US TSYS: Announced Opening Of Narrow Strait Brings Broad Gains
Apr-17 20:27
Treasuries rallied strongly Friday, led by the belly of the curve as it appeared the US and Iran were nearing an end to their conflict.
- The bulk of the gains came before the cash equity open after Iran's foreign minister announced the Strait of Hormuz is now “completely open” for commercial traffic for the remaining period of ceasefire (ending Monday) with President Trump saying talks will be held this weekend (though some reports said Monday).
- The Iranian foreign ministry later sounded more combative, saying "enriched uranium is not going to be transferred anywhere" in contrast to Trump's missives, while also claiming to be the one that determined the opening and closing of the strait.
- Markets largely shrugged off the latter uncertainty over the state of play however, with the Treasury curve leaning in a bull steepening direction on the day.
- Latest cash levels: The 2-Yr yield is down 7.6bps at 3.6977%, 5-Yr is down 8.1bps at 3.8379%, 10-Yr is down 7.1bps at 4.2401%, and 30-Yr is down 5.5bps at 4.8775%. Jun 10-Yr futures (TY) up 15.5/32 at 111-22.5 (L: 111-04 / H: 111-27.5)
- Ahead of the FOMC's pre-meeting blackout period that starts this weekend, Gov Waller sounded cautious about re-initiating cuts given the situation in the Middle East, though his comments appeared somewhat stale given the morning's headlines. Overall, rates ended the week on a dovish note, with 16bp of Fed cuts priced for 2026 vs 6bp at the end of last week.
- While weekend developments on the US-Iran front will remain very closely watched, next week's highlights include Tuesday's retail sales release for March, followed shortly Fed Chair confirmation hearing at the Senate Banking Committee for Kevin Warsh.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US TSYS: Fed on Hold, Curves Flatter, Projected Rate Cut Out to Jul'27 Post FOMC
Mar-18 20:06
- Treasuries briefly pared losses after the FOMC held rate steady on a near unanimous vote (11-1), Miran dissenting - but extended lows as Chair Powell discussed economic projections in light of effect of higher oil prices.
- Powell pours cold water on the possibility of a revision to the Fed's Communications policies, including the Dot Plot, which was being mulled last year: "we looked carefully at many aspects of the SEP and of our communications, and there just weren't, there weren't any ideas that had very broad support on the committee."
- Treasuries lower to start the day after higher than expected PPI inflation metrics (coupled with reports several Iranian gas fields were attacked) - Iran’s semi-official Fars news agency notes that Iran will hit enemy sites there were previously thought to be safe, highlighting energy infrastructure as a target in reaction to the Israeli attack on the South Pars gas field. This provides further demand for oil and gas, support for the USD and pressure for bonds and equities.
- Currently, TYM6 -17.5 at 111-14.5 (session low), the next key support at 111-06+, the Jan 20 low. Clearance of this level would highlight an important medium-term bearish development. Curves bear flattening: 2s10s -3.268 at 48.590, 5s30s -4.416 at 100.486.
- Projected rate cut pricing much cooler vs. late Tuesday lvls (*): Apr'26 -.5bp (-1.1bp), Jun'26 at -2bp (-5.6bp), Jul'26 at -5.5bp (-10.6bp), Sep'26 at -9.3bp (-16.7bp), Oct'26 -11.5bp (-20.1bp). The first 25bp rate cut back out to July 2027.
- Look ahead to Thursday: Weekly Claims, New Home Sales, 10Y TIPS R/O
MNI: US TSY TICS NET FLOWS IN JAN -$25.0B
Mar-18 20:00
- MNI: US TSY TICS NET FLOWS IN JAN -$25.0B
- US TSY TICS NET L-T FLOWS IN JAN +$15.5B
EURJPY TECHS: Has Breached Channel Support
Mar-18 20:00
- RES 4: 186.87 High Jan 23 and a key M/T resistance
- RES 3: 186.36 High Feb 9
- RES 2: 185.05 76.4% retracement of the Feb 9 - 12 bear leg
- RES 1: 184.08/77 High Mar 11 and a S/T bull trigger / High Feb 25
- PRICE: 183.68 @ 16:20 GMT Mar 18
- SUP 1: 181.87 Low Mar 16
- SUP 2: 180.81 Low Feb 12
- SUP 3: 180.10 Low Dec 5 ‘25
- SUP 4: 179.30 23.6% of the Feb 28 ‘25 - Jan 23 bull cycle
EURJPY has breached a key support around 183.42, marking the base of a bull channel drawn from the Feb 28 ‘25 low. The break signals a stronger reversal and a continuation lower would open the next key support at 181.81, the Feb 12 low. Clearance of this level would strengthen the bear cycle. Initial firm resistance to monitor is 184.08, the Mar 11 high. A move above this hurdle would instead signal a S/T reversal and a false channel breakout.
