EQUITIES: A Sea of red for Global Equities

SX7E (18th Dec) 320/360cs 1x1.5, bought for 10.1 in 3k.

Treasuries see sizeable gains on the day with WTI crude oil futures 6% lower on the resumption of US-Iran talks, helping lift TYU6 a little further away from Friday’s fresh cycle lows. Bloomberg also reports that Tsy Sec Bessent’s championing of the Fed repo facility Japan can use to boost the yen comes with the benefit of protecting the US bond market from excess sales. Today sees data headlined by the ISM mfg survey (expected to reflect improvement in activity alongside softer though still elevated price pressure), Treasury’s borrowing estimates at 1500ET as a prelude to Wednesday’s full QRA (MNI Preview: https://mni.marketnews.com/4w4jjKI) and a Senate procedural vote on the stopgap funding bill that would prevent a government shutdown in October. 

• Cash yields are 4.5-6.2bp lower on the day with declines led by the belly.
• TYU6 has firmed in the past hour to t 108-15 (015) on solid cumulative volumes of 410k. It’s still sightly off an initial high of 108-16 seen with the Asia open but having held within Friday’s range throughout which included a new cycle low of 107-31+.
• Friday’s sell-off reinforced bearish current conditions and next opens support at 107-29 and 107-20+ (Fibo projections of Apr 17 – May 4 – 7 swing). Resistance meanwhile is seen at 108-25+ (20-day EMA).
• Data: S&P Global US mfg PMI Jul final (0945ET), ISM mfg Jul (1000ET), Construction spending Jun (1000ET)
• Treasury borrowing estimates (1500ET) - likely to see a slight increase to May’s estimates of both financing needs and borrowing for the Jul-Sep quarter, with the following quarter set to see a slight sequential decline.
• Bill issuance: US Tsy $92B 13W & $79B 26W bill auctions (1130ET)
• Politics: Trump signs executive order (1330ET) plus multiple closed press policy meetings (1200ET, 1500ET, 1630ET and 1730ET). Senate expected to hold procedural vote at 1730 ET to advance a stopgap funding bill to avert a government shutdown in October. The measure would fund government agencies at current levels through December 11, with several differences from the funding patch (Continuing Resolution) passed by the House last month.

• On the commodity front, Gold continues to trade inside a range. The trend set-up is unchanged, it remains bearish. Moving average studies are in a bear-mode position highlighting a dominant downtrend. A resumption of the bear leg would open the $3900.00 handle next. Firm resistance is at the 50-day EMA, at $4194.1.
• WTI futures remain in a clear bull cycle and the latest sharp pullback appears to be a correction. Initial key pivot support to watch is $80.22, the 50-day EMA. It has been pierced, however, a clear break of it is required to signal scope for a deeper retracement. This would open $73.35, the 76.4% retracement of the Jul 2 - 23 bull leg. A resumption of gains would refocus attention on key resistance at $93.50, the Jul 23 high.