GOLD TECHS: Breaches Key Short-Term Support

Secured rates saw a large jump Tuesday versus last week's unusually soft levels, with SOFR up 5bp (vs Friday, after Monday's holiday) to 4.31%. That brings SOFR back to levels last seen on May 15. Elsewhere, GCF Treasury Repo printed 4.38%, up 8bp and the highest since May 2.

• As we noted Tuesday, downward pressures on secured rates last week exerted in part by temporary GSE cash in the system was due to dissipate this week, and upside pressures are likely to persist toward week-end exacerbated by Friday's month-end dynamics.
• Other factors to watch include Friday's $46B in net new cash raised via coupon auction settlements (upward rate pressure), while Thursday's rates could be temporarily subdued in the meantime by $29B in net bill paydown (downward rate pressure).
• Effective Fed funds was as usual unchanged Tuesday (4.33%).

REPO REFERENCE RATES (rate, change from prev. day, volume):
* Secured Overnight Financing Rate (SOFR): 4.31%, 0.05%, $2655B
* Broad General Collateral Rate (BGCR): 4.30%, 0.04%, $1061B
* Tri-Party General Collateral Rate (TGCR): 4.30%, 0.04%, $1025B

New York Fed EFFR for prior session (rate, chg from prev day):
* Daily Effective Fed Funds Rate: 4.33%, no change, volume:  $115B
* Daily Overnight Bank Funding Rate: 4.33%, no change, volume:  $293B

Gilts following wider bond/cross-market cues, with a recovery from lows seemingly aided by a bid in semi-core & peripheral EGBs before an uptick to fresh session highs in crude oil provided some counter. 

• Futures closed the opening gap lower (91.36), topping out at 91.37, before a fade back to ~91.15.
• The technical backdrop in the contract remains bearish.
• Extension through today’s low (90.98) would expose the May 23 low (90.46).
• Initial resistance located at the May 20 high (91.87).
• Bear flattening theme intact, yields 1.5-3.5bp higher.
• 2s10s ~64.4bp last, little changed on the day, unable to re-challenge cycle closing highs at 64.4bp in recent weeks.
• 5s30s ~1.5bp flatter on the day at 126.8bp, also unable to break closing cycle highs at 138.6bp in recent weeks.
• While fundamentals and the UK fiscal picture point to continued curve steepening, the DMO’s more activist approach to issuance (ongoing skew further forwards in terms of the maturity profile, as it looks to facilitate demand changes) presents ongoing risks to this idea.

US Cash opening calls, set for a steady Open.

• SPX: 5,925.7 (+0.1%); DJIA: 42,318 (-0.1%/-25pts); NDX: 21,445.2 (+0.1%).