US TSYS: Belly Outperforms Amid Legal Wrangling Over Tariffs
May-29 19:46
Treasuries reversed early weakness to finish stronger Thursday, with the belly outperforming on the curve.
- Treasuries were on the back foot early as risk assets gained following late Wednesday's court ruling that blocked implementation of most of the White House's tariffs.
- But the initial reaction faded as markets assessed whether the legal decision would have a lasting effect, and indeed, in late afternoon trade an appeals court allowed the tariffs to remain in effect at least temporarily.
- Equities faded from their highs, with Treasuries getting a boost from soft data in the form of downward revisions to Q1 consumption in GDP, and surprisingly weak jobless claims data. Month-end dynamics may have played a factor as well.
- There was a small but notable downtick in short-end rates after the White House said President Trump told Powell in a private meeting today that the Fed Chair was making a "mistake" by not cutting rates.
- The bond rally extended in the afternoon after the third strong Treasury auction of the week, with 7Y Note seeing the joint-highest trade-through since August 2022 (2.9bp), and record-low primary dealer takedown.
- Partly as a result, the curve belly outperformed on the day (7Y yields dropped 5.8bp). Latest levels: The 2-Yr yield is down 4.7bps at 3.9427%, 5-Yr is down 5.7bps at 4.0052%, 10-Yr is down 4.9bps at 4.4279%, and 30-Yr is down 5.1bps at 4.9244%.
- Sep US 10Y futures (TY) up 12.5/32 at 110-20.5 (L: 109-26 / H: 110-23.5), briefly testing key near-term resistance at 110-23, the May 16 high.
- Friday's calendar is busy data-wise: we get the April PCE report, April trade data, MNI Chicago PMI, and May's final UMichigan consumer survey.
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US TSYS: Modest Risk On - Domestic Automakers Hopeful For Tariff Relief
Apr-29 19:38
- Treasuries look to finish near near midday highs Tuesday, curves mildly steeper amid decent short end support all day (conditional steepeners via options, Block buying SOFR White packs) as Trump officials reported progress in tariff negotiations without much hard facts.
- Pres Trump to announce "more tariff relief" at a rally in Michigan this afternoon, "domestic automakers will be happy" WH Deputy Chief of Staff Miller said.
- Cautious risk-on support in rates buoyed projected rate cut pricing in the later half of the year (Sep at -61.0bp) while stocks finished near moderate session highs (SPX eminis +35.0 at 5588.0).
- The JOLTS report saw a second month with lower-than-expected job openings, and this time by a greater extent in March. However, layoffs fell to their lowest since June and quit rates surprisingly inched higher.
- US consumer confidence dropped for a 5th consecutive month in April following the November peak per the Conference Board's survey, with the Composite to 86.0 (88.0 expected, 93.9 prior upwardly revised from 92.9) - the lowest since May 2020.
- Focus turns to Wednesday's ADP private jobs data, GDP, Chicago PMI, PCE and Home Sales.
AUDUSD TECHS: Short-Term Structure Remains Bullish
Apr-29 19:30
- RES 4: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6528 High Nov 29 ‘24
- RES 2: 0.6471 High Dec 9 ‘24
- RES 1: 0.6450 Intraday high
- PRICE: 0.6388 @ 16:25 BST Apr 29
- SUP 1: 0.6344/6307 Low Apr 24 / 50-day EMA
- SUP 2: 0.6181 Low Apr 11
- SUP 3: 0.6116 Low Apr 10
- SUP 4: 0.5915 Low Apr 9 and key support
The trend condition in AUDUSD is unchanged, it remains bullish and the pair is trading at its recent highs. Price has recently breached a key resistance at 0.6409, the Dec 9 ‘24 high. This breach reinforces bullish conditions and signals scope for a continuation higher near-term. Sights are on 0.6471 next, the Dec 9 2024 high. Initial key support to monitor is 0.6307, the 50-day EMA. A clear break of this EMA would be a concern for bulls.
PIPELINE: Corporate Bond Roundup: $9B World Bank 2Pt Lion's Share $23B Supply
Apr-29 19:16
- Date $MM Issuer (Priced *, Launch #)
- 04/29 $9B *World Bank $4B 3Y +35, $5B 7Y +55
- 04/29 $5B *KFW 5Y SOFR+42
- 04/29 $2B *ADQ $1B 5Y +85, $1B 10Y +95
- 04/29 $1.75B *Swedish Export Credit 3Y SOFR+45
- 04/29 $1.5B #Las Vega Sands $1B 3Y +200, $500M 5Y +225
- 04/29 $1B *GS Private $400M 3Y +225, $600M 5Y +250
- 04/29 $900M *Tyco Electronics $450M each: +5Y +83, 10Y +97
- 04/29 $800M *Weir Group 5Y +160
- 04/29 $500M *Constellation Brands 5Y +107
- 04/29 $500M *Southwestern Public Service 10Y +115
- 04/29 $Benchmark Bahrain 12Y, 8Y Sukuk investor calls
- Expected Wednesday:
- 04/30 $Benchmark IADB 5Y SOFR+45a
- 04/30 $Benchmark CoE Dev Bank 3Y SOFR+37a
- 04/30 $Benchmark Nordic Investment Bank 5Y SOFR+44a
