US DATA: Another Supply Caveat Behind U/E Rate Drop But Less So This Month [1/2]
Aug-07 16:25
The unemployment rate was surprisingly low in July at 4.09% as it built on a latest decline in June,...
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US TSYS/SUPPLY: Preview 10Y Auction Re-Open: Higher Yield
Jul-08 16:24
Treasury futures remain broadly weaker, near recent session lows ahead of the $39B 10Y Note auction re-open (91282CQQ7) at the top of the hour. WI is currently 4.592%, 5.4bp cheap to last month's stop:
- June auction recap: Treasury futures held mildly weaker (TYU6 -2.5 at 109-04.5) after the $39B 10Y note auction re-open (91282CQQ7) finally stopped through - breaking a 4-tail streak: drawing 4.538% high yield vs. 4.540% WI; 2.57x bid-to-cover vs. 2.44x 5-auction average.
- Peripheral stats: indirect take-up climbed over March high of 74.45% t0 78.21%; direct bidder take-up falls to 12.32% - well below a 5-auction average of 21.47%; primary dealer take-up to 9.46% vs. 11.98% prior.
| High yield | When-issued yield | Trade through (tail) | High - Median Spread | Bid-to-cover | Primary Dealer Percent | Indirect Percent | Direct Percent | Offering Amount | |
| 5 auction avg | 4.3364% | 4.3314% | (0.5) | 5.66 | 2.45 | 11.66% | 69.29% | 19.03% | |
| 10-Jun-26 | 4.538% | 4.540% | 0.2 | 5.8 | 2.57 | 9.46% | 78.21% | 12.32% | $39B |
| 12-May-26 | 4.468% | 4.464% | (0.4) | 5.5 | 2.40 | 11.98% | 63.95% | 24.07% | $42B |
| 8-Apr-26 | 4.282% | 4.280% | (0.2) | 5.2 | 2.43 | 10.80% | 65.32% | 23.88% | $39B |
| 11-Mar-26 | 4.217% | 4.211% | (0.6) | 5.7 | 2.45 | 12.72% | 74.45% | 12.83% | $39B |
| 11-Feb-26 | 4.177% | 4.162% | (1.5) | 6.7 | 2.39 | 13.38% | 64.54% | 22.08% | $42B |
US STOCKS: Broadly Lower As Middle East Tensions on the Rise Again
Jul-08 16:21
- US equity indexes suffered sharp declines Wednesday, risk sentiment evaporating after President Trump said the US/Iran ceasefire after the two traded strikes since Iran's recent attacks on oil tankers exiting the Strait of Hormuz. Trump threatened additional retaliatory strikes against Iran may come tonight.
- The DJIA underperformed (-1.38%), S&P eminis -0.7%, while the tech heavy Nasdaq declined 0.6%.
- A wide swath of Materials/Industrials, Consumer Discretionary and Financials sector shares led declines by midday.
- Helping tech shares, Bloomberg reported "CHINA TO LET TOP AI COS BUY SOME NVIDIA H200 CHIPS" with Nvidia +.8% at the moment.
- The rebound in middle east tensions buoyed crude prices (WTI +7.25% to appr $75.70/bbl) and in turn oil & gas shares led advances with the following gaining 5.25% to 6.25%: Valero Energy Corp, Phillips 66, Occidental Petroleum and Marathon Petroleum.
BONDS: EGBs-GILTS CASH CLOSE: Short End Hit Hard On MidEast Re-Escalation
Jul-08 16:12
The European short end sold off substantially Wednesday as the US-Iran conflict re-escalated.
- Following recent strikes committed by both the US and Iran, President Trump said that he thinks the Memorandum of Understanding between the two countries is "over" and downplayed the prospects for a deal.
- That saw energy prices jump with front Brent crude jumping back above $80/bbl for the first time since June 22, weighing on EGBs and Gilts.
- Russia's announcement of a ban on diesel exports extended losses for the short end of curves, with 2Y yields closing near session highs.
- Implied ECB and BOE hike pricing leaned to seeing an even call between 1 and 2 25bp increases by year-end (vs closer to 1 fully priced entering the session).
- ECB's Nagel (a hawk) warned about being "back where we started" after the ending of the US-Iran ceasefire.
- On the day, Gilts underperformed Bunds with both the UK and German curves bear flattening. Semi-core/periphery EGB spreads widened, with France, Greece and Italy out ~2bp (10Y vs Bunds) though Spain and Portugal fared slightly better.
- Thursday brings German trade data and the accounts of the ECB's June meeting, while we also hear from ECB's Escriva and BOE's Breeden.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 12.4bps at 2.709%, 5-Yr is up 11.3bps at 2.818%, 10-Yr is up 9.9bps at 3.092%, and 30-Yr is up 6.6bps at 3.641%.
- UK: The 2-Yr yield is up 15.5bps at 4.331%, 5-Yr is up 14.8bps at 4.512%, 10-Yr is up 12.6bps at 4.974%, and 30-Yr is up 10.2bps at 5.691%.
- Italian BTP spread up 3.3bps at 81.6bps / Spanish up 1.3bps at 49.5bps
