Powell & China Dominate Pre-NFP Discussions, E-Minis Rally On Mega Cap Tech Earnings

Desks characterise today’s session as being representative of typical pre-NFP trade, with relatively contained ranges in FX and rates, conducted on average to below average volume.

• Most core global FI measures have extended on their move away from yesterday’s U.S. data/regional bank worry-inspired highs, with a bear/twist flattening bias apparent (depending on which curve you look at).
• UXY futures block buying in late Asia-Pac hours did little to support the wider Tsy sphere.
• E-minis buck the broader trend with the NASDAQ 100 contract leading the space higher post-mega cap tech earnings.
• That contract trades +1.1% at typing.
• That bid in equities has weighed on the USD, while the AUD sits at the top of the G10 FX table.
• Regional banking worry in the U.S. will remain a point of discussion into the weekend, although NYC Bancorp’s worries are seemingly of a contained nature (KRE & KBW are both comfortably lower in recent days, while some modest USD funding demand can be seen in the major 3-month x-ccy basis measures).
• More broadly, discussions have generally centred on the late volatility in Chinese equities, with footprints of state-backed support showing up in ETF volumes (CSI 300 pared some losses but still closed at a fresh cycle low).
• Elsewhere, Fed Chair Powell’s inbound weekend appearance on CBS’ 60 minutes is generating plenty of interest/discussion re: probable topics.
• Slightly hawkish comments from BoE chief economist Pill hit at typing.
• Looking ahead, the NFP release presents the key major macro risk event ahead of the weekend, with the U.S. factory and durable goods orders, as well as final UoM sentiment readings also eyed.