US TSYS: Curve Marginally Flatter In Asia, NFP In View
TYU3 deals at 110-20+, +0-01, a 0-07+ range has been observed on volume of ~69k.
- Cash tsys sit 2bps cheaper to flat across the major benchmarks, the curve has bear flattened.
- Regional flows dominated in early dealing, tsys fell as cheapening in Antipodean FI and pressure on JGBs has spilled over. Australia's 10-Year Yield printed its highest level since 2014 and New Zealand's 10-Year Yields climbed to its highest since 2011. JGBs were pressured after a stronger than forecast Labour Cash Earning print.
- The move didn't follow through and tsys pared the moderate losses through the session, ticking away from session lows alongside the USD retreating from session highs.
- Narrow ranges persisted for the remainder of the session.
- German Industrial Production headlines in Europe. Today's highlight is the June NFP print, the MNI preview is here. Fedspeak from Chicago Fed President Goolsbee will cross.
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US TSYS: Curve Marginally Flatter In Asia
TYU3 deals at 114-01, +0-08, a 0-04 range has been observed on volume of ~56k.
- Cash tsys sit 1bp cheaper to 1bp richer across the major benchmarks, the curve has twist flattened pivoting on 10s.
- Tsys were marginally pressured as spillover from ACGBs, in lieu of RBA Gov Lowe's remarks this morning as he noted further tightening may be needed due to wage gains and persistent service price pressures.
- A bid in JGBs and the Yen, which saw pressure on Japanese equities, facilitated a recovery off session lows. The move didn't follow through and tsys respected narrow ranges for the remainder of the Asian session.
- FOMC dated OIS price ~6bps of hikes into next week's meeting, a terminal rate of ~5.25% is seen in July with ~30bps of cuts priced for 2023.
- German Industrial Production and ECB-speak from de Guindos headlines the European session. Further out we have US Trade Balance and the latest monetary policy decision from the Bank of Canada.
BOBL TECHS: (U3) Maintains A Softer Tone
- RES 4: 118.130 High May 11
- RES 3: 118.000 Round number resistance
- RES 2: 117.700 High Jun 1 and key short-term resistance
- RES 1: 117.200 High Jun 6
- PRICE: 117.000 @ 05:26 BST Jun 7
- SUP 1: 116.590 Low Jun 5 / 6
- SUP 2: 116.400 Low May 30
- SUP 3: 116.302 76.4% retracement of the May 26 - Jun 1 rally
- SUP 4: 115.870 Low May 26
Bobl futures maintain a softer tone following the pullback from last week’s high of 117.700 on Jun 1. A continuation lower would expose support at 116.400, the May 30 low and if this level is cleared, potential would be seen for weakness towards key short-term support at 115.870, the May 26 low. On the upside, a break of 117.700 is required to reinstate the recent bullish theme. First resistance is yesterday’s high of 117.200.
BUND TECHS: (U3) Remains Above Tuesday’s Low
- RES 4: 136.97 High Apr 6
- RES 3: 136.50 High May 11
- RES 2: 135.85 High Jun 1 and key short-term resistance
- RES 1: 134.95 High Jun 6
- PRICE: 134.63 @ 05:21 BST Jun 7
- SUP 1: 133.82 Low Jun 6
- SUP 2: 133.45 Low May 30
- SUP 3: 133.00 76.4%retracement of the May 26 - Jun 1 rally
- SUP 4: 132.12 Low May 26 and key support
Bund futures have recovered from Tuesday’s low. The initial recovery yesterday did appear to be an early indication that the recent pullback was over and that a S/T bullish theme had returned. However, price needs to break yesterday’s 134.95 high to signal scope for a climb to key short-term resistance at 135.85, the Jun 1 high. Clearance of this level would be bullish. A breach of yesterday’s 133.82 low would instead be a bearish development.
