BUNDS: Afternoon Rally Pattern Repeats Once Again
Bunds have bounced strongly from near-session lows, with the front future now up 15 ticks on the day at 136.44, up 59 ticks from the day's lows set after stronger-than-expected eurozone industrial/services PMI data. Bunds are still trading within yesterday's ranges, though.
- Nothing notable driving the move, and nothing new vs the previous two sessions this week which each saw a morning pullback flip to gains in the afternoon with sharp upside moves.
Source: BBG, MNI
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US TSYS: Bull Flattening To New 2s10s Lows Ahead Of Light Docket
- Cash Tsys have continued Friday’s net rally (temporarily interrupted by a stronger than expected ISM Services report) despite relatively little further moderation overnight in Fed rate expectations.
- The setting of China’s annual GDP growth (“around 5%”) at the less optimistic end of the spectrum of potential outcomes has helped provide support. There has been little change since then at the front end but the longer end continues a bid as it reverses the cheapening after the surprise jump in ISM mfg prices paid earlier in the week, with the combination seeing 2s10s touch fresh multi-decade lows of -92.5bps.
- 2YY -1.7bp at 4.840%, 5YY -3.2bp at 4.214%, 10YY -3.9bp at 3.913% and 30YY -3.8bp at 3.838%.
- TYM3 trades 9 ticks higher at 111-12 just off session highs of 111-14 back at pre-ISM mfg levels. The bounce is deemed corrective with resistance at 111-23+ (Feb 28 high) and support at the bear trigger of 110-12+ (Mar 2 low).
- Data: Factory orders/final durable goods Jan (1000ET)
- Bill issuance: US Tsys $57B 13W, $48B 26W bill auctions (1130ET)
US 10YR FUTURE TECHS: (M3) Corrective Bounce
- RES 4: 113-09+ 50-day EMA
- RES 3: 112-28 High Feb 16
- RES 2: 112-11 20-day EMA
- RES 1: 111-23+/112-03 High Feb 28 / 24
- PRICE: 111-12+ @ 11:31 GMT Mar 6
- SUP 1: 110-12+ Low Mar 02 and the bear trigger
- SUP 2: 110-06 3.00 proj of the Jan 19 - Jan 30 - Feb 2 price swing
- SUP 3: 110-04+ Lower 2.0% Bollinger Band
- SUP 4: 109-22 3.236 proj of the Jan 19 - Jan 30 - Feb 2 price swing
Treasury futures have recovered from last week’s low of 110-12+ (Mar 2). Short-term gains are considered corrective and note that a move higher would allow an oversold trend condition to unwind. Key short-term resistance is seen at 112-11, the 20-day EMA. On the downside, the bear trigger lies at 110-12+, the Mar 2 low. A break would confirm a resumption of the downtrend and open 110-06, a Fibonacci projection.
USD: The NOK is now the worst performer
- NOK is the worst performer in G10 against the USD, down 0.71%, closely followed by the AUD, down 0.70%.
- USDNOK eye 10.4951, last week's high and the highest print since 4th November.
- AUDUSD sees support at 0.6688, the January and 2023 low.
