44 pts or +0.14% at 30977, S&P 500 mini up 4.25 pts or +0.11% at 3829.75, NASDAQ mini up 15.5 pts or +0.13% at 11689.75.
COMMODITIES: U.S. NatGas Gains Amid Broader Weakness
- WTI Crude down $0.11 or -0.1% at $111.22
- Natural Gas up $0.22 or +3.36% at $6.561
- Gold spot down $2.74 or -0.15% at $1822.13
- Copper down $1.9 or -0.5% at $377.25
- Silver down $0.01 or -0.03% at $20.9101
- Platinum up $16 or +1.75% at $916.85
LOOK AHEAD:
Date | GMT/Local | Impact | Flag | Country | Event |
29/06/2022 | 1015/1215 | EU | ECB Schnabel on Inflation Expectations at ECB Forum | ||
29/06/2022 | 1030/0630 | US | Cleveland Fed's Loretta Mester speaking at ECB forum | ||
29/06/2022 | 1100/0700 | ** | US | MBA Weekly Applications Index | |
29/06/2022 | 1200/1400 | *** | DE | HICP (p) | |
29/06/2022 | 1230/0830 | *** | US | GDP (3rd) | |
29/06/2022 | 1300/0900 | US | Fed Chair Jerome Powell speaking at ECB forum | ||
29/06/2022 | 1300/1500 | EU | ECB Lagarde pm Monetary Policy Challenges | ||
29/06/2022 | 1300/1400 | UK | BOE Bailey Panels ECB Forum | ||
29/06/2022 | 1430/1030 | ** | US | DOE weekly crude oil stocks | |
29/06/2022 | 1500/1700 | EU | ECB Lagarde Closing Remarks at ECB Forum | ||
29/06/2022 | 1530/1130 | * | US | US Treasury Auction Result for Cash Management Bill | |
29/06/2022 | 1705/1305 | US | St. Louis Fed's James Bullard | ||
30/06/2022 | 0130/0930 | *** | CN | CFLP Manufacturing PMI | |
30/06/2022 | 0130/0930 | ** | CN | CFLP Non-Manufacturing PMI | |
30/06/2022 | 0600/0700 | * | UK | Quarterly current account balance | |
30/06/2022 | 0600/0700 | *** | UK | GDP Second Estimate | |
30/06/2022 | 0630/0830 | ** | CH | retail sales | |
30/06/2022 | 0645/0845 | *** | FR | HICP (p) | |
30/06/2022 | 0645/0845 | ** | FR | PPI | |
30/06/2022 | 0645/0845 | ** | FR | Consumer Spending | |
30/06/2022 | 0700/0900 | * | CH | KOF Economic Barometer | |
30/06/2022 | 0730/0930 | ** | SE | Riksbank Interest Rate | |
30/06/2022 | 0755/0955 | ** | DE | Unemployment | |
30/06/2022 | 0900/1100 | ** | EU | Unemployment | |
30/06/2022 | 1230/0830 | *** | CA | Gross Domestic Product by Industry | |
30/06/2022 | 1230/0830 | ** | US | Jobless Claims | |
30/06/2022 | 1230/0830 | ** | US | Personal Income and Consumption | |
30/06/2022 | 1230/0830 | ** | US | WASDE Weekly Import/Export | |
30/06/2022 | 1330/1530 | EU | ECB Lagarde Speech at Simone Veil Pact | ||
30/06/2022 | 1345/0945 | ** | US | MNI Chicago PMI | |
30/06/2022 | 1430/1030 | ** | US | Natural Gas Stocks | |
30/06/2022 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result | |
30/06/2022 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result | |
30/06/2022 | 1600/1200 | *** | US | USDA Acreage - NASS | |
30/06/2022 | 1600/1200 | ** | US | USDA GrainStock - NASS |
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.