US TSYS: What Recession?
Rates trading weaker after the bell, just off midday session lows after FI markets gapped lower on stronger than expected jobs gains for July: +528k vs. +250k est, unemployment rate dropped a tenth to 3.5% after flattening out at 3.6% for six months. Average hourly earnings rose 0.5%, a tenth faster than in June. Better than expected data spurred heavy selling across the board but particularly in shorts to intermediates as yield curves extend inversion to new 22 year lows (2s10s -44.034).
- Heavy short end selling included 5Y Blocks as strong data spurs recession position unwinds as payrolls close gap with pre-pandemic levels, 75bp rate hike in September getting priced in again.
- Some faded the deep curve inversions w/ Block buying over 15,000 TUU2, 2s10s currently -5.686 at -41.947. Currently, 2-Yr yield is up 20.2bps at 3.2442%, 5-Yr is up 17.9bps at 2.9709%, 10-Yr is up 14.8bps at 2.836%, and 30-Yr is up 9.9bps at 3.0638%.
- Cross asset update: Stocks marginally lower/off lows (SPX eminis -15.0 at 4137.25 vs. 4104.25 low); Spot Gold weaker -16.10 at 1775.18; Crude weaker (WTI -0.39 at 88.15).
- Data: Slow start to next week, nothing scheduled for Monday except US Tsy bill auctions ($54B 13W, $42B 26W). Tuesday picks up with Nonfarm Productivity (-4.6% est) and Unit Labor Costs (9.8% est), US Tsy $34B 52W bill and $42B 3Y Note auctions.
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AUDUSD TECHS: Trend Needle Points South
- RES 4: 0.7202 High Jun 9
- RES 3: 0.7138 High Jun 10
- RES 2: 0.7069 High Jun 16 and a key short-term resistance
- RES 1: 0.6939/6964 20-day EMA / High Jun 28
- PRICE: 0.6777 @ 16:20 BST Jul 6
- SUP 1: 0.6762 Low Jul 5
- SUP 2: 0.6759, 50.0% retracement of the Mar ‘20 - Feb ‘ 21 bull cycle
- SUP 3: 0.6685 High Mar 9 2020
- SUP 4: 0.6647 0.764 proj of the Apr 5 - May 12 - Jun 3 price swing
AUDUSD remains vulnerable following the recent breach of support at 0.6829, the May 12 low. The break strengthens bearish conditions and confirms a resumption of the downtrend that started February 2021. The move lower also maintains a broader bearish price sequence of lower lows and lower highs. Sights are on 0.6759 next, a Fibonacci retracement. Initial firm resistance is seen at 0.6964, high Jun 28.
US EURODLR OPTIONS: BLOCK, July Put Spd
- 10,000 Jul 96.25/96.75 put spds, 8.5 at 1509:59ET
US: President Biden Delivering Remarks In Cleveland, Ohio
President Biden's remarks today are designed to boost the President's appeal in a state which has been trending Republican in the past two elections.
- The President's remarks are scheduled to start at 15:15 ET 20:15 BST and can be followed here: https://www.youtube.com/watch?v=zd2GN5-x7GE&featur...
- According to the White House, the President will announce plans that will help “two million workers and retirees avoid benefit cuts and keep union pensions solvent until 2051.”
- Biden will be joined by a number of high-profile Ohio Democrats including Senator Sherrod Brown (D-OH) and Reps Shantel Brown (D-OH) and Marcy Kaptur (D-OH).
- Rep Tim Ryan (D-OH), the Democrat candidate for the Ohio Senate race this year has declined to join the event, citing scheduling conflicts. The GOP has claimed that Ryan is avoiding exposure to Biden's poor approval rating.
- The Hill: "Biden’s approval rating could stand to hurt down-ballot Democrats like Ryan and Whaley running in November’s midterm elections, particularly in a red-leaning state like Ohio. The nonpartisan Cook Political Report rates Ryan’s Senate race as “lean Republican” and Whaley’s gubernatorial challenge to incumbent Gov. Mike DeWine (R) as “likely Republican.”"
- Ryan's GOP senate opponent JD Vance released a statement today saying: “Ryan has worked in lockstep with Biden to destroy our economy and Ohio’s middle class is suffering today because of it. But now, for the second time in two months, Ryan is refusing to be seen in public with his own party’s president.”
