US TSYS: Bear Steeper With 5s30s Near Recent Highs Ahead Of PCE, Cook Hearing
Aug-29 10:50
- Treasuries are bear steeper ahead of another important docket, with data focus on the monthly PCE report for July at 0830ET before US District Judge Jia Cobb begins the Fed Gov. Cook hearing at 1000ET.
- Cash yields are 0.2-2.5bp higher, with the long end leading increases.
- Curves give back some of yesterday’s flattening and hold close to recent steeps, including 5s30s at 120.5bp (+1.8bp) vs fresh multi-year highs of 122.8bp late on Wednesday.
- TYZ5 trades at 112-16+ (-02+) having eased off yesterday’s late fresh recent high of 112-20+. Volumes are subdued at a cumulative 215k.
- That 112-20+ marks latest resistance with some attention now on 113-00, whilst support is seen at 111-29 (20-day EMA) in the event of a strong PCE report.
- Data: PCE Jul (0830ET), Advance trade Jul (0830ET), Wholesale/retail inventories Jul/Jul P (0830ET), MNI Chicago PMI Aug (0945ET), U.Mich consumer survey Aug F (1000ET), Kansas City Fed serv Aug (1100ET)
- Fedspeak: None scheduled
- Politics: No public events scheduled for President Trump but presumably high likelihood of Cook-related comments
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ECB VIEW: TDS Push Back Last ECB Cut To December From September
Jul-30 10:47
TD Securities have pushed back their call for a September ECB cut to December, while noting that “the risk is there are no further cuts at all if the hard data proves to be resilient to US trade policy”.
- They believe this morning’s GDP print “feeds into President Lagarde's narrative of domestic demand superseding trade policy uncertainty”.
- Meanwhile, they view the recent EU-US trade agreement as a “plausible best case” scenario, writing that “though the 15% base tariff rate is above ECB's base case, the sectoral carve outs and removal of uncertainty is likely to feed more positively into future growth prospects”.
- Based on their new ECB call, they “expect 10y Bunds to end the year in the 2.40-2.50% range”.
OUTLOOK: Price Signal Summary - Corrective Cycle In Oil Futures Extends
Jul-30 10:44
- On the commodity front, Gold has pulled back from its Jul 23 high. Short-term weakness is considered corrective - for now - and a bull cycle that started Jun 30 remains intact. However, the yellow metal has traded through support at $3323.0, the 50-day EMA. A clear break of this level would signal scope for a deeper retracement and expose the next key support at $3282.8, the Jul 9 low. Key near-term resistance is $3439.0, the Jul 23 high.
- In the oil space, WTI futures traded higher yesterday highlighting an extension of the current corrective cycle. $69.41, 50.0% of the Jun 23-24 downleg, has been pierced. A continuation higher would open $70.96 next, the 61.8% retracement point. On the downside, support to watch is the 50-day EMA, at $65.02. The average has been pierced, a clear break of it would expose $58.17, the May 30 low.
US 10YR FUTURE TECHS: (U5) Holding On To Its Gains
Jul-30 10:41
- RES 4: 112-15 61.8% retracement of the Apr 7 - 11 sell-off
- RES 3: 112-12+ High Jul 1 and a bull trigger
- RES 2: 111-28 High Jul 3
- RES 1: 111-14+ High Jul 22
- PRICE: 111-12 @ 11:30 BST Jul 30
- SUP 1: 110-19+/08+ Low Jul 24 / Low Jul 14 & 16
- SUP 2: 110-03 76.4% retracement of the May 22 - Jul 1 bull leg
- SUP 3: 109-28 Low Jun 6 and 11
- SUP 4: 109.25 Low May 27
Treasury futures traded higher on Tuesday. Recent gains resulted in a break of the 20-day EMA, strengthening the recovery that began mid-July. Note too that resistance at 111-13+, the Jul 10 high, has been pierced. A clear break of it would highlight a stronger reversal and open 111-28, the Jul 3 high. Key support is 110-08+, the Jul 14 and 16 low. Clearance of this level would reinstate a bearish theme. First support is at 110-19+, the Jul 24 low.
