US TSYS: Bonds Firmer, Curves Flatter, Challenger Job Cuts Released Early
Oct-02 10:57
- Day two of US Government closure. Senate rejected a House Republican funding bill for the third time yesterday, ensuring the US government will remain shut until at least Friday. OMB Director Russell Vought stated late Wednesday that RIFs (reduction in Force) will begin "in a day or two" after Congressional Budget Office estimated 750,000 federal employees to be furloughed.
- Most of today's data will be delayed/suspended due to the shutdown. MNI shutdown guide to US data releases: LINK
- The Challenger Job Cuts was out prior to it's scheduled 0700ET release: "U.S.-based employers announced 54,064 job cuts in September, a 37% drop from the 85,979 cuts announced in August", LINK
- Treasuries are trading steady (TUZ5) to modestly higher: Dec'25 10Y contract (TYZ5) currently trades at 112-29 (+2) on average cumulative volumes of 260k, 10Y yield at 4.0923% (-.0058). Curves flatter: 2s10s -1.198 at 54.743, 5s30s -.900 at 102.720.
- Treasuries bounced Wednesday and the contract is holding on to its latest gains. Attention is on support at the 50-day EMA, currently at 112-11. A clear break of this average would undermine a bull theme and signal scope for a deeper retracement. This would open 111-13+, the Aug 18 low and the next key support. On the upside, initial firm resistance to watch is unchanged, at 113-00, the Sep 24 high. A break would be bullish.
- Treasury Auctions: $105B 4W & $90B 8W bill auctions at 1130ET.
- Fedspeak: Dallas Fed President Logan (alternate voter) moderated discussion at energy & policy conference (1030ET), Chicago Fed President Goolsbee on Fox Business (1430ET).
- Politics: Nothing publicly scheduled for President Trump today, receives his Intelligence briefing at 1100ET (closed press). Expect to see social media posts from President Trump, however. Trump expected to visit Japan on Oct 27.
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US TSY FUTURES: BLOCK: Dec'25 2Y Buy
Sep-02 10:57
- +3,000 TUZ5 104-06.5, post time offer at 0635:42ET, DV01 $107,000.
- The 2Y contract trades 104-06.25 last
OUTLOOK: Price Signal Summary - GBPUSD Pierces Support
Sep-02 10:56
- In FX, despite today’s sell-off in EURUSD, the trend set-up remains bullish and weakness is considered corrective. Note that the pair has recently pierced key support around the 50-day EMA, currently at 1.1611. A clear break of the average would signal scope for a deeper retracement and potentially expose key medium-term support at 1.1392, Aug 1 low. Key resistance and the bull trigger is 1.1829, Jul 1 high. A breach would resume the primary uptrend.
- The outlook in GBPUSD remains bullish and recent gains reinforce this theme. However, today’s sell-off undermines the bull theme and attention is on key short-term support at 1.3391, the Aug 22 low. It has been pierced, a clear break of this level would signal scope for a deeper retracement and expose 1.3315, a Fibonacci retracement. For bulls, a breach of 1.3595, the Aug 14 high, is required to signal scope for a stronger rally.
- USDJPY is trading higher today but for now, remains inside its range. Resistance to watch is 148.78, the Aug 22 high. It has been pierced, a clear break of it would highlight a range breakout and a stronger bullish theme. This would also undermine the recent bear threat. A breach would open 149.12, 61.8% of Aug 1 - 14 bear leg. The bear trigger lies at 146.21, Aug 14 low. Clearance of this level would resume a downtrend that started in August.
US TSYS: Bear Steeper With ISM Mfg, Cook Case and Heavy Bill Supply Ahead
Sep-02 10:54
- Treasuries trade firmly bear steeper and are at session lows across major benchmarks with no paring of the moves as US desks filter in after Labor Day cash closures.
- Cash yields are 3.9-6.0bps higher from Friday’s close, with 2s lagging increases and 7s to 10s modestly leading them.
- Fresh ytd steeps were seen in Asia trading, 5s30s hitting 124.5bps (currently 123.1bps) as curves reflect recent European steepening but also Japan after latest political developments.
- TYZ5 has seen session lows of 112-02+, -13+ from Friday’s settle although with a slightly smaller drop from 112-11+ at yesterday’s early close.
- It moves closer to resistance at 111-31 (20-day EMA) after which lies 111-18+ (50-day EMA), with a pullback deemed corrective. Resistance meanwhile is seen at 112-20+ (Aug 28/29 high).
- Steepening impetus can also depend on any headlines potentially today from the Fed Gov. Cook court case. US District Judge Jia Cobb on Friday asked Cook’s lawyers to file a brief today spelling out their arguments for why Trump’s firing of Cook was unlawful. This is a case that seems likely to ultimately end up in the Supreme Court.
- We also get the ISM manufacturing report for August, after most regional Fed surveys saw improvements in new orders, and heavily than usual bill issuance in the holiday-shortened week.
- Data: S&P Global mfg PMI Aug final (0945ET), ISM mfg Aug (1000ET), Construction spending Jul (1000ET)
- Bill issuance: US Tsy $82B 13W & $73B 26W bill auctions (1130ET), US Tsy $85B 6W bills & $50B 52W bill auctions (1300ET)
- Politics: Trump makes an announcement – topic unknown (1400ET)
