US TSYS: 10-Year Yield Breaks 4.50% Overnight
TYM5 reopens at 109-21, down 0-01 from closing levels in today’s Asia-Pac session.
- Overnight US 10-year yields had a range of 4.4452% - 4.5443%, closing around 4.53%.
- Treasury yields ended higher overnight, with the yield curve steepening (2s10s +2.06 at 48.131).
- The yield increase was driven by factors including a shift in market sentiment, hedging flows, and concerns about potential increases in Treasury debt supply due to proposed US tax legislation.(BBG)
- MNI US DATA: A Tentative Pause In Tighter Mortgage Lending Standards. MBA composite mortgage applications increased 1.1% last week (sa) to essentially hold steady after a noisy period on swings in mortgage rates.
- The 10-year Yield has broken above the 4.50% resistance. A sustained break above this level could see another round of selling targeting the 4.75% area. Support now seen back towards 4.35/40 where supply should now be seen.
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US: Tsy Secretary Bessent Plays Down Recent Bond Market Turmoil
US Tsy Secretary Scott Bessent made remarks from Argentina earlier (via BBG TV). He played down concerns over recent bond market volatility, stating there was no evidence of sovereign sales of USTs. He added that the Treasury has a big toolkit to deal with market turmoil but such a scenario is a long way off from being needed. See this BBG link for more details.
- Among the headline highlights: "*BESSENT: NO EVIDENCE OF SOVEREIGN SALES OF US TREASURIES, *BESSENT: SAW INCREASED FOREIGN COMPETITION AT US DEBT AUCTIONS, *BESSENT: WE'RE A LONG WAY FROM 'BREAK THE GLASS' SITUATION, *BESSENT: TREASURY HAS BIG TOOLKIT, COULD BOOST BUYBACKS "
- "*BESSENT: DOLLAR IS STILL A GLOBAL RESERVE CURRENCY, *BESSENT: STILL HAVE A STRONG-DOLLAR POLICY"
- On trade talks: "*BESSENT: THERE WILL BE A FIRST-MOVER ADVANTAGE ON TRADE TALKS, *BESSENT: OTHERS WILL WANT PROTECTION AGAINST CHINA EXPORT FLOOD, *BESSENT: DOESN'T HAVE TO BE DECOUPLING WITH CHINA, BUT COULD BE"
- On Fed: "*BESSENT: AGREE ABOUT 6 MTHS BEFORE THINKING ON POWELL SUCCESSOR, "*BESSENT: AGREE ABOUT 6 MTHS BEFORE THINKING ON POWELL SUCCESSOR" BBG
US TSYS: Some Relief
Overnight the 10yr yield had a range of 4.3583% - 4.4816%, closing near the lows around 4.37%. Treasuries found some relief and rallied most of the day. Risk appetite was stoked by Trump’s decision to exempt certain technology products, and the price action pointed to money being put back to work.
- President Trump said he is exploring possible exemptions on imported vehicles and parts, to give auto makers more time to set up US manufacturing.
- The Fed’s Waller said the impacts of the tariffs on inflation would be temporary. He also described the new policy as “one of the biggest shocks” on the US economy in decades, the effects of which are highly uncertain.
- The market will be relieved to see US yields finally get some reprieve, the next support is around 4.25/30% and expect supply to return down there.
- TYM5 closed at 110-24, up +1-00 on the day.
AUSSIE 3-YEAR TECHS: (M5) Within Range of Highs
- RES 3: 97.190 - High May 5 2023
- RES 2: 96.932 - 76.4% of Mar-Nov ‘23 bear leg
- RES 1: 96.860 - High Apr 07
- PRICE: 96.660 @ 15:39 GMT Apr 14
- SUP 1: 95.900 - Low Jan 14
- SUP 2: 95.760 - Low 14 Nov ‘24
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
Aussie 3-yr futures ripped to new contract highs again to begin last week - clearing resistance on the continuation contract. The rally has taken out resistance at 96.730, the Sep 17 ‘24 high. On the downside, any reversal lower from current levels would signal a resumption of a downtrend. A deeper sell-off would refocus attention on 95.760, the 14 Nov ‘24 low.
