US TSYS: Data-Driven Losses Broadly Consolidated, Fedspeak Eyed
Jan-16 11:57
Treasuries sit towards lower levels for the session but broadly consolidate yesterday’s sell-off on strong US data, 30s aside which have pushed a little lower. It’s a reminder of the bear threat deemed present for TYH6 although we’re yet to resume a test of 4.20% 10Y yields seen in the days ahead of Tuesday’s Dec CPI report. Today's calendar is lighter, with pre-blackout Fedspeak headlining, before Martin Luther King Day sees closures on Monday.
- Cash yields are 0.3-0.9bp higher, led by the long end.
- 10Y yields, whilst firming since yesterday’s stronger data, at 4.175% are still a way off troubling the 4.20% level after short-lived breaches in the days ahead of the Dec CPI report on Tuesday.
- TYH6 trades close to session lows of 112-04 (-03) on lighter cumulative volumes of 250k, matching yesterday’s brief low.
- In a reminder of the bear threat that remains present, it moves closer to 111-29 (Dec 10 low, bear trigger) although it has recently found some support around 111-31 in levels that chimed with tests of the 4.20% yield. Clearance here could open 111-19 (Fibo projection) whilst to the upside, resistance is seen at 112-22 (Jan 7 high).
- Data: NY Fed services Jan (0830ET), IP/Cap Util Dec (0915ET), NAHB Jan (1000ET)
- Fedspeak: Collins (1050ET), Bowman (1100ET), Jefferson (1530ET) – see FED/STIR bullets
- Politics: Trump in rural health roundtable (1000ET), Trump in dedication ceremony in Florida (1515ET) – TBD what time he departs for Florida
- Martin Luther King Day on Monday will see cash closed and an early close for futures.
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Historical bullets
OUTLOOK: Price Signal Summary - Key Resistance In Gold Remains Exposed
Dec-17 11:49
- On the commodity front, a bullish theme in Gold remains intact. The bear phase between Oct 20 - 28 appears to have been a correction and note that the recovery since Oct 28 signals the end of that corrective cycle. Key support to watch is the 50-day EMA, at $4087.6. Clearance of this EMA would signal scope for a deeper retracement. Attention is on key resistance and the bull trigger at $4381.5, the Oct 20 high.
- A bearish theme in WTI futures remains intact despite today's bounce - a correction. Moving average studies are in a bear-mode position, highlighting a dominant downtrend. A key support and the bear trigger at $55.99, the Oct 20 low has been breached. Clearance of this level resumes the downtrend and opens $53.53. First resistance is at $59.27, the 50- day EMA.
STIR: Fed Rate Path Back To Unchanged Since NFPs, Waller In Spotlight Today
Dec-17 11:38
- Fed Funds implied rates are 0.5-1.5bp higher for meetings out to end-2026, having now fully reversed a modest dovish reaction to yesterday’s NFP report with its multiple caveats.
- Cumulative cuts from 3.64% effective: 5bp Jan, 13.5bp Mar, 20bp Apr, 33bp Jun, 49.5bp Sep and 57bp Dec.
- SOFR futures are up to 4 ticks lower out to end-2027, with the implied terminal yield of 3.125% (Z6) 4bps higher but still within recent ranges.
- CPI looms large tomorrow but in the interim today’s docket is likely headlined by Fed Governor Waller’s appearance for his take on the payrolls report. He has seen some renewed interest in betting markets for next Fed chair although at 16% still lags Warsh (24%) and particularly Hassett (56%) – all from Polymarket. Hassett’s odds have seen little adverse impact from Politico yesterday citing three Trump officials raising doubts about Hassett for the role, with some pushback already noted elsewhere.
- 0815ET – Gov. Waller (voter) speaks on the economic outlook (no text). He has for a while now been one of the more dovish FOMC members, calling for cuts to get ahead of labor market weakness. It will be interesting to hear his views ahead of the January meeting, one that he last month described as “tricky” with a flood of incoming data and the need for a meeting-by-meeting approach.
- 0905ET – NY Fed Williams (voter) opening remarks (no text). Whilst having a notable impact after last month’s payrolls report with his unusual guidance in favor of a Dec cut, the opening remarks with no text at a FX market structure conference could limit mon pol discussions.
- 1230ET – Bostic (non-voter, retiring Feb) in moderated discussion (no text). He yesterday said he would have preferred to have held rates unchanged this month and didn’t pencil in any cuts for 2026, indicating he is one of just three participants who saw rates unchanged vs pre-December cut levels (of note from a composition basis with him shortly stepping down).
OUTLOOK: Price Signal Summary - USDJPY Trend Set-Up Remains Bullish
Dec-17 11:35
- In FX, a bull cycle in EURUSD remains intact, however, a short-term reversal signal has appeared on the daily chart. Tuesday’s candle pattern is a shooting star candle formation. If correct, this suggests scope for a pullback near-term. A correction would allow an overbought trend condition to unwind. The first important support lies at 1.1658, the 20-day EMA. Key short-term resistance has been defined at 1.1804, the Dec 16 high.
- A bull cycle in GBPUSD remains intact and for now, today’s sell-off is considered corrective. A fresh cycle high on Tuesday reinforces the bull theme. Attention is on 1.3452 (pierced), 61.8% of the Sep 17 - Nov 4 bear leg. A clear break of this hurdle would strengthen a bull theme and open 1.3527, the Oct 1 high. Initial firm support is 1.3290, the 50-day EMA. A breach of this EMA would highlight a possible reversal.
- The latest pullback in USDJPY appears corrective. The trend condition remains bullish and this is highlighted by moving average studies that are in a bull-mode position. Support to watch lies at 154.03, the 50-day EMA. A clear breach of this average would undermine the bull theme and signal scope for a deeper corrective pullback. For bulls, a resumption of gains would open 158.00.
