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In June, the United States saw 47,999 job cuts, down from 93,816.
Challenger job cuts in the U.S. for June were reported at 47,999, down from 93,816. This shows a significant drop in the number of job cuts during this time.
Mortgage applications rise due to refinancing, despite high rates challenges
Mortgage applications rose slightly for the week ending June 27, 2025, increasing by 2.7% compared to a 1.1% rise the week before.
According to the latest data from the Mortgage Bankers Association, refinancing activity has grown even with higher interest rates in place.
The overall market index climbed to 256.5 from 250.8 in the previous week.
The purchase index saw a small increase to 165.3 from 165.2, while the refinance index jumped significantly to 759.4 from 713.4.
The 30-year mortgage rate dropped to 6.79%, down from 6.88%.
This week shows a slight but significant shift in homeowner sentiment due to changes in interest rates. The 2.7% rise in mortgage applications follows a 1.1% uptick the previous week. While these percentages may seem small, the change in direction is noteworthy, especially given recent pressure from rising rates.
Refinancers are actively engaging in the market again. The refinance index’s leap from 713.4 to 759.4 indicates that borrowers are seeking different options despite elevated rates. This suggests they might be adjusting their loan terms or accessing equity. The increase in refinancing shows borrowers believe rates may have peaked for the time being.
On the other hand, the purchase index barely budged, climbing to 165.3 from 165.2. This minimal change highlights that current buyers are still concerned about affordability. Although homes are attractive, the costs involved are keeping buyers cautious, resulting in no urgent activity in this market segment.
The small decrease in the 30-year mortgage rate—from 6.88% to 6.79%—helped boost momentum, especially for refinancers. While it’s only a nine basis point drop, it coincided well with recent inflation data and guidance, encouraging more people to act rather than wait.
For swap traders, the rate volatility reflected in this week’s data is important. The rise in refinancing indicates that market participants are reassessing their strategies as they prepare for potential changes in rates. While it seems rates will stay in a specific range, positioning will likely be adjusted as July progresses. As mentioned earlier this month by Anwyl, summer yield behavior often follows sentiment trends with minimal triggers, which we might be beginning to see.
We must recognize that actual mortgage demand faces limitations, and the derivatives market has already started to reflect this—especially in the mid-range. Don’t expect a surge in purchases; the current activity is on the refinancing side. It is more apparent this week than last.
Refinancers have stepped up, while home buyers have not yet followed suit. Brooks noted an increase in TBA volume on the secondary market, and we anticipate that convexity hedging will rise, leading to tightening in roll pricing. If rates remain stable or drop slightly, scheduled activities may speed up. It’s essential to consider both current levels and other influencing factors for positioning. This week’s rise in activity feels intentional; we should view it as informed.
In summary, the data goes beyond mere applications—it shows who is responding and how quickly. Understanding this allows us to adjust our strategies based on observed behavior rather than speculation about future rate changes. Keep this insight in mind.
The US dollar faces challenges as the foreign exchange market braces for an impending storm.
The US Dollar is encountering challenges as we approach the June labor market report. Criticism of the Federal Reserve and its chairman, combined with a decrease in confidence about the US as a reliable economic partner, is raising concerns.
Trade policies may not effectively tackle the US trade and current account deficits, and the ‘Big Beautiful Bill’ might worsen the budget deficit. Poor budget management could pressure the Federal Reserve to raise interest rates to keep inflation in check, although current signs may suggest otherwise.
Inflation Risks and Government Actions
Inflation risks are on the horizon, with calls for interest rate cuts likely to grow as economic fundamentals weaken. This creates a complex situation where unconventional government actions to meet quick electoral promises could weaken the dollar. The provided information includes potential risks and uncertainties. There are no recommendations for buying or selling assets, and significant risks, including total loss, are noted. The views expressed belong to the authors and do not imply responsibility for any errors or omissions. There is no business relationship or compensation with any mentioned companies in the article. Recent changes in the dollar’s value are driven by growing fiscal instability and waning investor trust. With increasing concerns about policy coherence, all eyes are on the June employment figures. These numbers may serve not as a trigger, but as a guide—helping us understand economic slack and wage trends better.Scrutiny on Powell and Policy Implications
Powell is facing renewed scrutiny. A wave of criticism, particularly about the Fed’s cautious approach, highlights a growing discomfort with its apparent detachment. This response isn’t surprising. With mixed reports on inflation and ongoing weaknesses in key consumption areas, it seems that policymakers are opting to wait. Meanwhile, while Treasury discussions focus on national security, the actual numbers suggest otherwise. We believe the ‘Big Beautiful Bill’ may increase spending more than many realize, impacting budgets far into the future. New spending without matching revenue increases makes many traders uneasy. This widening fiscal gap raises expectations that tighter monetary policy could be needed, especially if inflation rises more sharply than expected. As for inflation, it’s still a concern—it’s waiting. Labor participation is slowly rising but hasn’t reached previous highs, and productivity growth is sluggish. If wages rise while output lags, we may soon see increasing price pressures. Though the market expects gentle easing, these assumptions could be challenged later this quarter. The dollar has seen short positioning in a softening economy before, but now there’s more than just sentiment behind it. From our viewpoint, unconventional fiscal actions before an election rarely yield positive medium-term results. Trying to boost demand quickly through cash infusions or changes to imports may hurt imports more than helping domestic consumption, especially if confidence declines. In previous cycles, we’ve seen similar policy mixes lead to delayed reactions in foreign exchange markets. This lag should not be mistaken for complacency. Liquidity providers and those involved in futures trading are showing signs of shifting positions. Hedging around key data points—especially non-farm payrolls—is moving up. To us, this signals dwindling market conviction. As rate expectations solidify, the uncertainty around the dollar amplifies. Options skew is reflecting this, pricing in more downside risk than we’ve observed in recent weeks. Pay close attention not just to the June figures but also to the messages that follow. Any hesitance from the Fed about fiscal impacts, combined with postponed guidance, could further weaken market stability. This alone may lead to a deeper revaluation of the US dollar, especially against high-beta currencies. We’re monitoring how cross-asset flows respond, particularly the movement of equities into European and Asian markets. A slight resurgence in safe-haven demand for gold and short-term Treasuries suggests a re-emergence of fragility. When such patterns become clear while spreads narrow, it usually indicates more than simple profit-taking. In the coming days, we believe that volatility in the yield curve will influence trading behavior more than the headlines on inflation. Discussions on the terminal rate may shift focus from timing to reasoning—creating room for potential missteps. For investment strategies, a sharper focus on expected rate differences and currency reactions to fiscal surprises could prove more beneficial than simply following general sentiment trends. Create your live VT Markets account and start trading now.Rehn emphasizes euro strength helping inflation goals but cautions against complacency about possible undershooting
ECB policymaker Olli Rehn noted that the rise of the Euro has aided the European Central Bank (ECB) in achieving its 2% inflation target. Still, there are worries about inflation possibly dropping below this target for an extended time.
Rehn highlighted that the exchange rate is not a direct target of their policy, but recent talks have focused on the strength of the Euro. He described inflation risks as two-sided, meaning there could be both upward and downward movements.
Potential Impacts of Euro Appreciation
Rehn took a cautious approach, pointing out that while the Euro may gain strength, economic conditions are always changing. If the Euro rises above $1.20, this could lead to discussions about multiple cuts in interest rates if inflation decreases over time. His comments suggest that while a stronger Euro can help meet inflation goals, it can also lead to lower prices for imports, which reduces inflation. However, if the Euro remains high for too long, it could push inflation further below the central bank’s goal, creating pressure to loosen financial policies instead. When Rehn mentioned that the exchange rate isn’t a policy tool, he did not disregard its importance. He suggested that while the monetary authority does not directly control the exchange rate, they closely monitor its changes. Currently, the Euro is getting stronger, and this is something they must consider regarding inflation. Rehn’s mention of “two-sided risks” suggests there isn’t a clear direction. There are possibilities above and below the 2% target. Both outcomes are likely enough that no swift decisions should be made just yet. With this uncertainty ahead, decisions will not be based solely on currency movements unless inflation consistently falls below the target. Looking to the future, two things will influence decisions: the strength of the Euro and the global economic response. If the Euro climbs significantly past $1.20, we may see softer inflation data, impacting not only the headline numbers but also core measurements. This scenario could lead to expectations for lower interest rates to keep the inflation target from slipping.Monitoring Economic Indicators
It’s crucial to observe how the next few weeks develop, especially regarding changes in implied rates, financial spreads, and whether real rates reflect rising expectations. If monetary policy shifts due to currency pressure rather than incoming data, markets will begin to adjust accordingly. Keeping an eye on short-term contracts and sensitivity to macroeconomic surprises will provide clearer signals. We should consider the relative momentum of price levels in Europe and the US. If prices are rising slowly, this trend, combined with a strong Euro, could impact projections and revisions. When these shifts start to influence consumer inflation expectations, positioning in the market will become crucial. So far, the ECB has maintained a careful tone. They have not yet exhausted their patience for adjustments, but they have defined limits. We will watch for signs that inflation remains too low for too long, alongside a consistently strong Euro, as this may limit their options. How quickly these changes happen is more significant than the direction itself. Rapid shifts in trends demand more decisive policy changes. In the coming sessions, we should pay attention to how changes manifest both in macro indicators and in the central bank’s discussions about them. Rehn’s reluctance to solely base expectations on currency movements indicates they are considering a wider range of factors, including market dynamics, fiscal policies, and global price influences. Using a broader perspective will help. Instead of making quick assumptions, let’s track whether any signs of softness appear consistently. This way, real-time indicators can start to guide trades more reliably. Create your live VT Markets account and start trading now.Pound Sterling weakens against US Dollar during European trading after reaching a three-and-a-half-year peak
The Pound Sterling has dropped back to about 1.3700 against the US Dollar. This change follows positive data from the US, which reported 7.769 million job openings in May, exceeding expectations of 7.3 million. This strong data has boosted the US Dollar, helping the Dollar Index rise to around 96.90 after a nine-day decline.
In the UK, Bank of England Governor Andrew Bailey raised concerns about the labor market, mentioning how global risks add uncertainty to economic activity. The Bank may consider reducing interest rates later this year, although no specific plans were shared at the recent European Central Bank summit.
Impact Of US Economic Data
US Dollar movements are also affected by fiscal pressures, like President Trump’s tax bill and criticism of Federal Reserve Chair Jerome Powell regarding interest rate cuts. Attention is on the upcoming release of June’s ADP Employment Change data, which is expected to show 95,000 new jobs. This could influence views on monetary policy. Recently, the Pound Sterling has been fluctuating. The 20-day Exponential Moving Average is near 1.3600, providing short-term bullish support. The 14-day Relative Strength Index indicates positive momentum, with 1.3630 as a support level and 1.4000 as a psychological barrier for the GBP/USD pair. After recent movements, the Pound has lost some ground, moving back towards the 1.3700 mark against the US Dollar. This drop followed the unexpectedly strong US jobs data; the Job Openings and Labor Turnover Survey (JOLTS) reported close to 7.8 million in May, exceeding predictions by nearly half a million. This led to new strength for the Dollar and ended a short-term downtrend in the broader Dollar Index, now stabilizing near 96.90. Governor Bailey spoke about ongoing uncertainties, both domestically and internationally. His comments on the challenges in the UK labor market hint at potential future policy changes, but not any immediate action. While it seems unlikely that rates will rise soon, a cut later this year might be on the table, though nothing is confirmed. Traders should note that Bailey did not mention any specific economic triggers for the Bank’s action, suggesting a reactive, rather than proactive, policy approach.Monetary Policy Influences
Across the Atlantic, there is growing concern over the Federal Reserve’s independence, particularly due to political pressures related to tax policy and recent statements by Trump. This scrutiny makes the Fed’s monetary policy feel less insulated. The ADP Employment Change figure is often a speculative indicator ahead of the official nonfarm payrolls report. This week’s forecast of 95,000 jobs added could shift rate expectations quickly, depending on actual results. Markets are attempting to balance the Fed’s cautious stance with political calls for monetary easing. Technically, the GBP/USD pair shows a supportive structure. The 20-day EMA is around 1.3600, and the price has kept this level as support during pullbacks. The RSI over the past two weeks indicates a continued interest in upward movement, although it has been more measured lately. Traders should keep an eye on the 1.3630 level—dropping below that heightens risks. Resistance at 1.4000 remains a goal, but a subtle position below that point could indicate future direction. In the coming sessions, trader strategies—especially around upcoming US data—will be crucial in determining whether the pair can hold its ground or face renewed pressure from the strengthening Dollar. Stay alert and pay close attention to support levels like 1.3630. Falling below that would require a response, especially with the broader index bouncing back. Create your live VT Markets account and start trading now.The BOE’s Taylor predicts that five rate cuts will be needed in 2025 based on his stance.
The Bank of England’s Taylor recently suggested that the bank might need to cut interest rates five times in 2025.
Taylor is known for his more lenient approach within the Bank, having previously supported a rate cut.
His recent statement is quite notable. During his remarks, Taylor proposed that five cuts could be necessary in 2025. This isn’t a small issue; it shows ongoing worries about weak domestic demand and the risk of falling short on inflation targets next year.
Taylor has already demonstrated his support for a softer policy. He voted for a cut in the last meeting while the rest of the committee chose to keep rates steady. This isn’t just a theoretical idea about future rates; it signals an important shift in the discussions happening within the Bank.
Let’s break it down a bit more. Inflation has been stubbornly high, but it’s starting to decline more consistently in key areas. This trend likely gives doves like Taylor more confidence. Although wage growth remains high in some sectors, it has decreased from its peak. Furthermore, services inflation, which was a concern, is slowly easing. This explains part of his statement.
For those watching short-term interest rates or market volatility, this is significant. If we interpret Taylor’s tone correctly, it hints at a growing belief among some within the Bank that there might be no need to keep policy tight well into next year. This affects how we’ll gauge future decisions—not just for their immediate impacts, but also for guidance and potential disagreements among committee members.
Expectations for short-term rates may now have more room to decline beyond current pricing, as long as inflation stays in check and growth remains weak. The UK economy still shows signs of softness in several areas. Retail sales are inconsistent, housing activity is sluggish, and business confidence remains low. This is the context Taylor is considering.
More cautious policymakers may not easily support five cuts at this moment. But if the economic outlook doesn’t improve and price pressures keep easing, it might bring additional committee members closer to his view by early next year.
The real risk isn’t runaway inflation—it’s slow progress and missed opportunities for recovery. For those monitoring rate volatility or options ahead of the next MPC meetings, this shift in perspective is crucial, especially if data weakens further in the third quarter.
So, what should you do in the near term? Start by re-evaluating how fixed income futures and rate-dependent volatility products might respond, not only to economic reports but also to speeches from MPC members. Watch for differences in tone between meeting minutes and actual votes. We are likely to see some members, including Taylor, more inclined to support early easing, even if they are currently in the minority.
Gold price hovers around $3,340 as European trading anticipates upcoming US employment data
**Gold Price and Market Sentiment**
Before the NFP data release, all eyes are on the ADP Employment Change report. It predicts 95K new jobs in June, an increase from 37K in May. The US Dollar is bouncing back, thanks to strong JOLTS data, which is limiting any increase in gold prices.
The US Dollar Index, which compares the Greenback to six major currencies, is nearing 97.00. Factors like the upcoming tariff deadline and legislative changes are providing support for gold prices.
Gold is currently hovering near a trendline in an Ascending Triangle pattern, facing resistance at the $3,500 level. The 20-day EMA at $3,342 indicates an unclear trend, and the 14-day RSI shows a sideways movement.
If gold breaks above $3,500, it could reach new highs around $3,550 and $3,600. On the other hand, if it falls below $3,245, it might slide down to $3,200 or even $3,121.
**Central Banks and Gold Reserves**
Gold has always been a reliable store of value and a means of exchange, especially in unstable times. Central banks are increasing their gold reserves, amassing 1,136 tonnes in 2022. Countries like China, India, and Turkey are leading the way in boosting their gold holdings.
Gold usually rises when the US Dollar and US Treasuries decline. Economic uncertainties or fears of a recession can elevate gold prices because of its safe-haven status. Additionally, lower interest rates typically help gold prices rise, while a strong Dollar can limit its gains.
Many factors can influence gold prices. Geopolitical instability and recession worries can cause quick price shifts. Although gold doesn’t yield interest, trends in interest rates can impact its value. A weaker Dollar often results in higher gold prices.
Different markets and investment instruments exist, so it’s vital to do thorough research before making investment choices due to potential risks. The information shared reflects the author’s views and may not reflect official policies. The author is not responsible for external links or stock positions mentioned.
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Taylor from the BOE believes rate cuts are unnecessary due to economic slowdowns and labor market concerns.
Bank of England policymaker Alan Taylor recently shared his thoughts on the UK’s economic outlook. He is worried about a slowing economy and emerging problems in the labor market. He also indicated that inflation might fall below the desired target. Taylor stressed the importance of considering various factors, which suggests that there isn’t a strict plan for future interest rate changes.
Despite his concerns, Taylor believes that energy price shocks will decrease by 2026. However, he sees a greater chance of economic challenges, such as weak demand and trade disruptions, during that time. Currently, markets see a 76% chance of a rate cut at the next policy meeting in August, with about 53 basis points of cuts expected for the rest of the year.
Economic Uncertainty Grows
Taylor’s remarks highlight increasing uncertainty about monetary policy, especially when looking at the latest economic data. His recognition of slowing growth and fragile employment figures indicates that the economy is losing momentum. The chance of inflation dropping below the 2% target seems more likely now, shifting expectations that it would remain stubborn. Since projections for future interest rates are not firm, we should view statements like Taylor’s as a sign of caution rather than a detailed plan. This suggests that policymakers are prioritizing flexibility over commitment, often indicating that external factors are more influential than domestic ones. As energy pressures are expected to lessen by 2026, the concern about inflation may diminish. In the meantime, we face short-term challenges from weak demand and problems in global supply chains. The focus now is more on growth risks rather than fears of overheating the economy.Expectations for Rate Cuts
At this point, market signals indicate a strong possibility of a rate cut as soon as August. It seems that upcoming policy moves will likely favor easier conditions, reflecting worries about fragile consumer spending and cautious hiring. The approximately 53 basis points forecasted for cuts this year shows a shift in sentiment away from previous concerns about persistent inflation. These developments suggest a need to reassess how sensitive our positions are to short-term rate changes. Traders dealing with rate-linked products should examine their exposure across different time frames, especially considering a potential drop in short-term yields. A steepening trend in the yield curve is possible, particularly if disinflation aligns with stabilizing long-term growth expectations. Volatility around important economic data is likely to rise, especially if labor market indicators continue to worsen. This may require a more cautious approach during significant macroeconomic releases. With forward guidance becoming less predictable, reactions will probably depend more on actual data. From a tactical standpoint, the current uncertainty often leads to quick adjustments in pricing, especially around rate decisions, labor data, or inflation reports. Opportunities may emerge from differences between actual volatility and what options markets are pricing, especially over the next three to six months. A helpful way to track changes in sentiment is by looking at swap spreads and terminal rate expectations. If the market pushes for earlier easing, it might show a significant shift in positioning. Risk reversals could also begin to favor downside protection for rates. Overall, we are leaning towards pricing changes that suggest a softer response from the Bank, but only if economic signals remain consistently weak. Right now, markets estimate that probability to be just over 75%—a significant figure, yet not purely speculative. Create your live VT Markets account and start trading now.After reaching a peak of 1.3788, GBP/USD stays around 1.3700 as bearish momentum continues
The GBP/USD pair is currently showing bearish momentum, trading around 1.3700 after reaching a multi-year high of 1.3788. This follows some small gains on Tuesday as the US Dollar Index tries to recover from a long losing streak.
In July, the momentum for GBP/USD slowed after five months of gains, peaking at 1.3787 on Monday. The rise has been supported by a weak dollar and the Bank of England’s cautious approach regarding interest rate cuts.
Wave Analysis
Recent analysis indicates that GBP/USD is in the early stage of wave ((iii)) of 3 of (3) in a significant impulse cycle. The internal wave structure shows a channel pattern, with subwaves i and ii of ((iii)) forming. The rise above the high of minor wave i suggests that wave ((iii)) is moving forward. Investing involves risks and the possibility of significant loss, including emotional stress. It’s essential to do thorough research before making any investment choices, as opinions presented do not reflect those of the organization cited. The views in this article might not represent its official policy or position. Currently, it seems the upward trend of the GBP/USD pair has paused. The strong rise that started earlier this year and lasted several months appears to be losing steam. After hitting a high of 1.3787, selling pressure is emerging. Now, the 1.3700 level is crucial to watch technically and psychologically. The US dollar’s tentative recovery, seen in the broader US Dollar Index, is impacting the performance of sterling. There’s a feeling that the trend of dollar weakness may be shifting—though not decisively. A stronger US dollar directly pressures this pair, making it harder for sterling to rise.Monetary Policy Impact
Expectations regarding monetary policy remain a key factor. The Bank of England has not shown urgency about rate cuts, providing some support. However, this caution isn’t enough to counter a strong recovery in the dollar. Close attention is being paid to Powell and his team for any changes in tone—warnings about inflation, labor markets, or growth could strengthen the dollar. A stronger dollar can increase volatility in derivatives linked to sterling. From a wave perspective, the movement still favors a bullish outlook in the larger timeframe. This analysis places the pair within a rising impulse structure—specifically, in wave ((iii)) of 3 of (3). Here, subwave i has finished; subwave ii formed a corrective leg; and a new upward wave seems to be forming. However, the rise from the subwave i high must continue to maintain the bullish cycle. If the current move stalls, it may indicate that the correction is either incomplete or that the pattern could be invalidated. In the short term, those trading derivatives should watch key reaction zones, especially between 1.3650 and 1.3730. A confirmed break below this range could suggest the advance is weakening more than initially thought. On the other hand, if the price stays above this area and forms a higher low, it may open the door for renewed optimism towards 1.3850 and beyond. We anticipate periods of volatility as various factors—dollar positioning, BOE expectations, and technical setups—compete against each other. It’s crucial to manage risk carefully. For those trading leveraged positions, seeking confirmation of bias without considering pullback levels might lead to significant losses. Wave analysis looks to the future but relies on a clear structure to remain effective. If the identified impulsive move stalls within the next 100 pips, the likelihood of a more complex correction increases significantly. In that case, it will be wise to mark zone boundaries and avoid acting on minor breakouts until more confirmation is received. Be vigilant for potential catalysts—macro insights from the US labor report, speeches by Bailey’s team, and any changes in forward rate expectations. These scheduled reports often disrupt short-term patterns and introduce unexpected volatility. While sterling’s medium-term outlook may still be upward for now, short-term traders should consider tighter targets, more careful stop placements, and assess whether the pattern continues to behave impulsively. Create your live VT Markets account and start trading now.Wunsch supports a mildly accommodating policy approach and is comfortable with market interest rate expectations.
The European Central Bank (ECB) is planning a gentle support for its policies. Markets expect one last rate cut of 25 basis points before the year ends, likely in December.
ECB policymaker Wunsch has shown no concerns about current interest rate expectations. These market forecasts indicate a cautious approach to changing monetary policy soon.
Wunsch’s comments suggest he is comfortable with how rates are priced now. This means the central bank is not looking to disrupt credit conditions unnecessarily. From our viewpoint, this acceptance of market expectations allows implied volatilities to remain stable, possibly decreasing a bit if encouraging data confirms the expected rate trend.
The expected 25 basis point cut has been gradually integrated into futures curves and swaps, particularly for December. This has narrowed rate differences against certain counterparts. Hence, we might see moderate flattening of short-end curves if upcoming economic data stays weak but not worrying. Any changes in wage pressures or inflation could affect the timeline, especially if price trends start to strengthen.
As the policy tightens less, there may be increased demand for short-dated euro options, especially at or just above the money level. Front-end risk reversals could slightly shift as traders assess the chances of earlier or later easing. This situation may also increase activity in calendar spreads as traders seek to benefit from or hedge against timing expectations.
We note that implied rates for shorter terms remain steady, indicating some uncertainty or hedging activities. However, unless forward guidance improves significantly, the gamma in shorter maturities may slowly decline with lower realized volatility. There’s an opportunity here for selective premium selling, provided there is adequate protection in areas where skew remains slightly high.
The cautious stance from policymakers, along with still-strong macro data in parts of the eurozone, reduces the likelihood of urgency returning to the curve without any significant shock. Instead of making aggressive moves, we find it wiser to keep flexible downside hedges and closely watch ECB comments for any signs of concern about market pricing or inflation.
In the coming weeks, option structures sensitive to policy directions beyond December may gain more attention, especially if forward guidance hints at a pause or conditional approaches. Traders focused on rate or currency path dependency may find a short but valuable window to shape their positions with an eye on volatility repricing timing.
