US TSYS: Curve Bear Steepens With Fed Chair Powell's Future In Focus
Apr-17 19:06
The Treasury curve bear steepened Thursday.
- In a holiday-shortened session for cash Treasuries, significant attention throughout was on President Trump's criticism of Fed Chair Powell, setting the tone in an early Truth Social post in which he said "Powell's termination cannot come fast enough".
- This saw a brief steepening of the curve, though the market reaction to multiple headlines on this theme later in the session (Trump telling reporters "If I want [Powell] out, he'll be out of there real fast, believe me") had limited impact.
- Recessionary Philly Fed manufacturing data garnered some attention, as did Trump declaring optimism over trade deals, but the biggest market catalyst of the day was the ECB rate cut decision and communications which put emphasis on growth concerns, triggering a rally in European rates.
- In contrast to the bull steepening seen in Europe, however, Treasury yields would close well off their lows, with bear steepening amid notable weakness at the long end.
- The long-end weakness in turn looked led by higher breakevens (and potentially term premia), possibly linked to concerns over Fed independence.
- Cash closing levels: The 2-Yr yield is up 2.9bps at 3.7982%, 5-Yr is up 3.5bps at 3.9381%, 10-Yr is up 4.8bps at 4.3249%, and 30-Yr is up 5.9bps at 4.798%. In futures: Jun 10-Yr (TY) down 11/32 at 111-02.5 (L: 111-1.5 / H: 111-16)
- Reminder that Treasury markets are closed for holiday Friday. Next week's calendar includes the Fed's Beige Book and flash PMIs.
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COMMODITIES: Crude Reverses Gains, Gold Hits Fresh All-Time High
Mar-18 19:04
- Crude has reversed earlier gains as greater optimism towards a ceasefire in Ukraine offset concerns for wider escalation in the Middle East.
- WTI Apr 25 is down by 1.0% at $66.9/bbl.
- The White House and Kremlin have released readouts of the recently concluded call between President Putin and President Trump, with both noting that Moscow agreed to the implementation of a 30-day energy and infrastructure ceasefire.
- A bearish condition in WTI futures remains intact, with initial support at $65.22, the Mar 5 low, followed by $63.61, the Oct 10 ‘24 low.
- Meanwhile, spot gold has risen to a fresh all-time high today, with the yellow metal currently up by 1.2% at $3,036/oz.
- The move comes amid increased geopolitical tensions in the middle east as Israel launched airstrikes in Gaza today after Hamas failed to release the remaining hostages.
- A clear uptrend in gold remains intact, and this week’s resumption of the bull cycle reinforces current conditions. Sights are on $3,056.84 next, a Fibonacci projection.
- Copper has also extended gains, with price piercing the $500 level for the first time since May last year. Copper futures are currently up by 1.0% at $501/lb.
- A bull cycle in copper futures remains in play, with next resistance at $503.59, a Fibonacci projection, followed by $514.40, the 2.00 projection of the Jan 2 - 17 - Feb 3 price swing.
EURGBP TECHS: Bullish Outlook
Mar-18 19:00
- RES 4: 0.8530 76.4% retracement of the Aug 8 - Dec 19 ‘24 bear leg
- RES 3: 0.8494 High Aug 26 ‘24
- RES 2: 0.8474 High Jan 20 and a key resistance
- RES 1: 0.8450 High Mar 11
- PRICE: 0.8413 @ 16:31 GMT Mar 18
- SUP 1: 0.8369/8345 Low Mar 14 / 50-day EMA
- SUP 2: 0.8299/41 Low Mar 5 / 3 and a near-term bear trigger
- SUP 3: 0.8223 Low Dec 19 and a key support
- SUP 4: 0.8203 Low Mar 7 ‘22 and a lowest point of a multi-year range
A bull cycle in EURGBP remains in play. Friday’s bullish engulfing candle - a reversal pattern - signals a resumption of the trend and the end of the recent corrective pullback. Initial firm support to watch lies at 0.8345, the 50-day EMA. For bulls, a continuation higher and a break of 0.8450, the Mar 11 high, would open 0.8474, the Jan 20 high and the next key resistance. Clearance of this level would strengthen bullish conditions.
LOOK AHEAD: Wednesday Data Calendar: FOMC Main Focus, TIC Flows
Mar-18 18:44
- US Data/Speaker Calendar (prior, estimate)
- 19-Mar 0700 MBA Mortgage Applications (11.2%, --)
- 19-Mar 1130 US Tsy $60B 17W bill auction
- 19-Mar 1400 FOMC Rate Decision
- 19-Mar 1600 Net Long-term TIC Flows ($72B, --)
- 19-Mar 1600 Total Net TIC Flows ($87.1B, --)
