US TSYS: Bull Steeper Post BoJ Ahead Of Further Key Data Releases
Jul-28 10:50
- Cash Tsys have seen a bull steepening ahead of the US session getting underway, paring some of yesterday’s data-induced losses. The long-end underperforms with relative cheapening pressure from the BoC tweaking its YCC to allow for a drifting higher in 10Y yields with a cap now at 1%, after heightened volatility following the decision which saw 10Y Tsy yields almost touch 4.04%.
- Fed Chair Powell on Wednesday put particular emphasis on data dependency, hence the strong reactions to yesterday’s GDP, initial claims and less so durable goods beats, and further important releases headline today’s docket. We particularly watch core PCE for June and revisions after yesterday’s softer than expected Q2 advance, plus the ever-important ECI for Q2 for more compositionally robust measures of wage growth.
- 2YY -6.0bp at 4.868%, 5YY -5.4bp at 4.184%, 10YY -3.2bp at 3.967%, 30YY -1.0bp at 4.029%
- TYU3 trades 10+ ticks higher at 111-11 and off lows of 110-25+, after extremely elevated volumes of 600k following the BoJ decision and some European regional inflation prints. The low cleared multiple support points including 110-28 (76.4% retrace of the Jul 7-18 rally) to open a bear trigger at 110-05 (Jul 6 low).
- Data: ECI Q2 (0830ET), Incomes/spending/core PCE Jun (0830ET), U.Mich Jul final (1000ET), KC Fed services Jul (1100ET).
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
OUTLOOK: Price Signal Summary - Bull Cycle In Gilts Likely A Correction
Jun-28 10:44
- In the FI space, Bund futures have this week breached resistance at 134.77, the Jun 12 high. The latest gains have eased recent bearish pressure and the breach of 134.77 signals scope for a stronger recovery towards 135.85, the Jun 1 high. Initial support lies at the 20-day EMA, at 133.79. A break of the EMA would be a bearish development. Key support and the bear trigger lies at 132.12, the May 26 low.
- A strong bounce in Gilt futures Friday, resulted in a clear break of resistance at the 20-day EMA. The contract has since pulled back. Short-term gains are considered corrective and a continuation higher would expose key resistance at 97.64, the Jun 1 high. The medium-term trend condition is bearish - a stronger reversal lower and a break of 93.88, the Jun 20 low, would confirm a resumption of the downtrend.
US 10YR FUTURE TECHS: (U3) Trend Needle Points South
Jun-28 10:32
- RES 4: 115-00 High Jun 1 and a key resistance
- RES 3: 114-06+/07 High Jun 6 / 50-day EMA
- RES 2: 114-00 High Jun 13
- RES 1: 113.18 High Jun 15
- PRICE: 112-31 @ 11:18 BST Jun 28
- SUP 1: 112-12+ Low Jun 14 and the bear trigger
- SUP 2: 112-00 Low Mar 10
- SUP 3: 111-14+ Low Mar 9
- SUP 4: 110-27+ Low Mar 2 and key support
Treasury futures edged lower Tuesday, showing that bears still hold sway at current levels. Nonetheless, the pullback held inside the recent range and the contract remains in consolidation mode. The trend outlook is bearish. Recently, support at 112-29+, the May 26 / 30 low was cleared. This exposes 112-00, Mar 10 low and 110-27+ further out, Mar 2 low and a key support. Initial firm resistance is at 114-00, the Jun 13 high.
OPTIONS: Expiries for Jun28 NY cut 1000ET (Source DTCC)
Jun-28 10:26
- EUR/USD: $1.0800-15(E916mln), $1.0845-50(E1.3bln), $1.0900-10(E3.0bln), $1.0970-75(E999mln), $1.0999-00(E1.4bln)
- USD/JPY: Y139.00($1.1bln)
- GBP/USD: $1.2650-65(Gbp1.2bln)
- AUD/USD: $0.6550(A$1bln), $0.6650(A$790mln)
- USD/CNY: Cny7.1500($1.4bln), Cny7.2000($512mln), Cny7.2100($544mln), Cny7.2200($553mln)
