MACROCOSM: Quick Rates TECHNICALs > Charts Package
- Trump’s still driving market sentiment but stocks had a decent day and the rally in G-7 rates has shown signs of stalling amid profit taking. To be frank, we didn’t read Powell’s speech as dovish as some articles have implied, however, with the Beige Book and 6 FOMC speakers on the tapes between now and Friday, along with tomorrow’s ECB meeting, there will be ample fodder for some volatility.
- USTs…
TYU9 showing tell-tale signs of a stall that signals some consolidation into the payrolls data today and Friday.
UST 2-5s steepened back from the recent lows – which can be a double-edged sword. The chart below shows the bull flattening of 2-5s was more of a meander than a snap flatter as the market still didn’t believe the FED would cut rates but trade wars were bullish for USTs on a medium term basis. Notwithstanding our doubts, this re-steepening of the sprd is a reflection that the market thinks a rate cut could be sooner than thought – which was an easy bet to make given the carry dynamics of this steepener. The zero-two bps range has been solid resistance for most of the year and bears watching.
UST 5-10-30s fly remains at its richest levels, in line with 5y5y swaps. This bears watching as a barometer of overall USD rates sentiment…
UST-DBR 10yr Sprd > With the ECB meeting looming large tomorrow, one has to ask, ‘Who’s more dovish right now? The FED or the ECB?’. UST-DBR 10yr sprds have nose-dived since the last week of May to levels we haven’t seen in quite some time. From a tactical perspective, DBRs aren’t likely to be the primary beneficiary of renewed ECB stimulus measures, however, in our view, this spread has been stretched too far, too fast. Take a look at selling UST 10yrs into 10yr OATs or even SPGBs here.
- UK…
GBP has held off Armageddon for now as the leadership contest takes shape. Boris Johnson is still banging the ‘No-Deal is on the table’ Brexit drum which still has the market antsy. That’s made trading linkers the equivalent of a bomb-disposal unit and the curve rather whippy, especially in the long-end.
With the front-end of the GBP curve pricing in ~40% odds of a 25bps rate cut in the next 12 months, despite fears of GBP-driven inflation, we’re back to some very overbought levels on RSIs that have proven to be good location to lighten up on longs and enter into tactical steepeners/shorts.
UKT 1T49-4Q55 sprd has re-steepened sharply on the back of the rally and some selling of long linkers. There’s a tap of the 1T49s on Jun 25th which could put an end to this move…
- Eurozone…
SPAIN continues to trade well on balance with a rolling tide forcing the curve flatter. We advocated the SPGB 27-33s flattener a few weeks ago (which fell on deaf ears) and are now seeing signs of further extension beyond the 15/20yr point out to 30yrs. The audience for 30yr paper is different than the 20yr but if the pundits are right and the ECB announces a chance of renewed QE and/or an expansion of their per-issue limits from 33% to 50%, this 33-48 sprd will pancake.
Bunds are clearly into overbought territory and are rich on every metric we can think of. They’ve become more of a magnet for sister EGBs rather than a vehicle themselves.
FRTR 5/28s vs DBR 2/28s and SPGB 7/28s (60/100/40 split) has the OATs looking cheap, driven largely by the perma-bid in SPGBs. Buying the belly of this blend is a relatively low-beta fade of the ECB/periphs tightening.
So much for rates normalization in the short-end of Europe…!
More to come!
Mark
image009.jpg@01D28D1B.42BD95C0">
Mark Funsch
O: +44 (0) 203 - 143 - 4177
M: +44 (0) 789 - 996 - 4051
UK: 14-16 Dowgate Hill, London UK EC4R 2SU
US: 245 Park Ave, 39th Floor, NY, NY, 10167
This research was prepared by Mark Funsch. He is a consultant with Astor Ridge. A history of his marketing commentaries can be provided upon request in compliance with the European Commission’s Market Abuse Regulation. Astor Ridge takes no proprietary trading risk, has no market making facilities, and has no position in any security we discuss in this e-mail. The views in this e-mail are those of the author(s) and are subject to change, and Astor Ridge has no obligation to update its opinions or the information in this publication. If this e-mail contains recommendations, those recommendations reflect solely and exclusively those of the author, and such opinions were prepared independently of any other interests, including those of Astor Ridge and/or its affiliates. This publication does not constitute personal investment advice or take into account the individual financial circumstances or objectives of the clients who receive it. The securities discussed herein may not be suitable for all investors. Astor Ridge recommends that investors independently evaluate each issuer, security or instrument discussed herein, and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results.
You should not use or disclose to any other person the contents of this e-mail or its attachments (if any), nor take copies. This e-mail is not a representation or warranty and is not intended nor should it be taken to create any legal relations, contractual or otherwise. This e-mail and any files transmitted with it are confidential, may be legally privileged, and are for the sole use of the intended recipient. Copyright in this e-mail and any accompanying document created by Astor Ridge LLP is owned by Astor Ridge LLP.
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Today's BREXIT BARRAGE... 'Extinction'?
BBG: Boris Johnson Warns Tories of ‘Extinction’ If Brexit Is Delayed
BBG: The Brexit Wrecking Ball Hits the High Street
BBG: No-Deal Brexit Stock Market Mess Will Be London’s Fault, EU Says
BBG: Tories to Choose New Prime Minister by Late July: Brexit Update
BBG: Stewart Swipes at Tory Rivals Johnson, Raab Over U.K. Tax Cuts
BBG: PM and President Set Up Future U.K. – US Clashes: Trump Update
FT: Boris Johnson adamant on no-deal strategy in first Tory hustings
FT: Tories impose last-minute rule changes on leadership poll
FT: Conservative leadership favourite Boris Johnson talks with Donald Trump
FT: Donald Trump sends mixed messages on US-UK trade deal
FT: Brexit and the lesson of D-Day
TEL: Call Andrea! Leadership hopeful Leadsom vows to hold regular phone-ins with public if elected PM
TEL: The only hope left for the next Tory PM is to call an election and go for a no-deal Brexit
TEL: The Queen personifies our national story. Now we need a Prime Minister who can do the same thing
TEL: British businesses need action, not talk, from the next prime minister
More to come…!
Mark
image009.jpg@01D28D1B.42BD95C0">
Mark Funsch
O: +44 (0) 203 - 143 - 4177
M: +44 (0) 789 - 996 - 4051
UK: 14-16 Dowgate Hill, London UK EC4R 2SU
US: 245 Park Ave, 39th Floor, NY, NY, 10167
This research was prepared by Mark Funsch. He is a consultant with Astor Ridge. A history of his marketing commentaries can be provided upon request in compliance with the European Commission’s Market Abuse Regulation. Astor Ridge takes no proprietary trading risk, has no market making facilities, and has no position in any security we discuss in this e-mail. The views in this e-mail are those of the author(s) and are subject to change, and Astor Ridge has no obligation to update its opinions or the information in this publication. If this e-mail contains recommendations, those recommendations reflect solely and exclusively those of the author, and such opinions were prepared independently of any other interests, including those of Astor Ridge and/or its affiliates. This publication does not constitute personal investment advice or take into account the individual financial circumstances or objectives of the clients who receive it. The securities discussed herein may not be suitable for all investors. Astor Ridge recommends that investors independently evaluate each issuer, security or instrument discussed herein, and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results.
You should not use or disclose to any other person the contents of this e-mail or its attachments (if any), nor take copies. This e-mail is not a representation or warranty and is not intended nor should it be taken to create any legal relations, contractual or otherwise. This e-mail and any files transmitted with it are confidential, may be legally privileged, and are for the sole use of the intended recipient. Copyright in this e-mail and any accompanying document created by Astor Ridge LLP is owned by Astor Ridge LLP.
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Today's BREXIT BARRAGE... "Big Trade Deal..."? Or more 'Fake News"?
And then came Trump…
BBG: Trump Spurs On Brexit in London Visit, Diving Into U.K. Politics
BBG: Trump’s State Visit – Turned Stress Test for the Special Relationship
BBG: President Sees Trade Deal If UK Loses Shackles: Trump Update
BBG: No Wonder Donald Trump Loves Brexit So Much
BBG: Brexit Bulletin: What About This Trade Deal?
FT: Liam Fox backs Jeremy Hunt in Tory Leadership race
FT: Would a trade deal with Trump boost Brexit Britain
FT: Theresa May to talk up potential for trade deal with US
FT: Tories set to debate rules for leadership election
FT: Conservatives put getting Brexit done before getting Brexit right
FT: Theresa May puts Brexit efforts on hold pending own departure
FT: Watch Matt Hancock and Rory Stewart on Brexit
TEL: UK retains top spot for foreign investors in Europe
TEL: Boris Johnson launches leadership campaign as rival Jeremy Hunt says he would allow no deal
TEL: Factories feel hangover from Brexit stockpiling
TEL: It’s high time we drained the swamp of our arrogant ‘new elite’
TEL: Foreign investment boom is building global Britain brick by brick
TEL: The maths of a trade deal with Trump do not add up
TEL: Boris Johnson has promised to make Brexit mean Brexit – he can’t wriggle out of it now
Enjoy!
Mark
image009.jpg@01D28D1B.42BD95C0">
Mark Funsch
O: +44 (0) 203 - 143 - 4177
M: +44 (0) 789 - 996 - 4051
UK: 14-16 Dowgate Hill, London UK EC4R 2SU
US: 245 Park Ave, 39th Floor, NY, NY, 10167
This research was prepared by Mark Funsch. He is a consultant with Astor Ridge. A history of his marketing commentaries can be provided upon request in compliance with the European Commission’s Market Abuse Regulation. Astor Ridge takes no proprietary trading risk, has no market making facilities, and has no position in any security we discuss in this e-mail. The views in this e-mail are those of the author(s) and are subject to change, and Astor Ridge has no obligation to update its opinions or the information in this publication. If this e-mail contains recommendations, those recommendations reflect solely and exclusively those of the author, and such opinions were prepared independently of any other interests, including those of Astor Ridge and/or its affiliates. This publication does not constitute personal investment advice or take into account the individual financial circumstances or objectives of the clients who receive it. The securities discussed herein may not be suitable for all investors. Astor Ridge recommends that investors independently evaluate each issuer, security or instrument discussed herein, and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results.
You should not use or disclose to any other person the contents of this e-mail or its attachments (if any), nor take copies. This e-mail is not a representation or warranty and is not intended nor should it be taken to create any legal relations, contractual or otherwise. This e-mail and any files transmitted with it are confidential, may be legally privileged, and are for the sole use of the intended recipient. Copyright in this e-mail and any accompanying document created by Astor Ridge LLP is owned by Astor Ridge LLP.
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MACROCOSM: Quick TECHNICALS Update > Rates Bears Gored As Rally Resumes
- Well, so much for our bearish ‘rounding top’ formation in G-7 rates markets. Continued jitters over the outcome of the UK’s impending leadership vacuum, a wobble in commodities and some softer data helped to spark renewed buying across the rates universe, taking USTs to their richest levels since 2017 and inverting sectors of the UST curve in the bull flattening move.
- RXM9 > The slowing momentum and topping formation that we highlighted in RXM9 from mid last week was looking prophetic until Wednesday’s test of bottom of the bull channel (in place since mid-April – see chart) held, attracting some bottom-feeders and we’re now back to the highs. Open interest has risen and even though we’re still trying to make new highs, the performance of sister markets is making the bears antsy to say the least. The 167.50 level still looms large (~-22.5bps in DBR 2/28s) so until we’ve taken that out emphatically, we’ll stay sidelined as we chop around in this 25 tick range between 167.25-50.
- USM9 > To quote Kung Fu Panda: ‘Ska-Doooooojjjj! That is one very emphatic break of the highs that had held like a rock, dragging shorts kicking and screaming to cover. That said, we are struggling to build on that very bullish close this morning as USTs sell-off on the back of the bounce in stocks. Open interest has surged 12.5% since the start of May which CFTC data shows are new non-comml longs. So, the market is getting longer as we rally, driving the bull flattening of the curve. RSIs remain overbought and momentum, in general, is bullish. Today’s price action will be very important as we head into a long weekend when the market typically likes to be flat to long…
- GM9 > May-hem at the helm helped to spark the latest round of buying in gilts as they outperformed most other sovereign markets the last couple sessions. With a long-weekend on tap and a big gap between Wednesday’s close and Thursday’s open, we’ll be watching price action closely here too. RSIs are back to their richest levels since Mar 22nd and volumes in G M9 yesterday were the highest since G M9 kicked off. Open interest has been pretty stable with a modest upward bias and even though the contract is making new highs, the 1F28s (CTD) aren’t at their richest levels vs 26s and 30s. The bull flattening of the short-end of the GBP curve has begun to price in small odds of a rate-cut with Aug’19 v Mar’20 MPC meeting sprd now -3.1bps mid. So, as above, we’re overbought, at nosebleed levels and at extremes on the curve. Lots of bad news built into gilts now.
- OIL slid lower in a dramatic bet that global demand will wane as growth slows. The chart below tells a lot of stories. We broke the 200 day MA – BIG SUPPORT which held for almost 2 months, open interest has shot higher in what looks like new spec shorts and RSIs are back into oversold territory. This was a flash-sale that caught the market napping and will need a continuation of this bearish bias to turn this into a bonafide bear market. Expect a response from what’s left of OPEC soon.
More to come….
Mark
image009.jpg@01D28D1B.42BD95C0">
Mark Funsch
O: +44 (0) 203 - 143 - 4177
M: +44 (0) 789 - 996 - 4051
UK: 14-16 Dowgate Hill, London UK EC4R 2SU
US: 245 Park Ave, 39th Floor, NY, NY, 10167
This research was prepared by Mark Funsch. He is a consultant with Astor Ridge. A history of his marketing commentaries can be provided upon request in compliance with the European Commission’s Market Abuse Regulation. Astor Ridge takes no proprietary trading risk, has no market making facilities, and has no position in any security we discuss in this e-mail. The views in this e-mail are those of the author(s) and are subject to change, and Astor Ridge has no obligation to update its opinions or the information in this publication. If this e-mail contains recommendations, those recommendations reflect solely and exclusively those of the author, and such opinions were prepared independently of any other interests, including those of Astor Ridge and/or its affiliates. This publication does not constitute personal investment advice or take into account the individual financial circumstances or objectives of the clients who receive it. The securities discussed herein may not be suitable for all investors. Astor Ridge recommends that investors independently evaluate each issuer, security or instrument discussed herein, and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results.
You should not use or disclose to any other person the contents of this e-mail or its attachments (if any), nor take copies. This e-mail is not a representation or warranty and is not intended nor should it be taken to create any legal relations, contractual or otherwise. This e-mail and any files transmitted with it are confidential, may be legally privileged, and are for the sole use of the intended recipient. Copyright in this e-mail and any accompanying document created by Astor Ridge LLP is owned by Astor Ridge LLP.
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Today's BREXIT BARRAGE... May Finally Gets the Joke
With headlines in the UK press this morning pleading with Theresa May’s husband Phil to convince her to resign, it looks like a time table for her departure is in the works. We still think this outcome should be seen as positive for the markets as it sets us on a course to finally complete this agonisingly painful Brexit process, however, Cable continues to flounder.
FT: Theresa May to give firm departure date as Brexit deal founders
FT: Fragile May hunkers down to plan Downing Street exit
FT: Theresa May rewrites Brexit deal to head off cabinet revolt
FT: Boris Johnson acted in ‘dishonest’ way in Brexit poll, court told
FT: Pound approaches 2019 low as pressure on Theresa May intensifies
FT: Theresa May attracts derision in UK, pity and mockery in Europe
FT: Leadership hopefuls look for swift start to contest
BBG: Theresa May Set to Announce Timetable to Quit as Tory Leader
BBG: May Faces Her Exit as Farage Laughs Again: Postcard from London
BBG: Boris Is the Bogeyman Stalking Pound as Leadership Contest Looms
BBG: Gaffes, Duplicity and Ballots: How the Tory Party Picks a Leader
TEL: Theresa May’s day of destiny arrives after Jeremy Hunt withdraws support for Brexit Bill
TEL: Why won’t Theresa May quit? Is it ‘vicar’s daughter complex’ or the perks of power?
TEL: The day Theresa May was left in no doubt she had run out of road
TEL: Conservative leadership: the 1922 Committee’s secret ballot gambit is far from a sure bet
TEL: Smart, capable and diplomatic: Rory Stewart is the leader the Tories – and the nation – needs
TEL: Rage over Brexit is swamping out answers to the great challenges of our time
*** I will be out next week, spending half-term with my family. These updates will resume a week from Monday…
Enjoy!
Mark
image009.jpg@01D28D1B.42BD95C0">
Mark Funsch
O: +44 (0) 203 - 143 - 4177
M: +44 (0) 789 - 996 - 4051
UK: 14-16 Dowgate Hill, London UK EC4R 2SU
US: 245 Park Ave, 39th Floor, NY, NY, 10167
This research was prepared by Mark Funsch. He is a consultant with Astor Ridge. A history of his marketing commentaries can be provided upon request in compliance with the European Commission’s Market Abuse Regulation. Astor Ridge takes no proprietary trading risk, has no market making facilities, and has no position in any security we discuss in this e-mail. The views in this e-mail are those of the author(s) and are subject to change, and Astor Ridge has no obligation to update its opinions or the information in this publication. If this e-mail contains recommendations, those recommendations reflect solely and exclusively those of the author, and such opinions were prepared independently of any other interests, including those of Astor Ridge and/or its affiliates. This publication does not constitute personal investment advice or take into account the individual financial circumstances or objectives of the clients who receive it. The securities discussed herein may not be suitable for all investors. Astor Ridge recommends that investors independently evaluate each issuer, security or instrument discussed herein, and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results.
You should not use or disclose to any other person the contents of this e-mail or its attachments (if any), nor take copies. This e-mail is not a representation or warranty and is not intended nor should it be taken to create any legal relations, contractual or otherwise. This e-mail and any files transmitted with it are confidential, may be legally privileged, and are for the sole use of the intended recipient. Copyright in this e-mail and any accompanying document created by Astor Ridge LLP is owned by Astor Ridge LLP.
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MACROCOSM: GILTs, GBP and Brexit... Are Things Really That Bad?
- Readers of our AM Brexit Barrage updates will be well aware of our frustration, exasperation and astonishment regarding all things Brexit-related. After all the twists and turns in this saga, we’ve become de-sensitized and, as you can tell from the nosedive Cable has taken, the market’s had enough.
- What we find a bit surprising, however, is the selling of GBP/USD has accelerated as Theresa May’s departure draws closer, even if she does have ‘her sofa against the door’ (well, at least according to the pundits at the BBC, et al). May was given one job when she took over as PM in the summer of 2016 – get the UK out of the EU on time and in one piece. She has failed miserably and her cabinet has called for her immediate departure.
- The question we have is, ‘Shouldn’t May’s departure be considered a step forward, rather than a source of angst?’. What’s more distressing for us is the idea of banging our collective heads against a wall while we watch May dust off her much-maligned deal for yet another epic defeat.
- The pool of PM hopefuls is large enough to further confuse both the markets and those UK citizens most affected by the Brexit outcome. But in reality, however, there are just a handful of Tories who have the gravitas, support and experience to become PM. This article in the Telegraph from last night: Who could be the next Prime Minister after Theresa May? discusses this in detail. While BoJo is considered the favourite at this point, there’s a significant number of MPs who despise the man, even if he managed to rejuvenate the Brexit process. He’s just got too much baggage. Dominic Raab is second favourite, has fewer skeletons in his closet and is committed to delivering Brexit, unlike former Remainers who are now professing their commitment to the deal like Sajid David and Jeremy Hunt. Leadsom, Rudd and Mordaunt are also in the mix but they don’t seem to have the same broad appeal – yet at least.
- The point here is May’s tenure has been a source of stress for all involved – particularly the markets – and in our view, a move to replace her with a Brexiteer with the same moderate/centrist approach the Tories are known for, should be seen as a positive step towards a resolution.
- If our take on this is correct, wouldn’t Cable at 1.26 seem too cheap? Conversely, wouldn’t that make 10yr gilts sub 1.00% too rich?
The SONIA curve has pancaked, the 7mo-18mo sprd (for ex) is slightly negative and MPC dates out to next August are virtually identical. So, unless you think the MPC is likely to cut rates some time in the next 18 months, it’s tempting to have a steepener on here. Pick your poison.
UKT 0H22-4Q27-1T37 fly – making new all time highs (belly richest)…
More to come…
Mark
image009.jpg@01D28D1B.42BD95C0">
Mark Funsch
O: +44 (0) 203 - 143 - 4177
M: +44 (0) 789 - 996 - 4051
UK: 14-16 Dowgate Hill, London UK EC4R 2SU
US: 245 Park Ave, 39th Floor, NY, NY, 10167
This research was prepared by Mark Funsch. He is a consultant with Astor Ridge. A history of his marketing commentaries can be provided upon request in compliance with the European Commission’s Market Abuse Regulation. Astor Ridge takes no proprietary trading risk, has no market making facilities, and has no position in any security we discuss in this e-mail. The views in this e-mail are those of the author(s) and are subject to change, and Astor Ridge has no obligation to update its opinions or the information in this publication. If this e-mail contains recommendations, those recommendations reflect solely and exclusively those of the author, and such opinions were prepared independently of any other interests, including those of Astor Ridge and/or its affiliates. This publication does not constitute personal investment advice or take into account the individual financial circumstances or objectives of the clients who receive it. The securities discussed herein may not be suitable for all investors. Astor Ridge recommends that investors independently evaluate each issuer, security or instrument discussed herein, and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results.
You should not use or disclose to any other person the contents of this e-mail or its attachments (if any), nor take copies. This e-mail is not a representation or warranty and is not intended nor should it be taken to create any legal relations, contractual or otherwise. This e-mail and any files transmitted with it are confidential, may be legally privileged, and are for the sole use of the intended recipient. Copyright in this e-mail and any accompanying document created by Astor Ridge LLP is owned by Astor Ridge LLP.
Astor Ridge LLP is regulated by the Financial Conduct Authority (FCA): Registration Number 579287
Astor Ridge LLP is Registered in England and Wales with Companies House: Registration Number OC372185
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FW: Today's BREXIT BARRAGE... 'She's got the sofa against the door'
What ever happened to dignity?
TEL: Has the Bank of England lost its credibility with the markets?
TEL: Theresa May urged to quit now over new Brexit deal – what happens when the Prime Minister resigns?
TEL: Theresa May is the epitome of all that is wrong with British politics
TEL: This is a sorry end for a Prime Minister who never believed in Brexit
FT: Conservative MPs expect Theresa May to be gone within days
FT: Theresa May cuts a lonely figure as her authority evaporates
FT: Theresa May’s premiership is all over bar the shouting
FT: Andrea Leadsom resignation delivers hefty blow to May
BBG: May’s Premiership Hangs by Thread as Leadsom Quits Over Brexit
BBG: Pound Investors Are Bailing Out With Brexit Chaos Back on the Radar
BBG: Brussels Edition: Game of EU Thrones
Meanwhile… How’s this for a bit of monkeying around…?
Bold baboons in backstroke break-in
https://www.bbc.co.uk/newsround/48353253
Enjoy!
Mark
image009.jpg@01D28D1B.42BD95C0">
Mark Funsch
O: +44 (0) 203 - 143 - 4177
M: +44 (0) 789 - 996 - 4051
UK: 14-16 Dowgate Hill, London UK EC4R 2SU
US: 245 Park Ave, 39th Floor, NY, NY, 10167
This research was prepared by Mark Funsch. He is a consultant with Astor Ridge. A history of his marketing commentaries can be provided upon request in compliance with the European Commission’s Market Abuse Regulation. Astor Ridge takes no proprietary trading risk, has no market making facilities, and has no position in any security we discuss in this e-mail. The views in this e-mail are those of the author(s) and are subject to change, and Astor Ridge has no obligation to update its opinions or the information in this publication. If this e-mail contains recommendations, those recommendations reflect solely and exclusively those of the author, and such opinions were prepared independently of any other interests, including those of Astor Ridge and/or its affiliates. This publication does not constitute personal investment advice or take into account the individual financial circumstances or objectives of the clients who receive it. The securities discussed herein may not be suitable for all investors. Astor Ridge recommends that investors independently evaluate each issuer, security or instrument discussed herein, and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results.
You should not use or disclose to any other person the contents of this e-mail or its attachments (if any), nor take copies. This e-mail is not a representation or warranty and is not intended nor should it be taken to create any legal relations, contractual or otherwise. This e-mail and any files transmitted with it are confidential, may be legally privileged, and are for the sole use of the intended recipient. Copyright in this e-mail and any accompanying document created by Astor Ridge LLP is owned by Astor Ridge LLP.
Astor Ridge LLP is regulated by the Financial Conduct Authority (FCA): Registration Number 579287
Astor Ridge LLP is Registered in England and Wales with Companies House: Registration Number OC372185
Astor Ridge NA LLP is a member of FINRA/SIPC: CRD Number 282626
Astor Ridge NA LLP is a member of the National Futures Association (NFA): Firm ID Number 0499303
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MACROCOSM: Quick Rates Technicals Update > Looking for a Catalyst
- The rounding top formations that have marked slowing bullish momentum and modest profit taking since last Thursday appear to have run their course. Rates markets have bounced a bit this morning, especially gilts, as disappointment that May’s deal won’t fly (again!) and the Fed’s Bullard (arch-dove) comment (“I am concerned we may have slightly overdone it with our December rate hike but I was pleased that the committee pivoted.”) got the bears scrambling to cover shorts.
- So, while we maintain the view that there’s a lot of bad news built into prices across the G-7 right now, reducing the need for another push to new highs, it seems likely that we’ll settle into a relatively narrow range where vol takes another hit, EGBs spreads tighten further (tomorrow’s SPGB supply is all but done and dusted) and we await the outcome of the European elections which kick off tomorrow.
- RXM9 > Settling down here…
- TYM9 > A bit of ‘blood-letting’ from the highs has stalled at the 38.2% retracement. Positioning is still net-long (from the non-comml hedgers perspective) and RSIs still on the richer side of fair but we need some new data/news to direct us here.
- UST 5-10s Curve > Medium-term steepening bias has run out of steam – steepening channel still intact – barely…
- GBP/Sonia > The song remains the same here. GBP bounced and G M9 sold off yesterday PM on hopes that May’s deal might offer a Brexit breakthrough but that didn’t last long as GBP has resumed it’s move lower and 1y1y SONIA rallied back.
- Here’s one out of left field for you… EU Data Surprise index (BARC’s BCFXEUDS) vs FRTR-SPGB 10yr sprds (inverted)… Correlation is by no means 99% but this chart is still instructive. It tells me that not only have estimates of European activity been too pessimistic but the pace of economic growth has been solid enough that spreads like SPGB-FRTR will have little fundamental reason to NOT narrow further.
More to come…
Mark
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Mark Funsch
O: +44 (0) 203 - 143 - 4177
M: +44 (0) 789 - 996 - 4051
UK: 14-16 Dowgate Hill, London UK EC4R 2SU
US: 245 Park Ave, 39th Floor, NY, NY, 10167
This research was prepared by Mark Funsch. He is a consultant with Astor Ridge. A history of his marketing commentaries can be provided upon request in compliance with the European Commission’s Market Abuse Regulation. Astor Ridge takes no proprietary trading risk, has no market making facilities, and has no position in any security we discuss in this e-mail. The views in this e-mail are those of the author(s) and are subject to change, and Astor Ridge has no obligation to update its opinions or the information in this publication. If this e-mail contains recommendations, those recommendations reflect solely and exclusively those of the author, and such opinions were prepared independently of any other interests, including those of Astor Ridge and/or its affiliates. This publication does not constitute personal investment advice or take into account the individual financial circumstances or objectives of the clients who receive it. The securities discussed herein may not be suitable for all investors. Astor Ridge recommends that investors independently evaluate each issuer, security or instrument discussed herein, and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results.
You should not use or disclose to any other person the contents of this e-mail or its attachments (if any), nor take copies. This e-mail is not a representation or warranty and is not intended nor should it be taken to create any legal relations, contractual or otherwise. This e-mail and any files transmitted with it are confidential, may be legally privileged, and are for the sole use of the intended recipient. Copyright in this e-mail and any accompanying document created by Astor Ridge LLP is owned by Astor Ridge LLP.
Astor Ridge LLP is regulated by the Financial Conduct Authority (FCA): Registration Number 579287
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Astor Ridge NA LLP is Registered in England and Wales with Companies House: Registration Number OC401796
Today's BREXIT BARRAGE... Just when I thought it was a waste of time...
So, I pull the plug on my Brexit Barrages yesterday and lo and behold, Theresa May lays another egg in a last-ditch attempt to save her legacy.
This will make one helluva mini-series someday.
Give me strength…!
BBG: May Faces Pressure to Abandon Vote on Brexit Law and Resign
BBG: What English Soccer Says About Immigration and Brexit
BBG: May’s Desperate Gamble on a New Brexit Referendum Falls Flat
BBG: Theresa May Offers Vote on Second Brexit Referendum
BBG: May’s Latest Brexit Deal Is Already an Ex-Deal
BBG: Theresa May’s Swan Song Sadly Falls Flat
BBG: Tory Grandee Chris Patten Calls Boris Johnson ‘Mendacious’ and ‘Incompetent’
FT: Northern Ireland party seeks Brexit breakthrough
FT: Explainer: The main points in May’s new Brexit offer
FT: May critics waste little time in thumbs-down for new Brexit push
FT: Pound is being buffeted by global and domestic headwinds
FT: Theresa May offers vote on second Brexit referendum
TEL: Theresa May’s plan leaves MPs with a choice of uncertainty of chaos
TEL: Farage v Cable: The Brexit Debate – live at 9am today
Enjoy!
Mark
image009.jpg@01D28D1B.42BD95C0">
Mark Funsch
O: +44 (0) 203 - 143 - 4177
M: +44 (0) 789 - 996 - 4051
UK: 14-16 Dowgate Hill, London UK EC4R 2SU
US: 245 Park Ave, 39th Floor, NY, NY, 10167
This research was prepared by Mark Funsch. He is a consultant with Astor Ridge. A history of his marketing commentaries can be provided upon request in compliance with the European Commission’s Market Abuse Regulation. Astor Ridge takes no proprietary trading risk, has no market making facilities, and has no position in any security we discuss in this e-mail. The views in this e-mail are those of the author(s) and are subject to change, and Astor Ridge has no obligation to update its opinions or the information in this publication. If this e-mail contains recommendations, those recommendations reflect solely and exclusively those of the author, and such opinions were prepared independently of any other interests, including those of Astor Ridge and/or its affiliates. This publication does not constitute personal investment advice or take into account the individual financial circumstances or objectives of the clients who receive it. The securities discussed herein may not be suitable for all investors. Astor Ridge recommends that investors independently evaluate each issuer, security or instrument discussed herein, and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results.
You should not use or disclose to any other person the contents of this e-mail or its attachments (if any), nor take copies. This e-mail is not a representation or warranty and is not intended nor should it be taken to create any legal relations, contractual or otherwise. This e-mail and any files transmitted with it are confidential, may be legally privileged, and are for the sole use of the intended recipient. Copyright in this e-mail and any accompanying document created by Astor Ridge LLP is owned by Astor Ridge LLP.
Astor Ridge LLP is regulated by the Financial Conduct Authority (FCA): Registration Number 579287
Astor Ridge LLP is Registered in England and Wales with Companies House: Registration Number OC372185
Astor Ridge NA LLP is a member of FINRA/SIPC: CRD Number 282626
Astor Ridge NA LLP is a member of the National Futures Association (NFA): Firm ID Number 0499303
Astor Ridge NA LLP is Registered in England and Wales with Companies House: Registration Number OC401796