US TSYS: Curves Twist Steeper Heading into Likely Gov Shutdown at Midnight
- US Govt likely to shutdown at midnight tonight - the first time since late Dec 2018 when the government shutterd for 35 consecutive days. Senate majority whip Barrasso: "SENATE TO VOTE THIS WEEKEND ON REOPENING GOVERNMENT", Bbg.
- The BLS plans to postpone key economic releases in the event of a shutdown: "BLS will suspend all operations. Economic data that are scheduled to be released during the lapse will not be released. All active data collection activities for BLS surveys will cease. The BLS website will not be updated with new content or restored in the event of a technical failure during a lapse." LINK
- That said, most of Wednesday's scheduled data should be released as most are generated by non-govt firms, Construction Spending the lone exception tomorrow as the U.S. Census Bureau the source. Updates to follow if/when an announcement of a closing is made.
- Treasuries trading mixed after the bell, curves twist steeper (2s10s +2.591 at 54.207) as Bonds led the decline in the second half, Tsy Dec'25 10Y contract (TYZ5) currently trades at 112-15.5 (-1) on decent cumulative volumes of 1.68M. 10Y yield at 4.1483% (+.0096).
- A short-term bear cycle in Treasury futures remains in play. Last Thursday’s sell-off resulted in a print below the 50-day EMA, currently at 112-10+. A clear break of this average would undermine a bull theme and signal scope for a deeper retracement. This would open 111-13+, the Aug 18 low and the next key support. On the upside, initial firm resistance to watch is 113-00, the Sep 24 high.
- Projected rate cut pricing gaining vs. late Monday levels (*): Oct'25 at -24.2bp (-22.7bp), Dec'25 at -44.2bp (-41.3bp), Jan'26 at -53.7bp (-50.7bp), Mar'26 at -64.7bp (-60.9bp).
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USDJPY TECHS: Support Remains Exposed
- RES 4: 151.62 61.8% retracement of the Jan 10 - Apr 22 bear leg
- RES 3: 150.92 High Aug 1 and a key resistance
- RES 2: 149.81 76.4% retracement of the Aug 1 - 14 bear leg
- RES 1: 148.78/149.12 High Aug 22 / 61.8% of the Aug 1 - 14 bear leg
- PRICE: 147.04 @ 20:07 BST Aug 29
- SUP 1: 146.21 Low Aug 14
- SUP 2: 145.86 Low Jul 24
- SUP 3: 145.40 50% retracement of the Apr - Aug upleg
- SUP 4: 145.19 Trendline drawn from the Apr 22 low
A bear threat in USDJPY remains present. The short-term bear trigger lies at 146.21, the Aug 14 low. Clearance of this level would resume a downtrend that started early August and pave the way for an extension towards 145.40, a Fibonacci retracement. For bulls, a resumption of gains would instead open 149.12, 61.8% of the Aug 1 - 14 bear leg. Key resistance is far off at 150.92, the Aug 1 high.
EURGBP TECHS: Bear Threat Remains Present
- RES 4: 0.8769 High Jul 28 and the bull trigger
- RES 3: 0.8744 High Aug 7
- RES 2: 0.8682 High Aug 8
- RES 1: 0.8674 High Aug 25 and a key near-term resistance
- PRICE: 0.8660 @ 19:54 BST Aug 29
- SUP 1: 0.8597 Low Aug 14 and the bear trigger
- SUP 2: 0.8562 50.0% retracement May 29 - Jul 28 upleg
- SUP 3: 0.8540 Low Jun 30
- SUP 4: 0.8514 61.8% retracement May 29 - Jul 28 upleg
EURGBP continues to trade below its most recent highs. A bear threat remains present and attention is on support at 0.8597, the Aug 14 low. Clearance of this level would confirm a resumption of the downtrend that started Jul 28 and highlight potential for a deeper retracement. This would open 0.8562, a Fibonacci retracement. For bulls, resistance to watch is 0.8674, the Aug 25 high. A breach would instead signal a stronger reversal.
GBPUSD TECHS: Bullish Outlook
- RES 4: 1.3753 High High Jul 2
- RES 3: 1.3681 High Jul 4
- RES 2: 1.3636 76.4% retracement of the Jul 1 - Aug1 downleg
- RES 1: 1.3544/3595 High Aug 22 / 14
- PRICE: 1.3507 @ 19:50 BST Aug 29
- SUP 1: 1.3391 Low Aug 22 and the bear trigger
- SUP 2: 1.3315 61.8% retracement of the Aug 1 - 14 bull leg
- SUP 3: 1.3249 76.4% retracement of the Aug 1 - 14 bull leg
- SUP 4: 1.3142 Low Aug 1 and a key support
The outlook in GBPUSD remains bullish and the pair is trading above support. The Aug 22 price pattern - a bullish engulfing candle - signals the end of a recent corrective phase. An extension higher would open the short-term bull trigger at 1.3595, the Aug 14 high. Clearance of this level would signal scope for a climb towards 1.3636, 76.4% of the bear leg between Jul 1 and Aug 1. Key short-term support is 1.3391, the Aug 22 low.
