US TSY FUTURES: Bias Towards Short Setting Seen On Thursday
OI data points to a mix of net short setting (TU, FV, TY & WN) and long cover (UXY & US) during Thursday's sell off.
- The curve-wide bias was tilted firmly towards net short setting, with just over $4mn DV01 equivalent of fresh net shorts added curve-wide.
- Firmer crude oil prices and a less-stagflationary-than-expected ISM manufacturing reading more than reversed the pre-ISM rally.
| 01-May-25 | 30-Apr-25 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 4,177,720 | 4,135,112 | +42,608 | +1,574,520 |
FV | 6,956,466 | 6,895,202 | +61,264 | +2,644,013 |
TY | 4,921,290 | 4,910,246 | +11,044 | +708,131 |
UXY | 2,287,455 | 2,296,685 | -9,230 | -821,114 |
US | 1,781,213 | 1,781,493 | -280 | -36,097 |
WN | 1,883,133 | 1,881,515 | +1,618 | +304,002 |
|
| Total | +107,024 | +4,373,454 |
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SWEDEN: EURSEK Prints Fresh Cycle Low Below 10.76, Inflation Data Friday
- Firmer risk appetite in currency markets Wednesday has provided the Swedish Krona with its latest bout of strength, pulling EURSEK to a fresh cycle low in the process. EURSEK declines on the year now total 6.03%, at the lowest level since November 2022. The next target on the downside is at 10.6826.
- USDSEK remains shy of the March lows at 9.9488, with the key medium-term support also remaining intact at 9.9066, the Dec 2023 low.
- Swedbank/Silf Services and Composite PMIs will be released tomorrow, however, the focus will turn to Friday’s preliminary release of March inflation, where the annual reading for CPIF excl. energy is expected to tick higher to 3.2%, from 3.0% in Feb.
- Riksbank Deputy Governor Per Jansson told MNI on Tuesday that rising trade tariffs are likely to depress economic growth, but while their effects on inflation may be short-lived, monetary policymakers must be alert to any risk of price expectations becoming de-anchored.
- Speaking last week, Riksbank Breman’s noted "Inflation is expected to fall back next year. But we need to be extremely vigilant and to act if forward-looking indicators point to inflation being lastingly above the target".
CHINA: Stocks Slip as China Restrict US Investments
China are reportedly restricting companies from investing in the US - potentially giving Beijing more flexibility in future negotiations, according to Bloomberg. The headlines prompt a new daily low in the e-mini S&P at 5640.75.
- Chinese investment headed to the US was already tilting lower through the election (data shows Chinese investment into the US was just $191mln in Q4 2024) - but this would represent an acceleration of that trend. The move would also limit Chinese firms' ability to skirt sanctions pressure by re-shoring manufacturing into the US, potentially hindering one of Trump's main policy objectives with tariffs.
- Modest bid in bonds alongside the headline, but yesterday’s highs remain untested across TY, Bund & gilt futures.
US TSY OPTIONS: TYK5 113.25 Calls Sold
TYK5 113.25 calls 10K given at 0-17. Looks like new risk/hedging, with only ~8.5K OI in the contract as of yesterday.
