US TSYS: Bear Steeper, Outperforming EGBs
Feb-19 11:57
- The front-end consolidates yesterday’s sell-off as it awaits a next material driver, fading a hawkish shift in ECB and BoE expectations along with a further push higher for WTI futures.
- The long end meanwhile is dragged lower by renewed losses for EGBs on defense spending themes, aided by notable flow including a ~$1mln DV01 FV/TY steepener after the ~$510k DV01 steepener flagged earlier in London trade.
- Cash yields are 0-3bp higher, led by 20s and 30s, to offer some relative concession ahead of today’s 20Y supply. Last week’s 30Y auction saw a 1.3bp tail whilst last month’s 20Y traded through by 1bp to break two prior tails.
- TYH5 is close to recent session lows of 108-22 (-05) on reasonable cumulative volumes of 385k.
- Moving average studies highlight a dominant downtrend, with support seen at 108-04 (Feb 12 low) closely followed by 108-00 (Jan 16 low).
- Data: Weekly MBA data (0700ET), Housing starts/building permits Jan (0830ET
- Fedspeak: FOMC Minutes (1400ET), Jefferson (1700ET) – see STIR bullet
- Coupon issuance: US Tsy to sell $16bn 20Y bonds - 912810UJ5 (1300ET)
- Bill issuance: US Tsy to sell $60bn 17-week bills (1130ET)
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US TSYS: Modestly Cheaper To Start Inauguration Day
Jan-20 11:45
- Cash Treasuries are closed today for Martin Luther King Day whilst futures markets are set for an early close at 1300ET.
- Focus is firmly on Trump’s inauguration, due to be sworn in at 1200ET and with eyes on executive orders that may follow. See our political risk team’s schedule for the day: https://media.marketnews.com/MNIPOLRISK_Inauguration_Day_Schedule_07a11994f9.pdf
- TYH5 pushed through Friday’s low overnight with 108-10 (currently 108-12+, -05) but still carries some of the impact from a dovish Waller on Thu and all of Wednesday’s CPI impact. Cumulative volumes are unsurprisingly extremely thin, at 165k.
- Gains are considered corrective against a medium-term bearish trend condition. Resistance is seen at 108-27+ (Jan 17 high) whilst support is seen at 108-00 (Jan 13 low).
- Fed Funds futures meanwhile price a cumulative 7.5bp of cuts for Mar, 13bp for May, 23bp for Jun, 26bp for Jul and 38bp for 2025 (the latter vs 32bp pre-CPI).
EURIBOR OPTIONS: Large Call Condor is bought for more
Jan-20 11:45
Large Condor in Euribor is still trading, multiple clips:
- ERM5 98.125/98.25/98.375/98.50c condor, bought for half in ~40k.
OUTLOOK: Price Signal Summary - Resistance In Gold Remains Exposed
Jan-20 11:42
- On the commodity front, the recent climb in Gold appears corrective - for now. However, the yellow metal continues to hold on to its latest gains and scope is seen for a continuation higher near-term. The stronger recovery exposes $2726.2, the Dec 12 high and an important resistance. Clearance of this level would be a bullish development. On the downside, a reversal lower would expose $2583.6, the Dec 19 low. Initial support is at $2649.0, the 50-day EMA.
- In the oil space, the trend structure in WTI futures remains bullish and the Jan 15 rally reinforces current conditions. The recent strong impulsive climb has resulted in a breach of $75.91, the Oct 8 high. Attention is on $79.48, the Apr 12 ‘24 high. A clear break of this hurdle would strengthen the bullish theme and open 80.63, a Fibonacci projection. On the downside, a reversal lower would expose the 20-day EMA, at $73.89, a key short-term support.
