US TSYS: Consolidation Of Bounce From Yesterday’s Long End Lows

• Treasuries are firmly twist flatter, with the majority of moves coming at the open after President Trump said he had no intention of firing Fed Chair Powell.
• It helps build on the broader improvement in risk seen with a softened stance around China trade.
• Long-end gains have extended over the past hour as US desks filter in, with Treasuries continuing their recent relationship of firming amidst risk-on as deleveraging pressures dissipate.
• Cash yields are 2.5bp higher (2s) to 11bp lower (30s).
• 2s10s at 50bp (-8.5bp) for lows since Apr 17 vs a high of over 66bp on Monday.
• 5s30s at 80.6bp (-8.2bp) for lows since Apr 16 vs a high of 97bp on Monday.
• TYM5 has recently touched session highs of 111-04 (+10+) on decent cumulative volumes of 415k.
• It has cleared resistance at 111-00+ (20-day EMA) after which lies 111-17+ (Apr 16 high). Gains are still deemed corrective from a technical angle, with a firmer resistance level at 111-25 (50% retrace of Apr 7-11 bear leg) watched.
• Data: MBA mortgages (0700ET), S&P Global US mfg & serv PMI Apr flash (0945ET), New home sales Mar (1000ET)
• Fedspeak: Goolsbee (0900ET), Musalem (0930ET), Waller (0935ET), Musalem (1435ET), Hammack (1830ET) – see STIR bullet
• Coupon issuance: US Tsy $30B 2Y FRN (1130ET), $70B 5Y Note auction - 91282CMZ1 (1300ET)
• Bill issuance: US Tsy $60B 17W bill auctions (1130ET)

• On the commodity front, the trend needle in Gold continues to point north and this week’s fresh cycle high reinforces bullish conditions. The latest move down is allowing an overbought trend condition to unwind. Moving average studies are unchanged, they remain in a bull-mode position highlighting a dominant uptrend. The next objective is $3547.9, the 1.764 projection of the Feb 28 - Apr 3 - Apr 7 price swing. Initial firm support to watch lies at 3184.2, the 20-day EMA.
• In the oil space, a bearish theme in WTI futures remains intact and the recovery since Apr 9 is - for now - considered corrective. The move higher is allowing an oversold trend condition to unwind. Recent weakness has resulted in the breach of a number of important support levels, reinforcing a bearish threat. A resumption of the bear cycle would open $53.72, a Fibonacci projection. Resistance is seen at $64.49 (pierced), the Mar 5 low. The 50- day EMA is at $66.12. A clear breach of the 50-day average is required to undermine the bearish theme.

SX7E (19th Sep) 160/137.5ps 1x2, bought for 0.95 in 12k (12k x 24k).