COMMODITIES: Crude Unwinds Earlier Gains, Precious Metals Extend Rally

Analysts who expect the next nominal coupon upsizing in May:

CIBC: “Because we expect to see auction sizing increases in May of 2027, communication sequencing suggests the Treasury effectively has to alter its language at this refunding. Owing to the ‘regular and predictable’ mandate, we expect sizing increases to be fairly modest out the gate. However, month-to-month jumps will need to ramp up significantly to accommodate financing needs in FY28.”

• Duration Strategy: “the jump in maturities in FY28, alongside the potential for Fed runoff to resume means that issuance expectations are simply not high enough for the next fiscal year. As such, we look for a much more aggressive pace of auction size increases than expected toward the tail end of FY28, especially at the very frontend of the curve. And that increase in the amount of duration coming to market will likely put some pressure on yields around the middle of next year.”
• Issuance guidance: “The language that “Treasury does not anticipate needing to increase nominal coupon or FRN auction sizes for at least the next several quarters” is very likely to be dropped.”
• Fiscal Outlook: “We continue to look for a total of ~$1.9tn in FY26, while our FY27 forecast has risen slightly $2.12tn, which is on the upper-end of the latest range of estimates.”
• Next nominal coupon auction size change: May 2027

Citi: “August Treasury refunding should be a non-event”.

• Duration Strategy: “our view … Treasury should keep a soft cap on T-bill share ~25% over time..possible that Treasury could first switch the cycle of the 7y auction, could be as soon as this year, in preparation to grow the 7y auction sizes next year”
• Guidance: Unchanged
• Next nominal coupon auction size change: May 2027

Goldman Sachs: “Potential items of note would be any adjustments Treasury makes to its guidance about auction sizes, any focus on risks surrounding T-bill supply absorption, and any additional discussion of the interaction between Fed balance sheet policy and issuance decisions.”

• Duration Strategy: “eventual auction size increases limited to 2-to-7y maturities”
• Issuance guidance: Possible. “our expectations for a second consecutive quarter of upward revisions to the borrowing estimates could argue for shifting language to begin laying the groundwork for auction size adjustments. The recent selloff-while not, in our view, related to supply pressures -may be seen as an argument to stick to the status quo in order to avoid further market volatility. At a minimum, we suspect any shift in language would likely be paired with some indication of approach (i.e. where on the curve) in the context of Treasury's existing acknowledgment regarding structural trends in demand.”
• Fiscal Outlook: “Our estimates reflect a FY26 deficit of $2.1tn, which is up from our baseline of $1.95tn ahead of last refunding, primarily driven by the previously noted mix of corporate tax receipts and tariff refund timing. Deficit projections of $2.1tn/$2.1tn/$2.2tn for FY26/27/28”
• Next nominal coupon auction size change: May 2027

TD: “We expect Treasury to maintain its forward guidance about coupon auction sizes remaining steady, relying on added bill issuance to fund deficits in the near-term. This could help bull flatten the curve modestly as Treasury delays the timing of the next auction size increase… Despite their post-FOMC selloff, longer-dated Treasuries could see a modest flattening if Treasury keeps its forward guidance unchanged.”

• Duration Strategy: Coupon increases “will largely be limited to the 2-10y sector, with Treasury cautious about increasing long-end issuance amid higher term premium.”
• Issuance guidance: Unchanged. “We look for Treasury to alter its forward guidance at the November meeting and look for it to begin increasing auction sizes in May 2027.”
• Next nominal coupon auction size change: May 2027

• RES 4: 161.98 20-day EMA
• RES 3: 161.32 50-day EMA
• RES 2: 159.61 50.0% retracement of the Jul 23 - Aug 3 bear leg
• RES 1: 158.58 38.2% retracement of the Jul 23 - Aug 3 bear leg 
• PRICE: 157.52 @ 17:09 BST Aug 4
• SUP 1: 155.23 Low Aug 3
• SUP 2: 155.04 Low May 6 and a key support
• SUP 3: 154.00 Low Feb 23 
• SUP 4: 152.10 Low Jan 27 and a key M/T support 

USDJPY has recovered from its most recent low, however, a bear threat remains present. The pair has breached the 20- and 50-day EMAs suggesting potential for a deeper retracement of the May 6 - Jul 23 bull cycle. 158.04, the base of a bull channel drawn from the Feb 12 low, has also been cleared, strengthening a bear threat. A resumption of weakness would open 155.04, the May 6 low. 161.16, the 50-day EMA is the first key resistance.

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