US TSYS: Data-Induced Gains Held Before A Wednesday NFP Report
Feb-11 11:56
Treasuries broadly consolidate yesterday’s gains on clearly weaker than expected retail sales data in a further dovish build-up ahead of today’s unusual Wednesday release for nonfarm payrolls. The short-term bullish condition in TYH6 has been strengthened and starts to eye a next resistance at 112-25.
- Cash yields are 0.8-1.7bp lower, with declines led by 5s.
- 10Y yields at 4.129% (-1bp) are close to lows since Jan 15 vs last Thursday’s 4.2796% before a slew of soft labor updates.
- TYH6 trades at 112-18+ (+02) for close to earlier highs of 112-20, on reasonable cumulative volumes of 315k for a pre-NFP overnight session and with a Japanese holiday.
- This week’s rally has strengthened a short-term bullish condition with further resistance seen at 112-25 (61.8% retrace of Nov 25 – Jan 20 bear leg) after which could see 112-27 (today’s equivalent to the 4.10% yield).
- To the downside, support is seen at 112-00 (20-day EMA) before 111-26 (Feb 9 low).
- Data: Weekly MBA mortgage applications (0700ET), Nonfrm payrolls Jan (0830ET), Federal budget balance Jan (1400ET)
- Fedspeak: Schmid (1000ET), Bowman (1015ET), Hammack (1600ET) – see STIR bullet
- Coupon issuance: US Tsy $42B 10Y Note auction - 91282CPZ8 (1300ET). Last month’s 10Y auction stopped through by 0.6bps whilst the bid-to-cover was steady at 2.55x.
- Bill issuance: US Tsy $69B 17W bill auction (1130ET)
- Politics: Trump participates in visit with Israel PM (1100ET), Trump in Champion of Coal event (1600ET), Trump meets with special envoy to UK (1730ET)
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US TSYS: Firmly Bear Steeper Following Powell Subpoenas, 4.20% 10Y Yields Probed
Jan-12 11:54
Treasuries trade firmly steeper from Friday’s close in reaction to the DoJ serving Powell with subpoenas over the weekend, driving heavy volumes and multiple tests of 4.20% 10Y yields. Today sees front-loaded US supply (owing to settlement ahead of MLK Day next week) before NY Fed’s Williams after the close.
- Cash yields are 0-4.4bp higher from Friday’s close, led by 20s.
- 10Y yields currently sit at 4.199% (+3.4bp) after brief tests above 4.20%, after similar levels following Friday’s NFP report saw buyers step in.
- TYH6 trades at 112-02 (-05), near session lows as it probes level equivalent to the 4.20% yield (112-02+ today), with huge cumulative volumes of 790k.
- It currently remains within Friday’s range with its low of 111-31 just above a key support at 111-29 (Dec 10 low). A breach would confirm a continuation of the bear cycle and could initially open 111-19 (1.236 proj of Oct 17 – Nov 5 – 25 price swing), whilst a head and shoulders reversal pattern on the daily chart also highlights a bearish threat. A key short-term resistance is unchanged at 112-31 (Dec 18 high).
- Data: No data of note today with focus firmly on tomorrow’s CPI report for December.
- Fedspeak: Bostic moderates discussion (1230ET), Barkin in fireside chat (1245ET), Williams keynote remarks (1800ET) – see STIR bullet
- Coupon issuance: US Tsy $39B 10Y Note re-open - 91282CPJ4 (1300ET)
- Bill issuance: US Tsy $58B 3Y Note (91282CPT2) & $77B 26W bill auctions (1130ET), $86B 13W bill auction (1300ET)
- Politics: Trump meets with Secretary of State (1030ET), Trump meets with Archbishop Coakley (1330ET), Trump participates in Signing Time (1530ET), Trump meets with CEO of Tunnel to Towers Foundation (1600ET)
FOREX: GBPJPY Extends to New Cycle High, Sights on Mid-2008 Peak
Jan-12 11:54
- Sterling is a moderate outperformer to start the week, and despite the weaker equity backdrop, GBPJPY has risen to a fresh cycle high above 212.50 this morning. This extends the latest upswing for the cross, which gathered momentum on a break of 208.00 in December and now places the cross at the highest level since mid-2008.
- Moving average studies continue to highlight the sharp uptrend for the cross, with the 20-day EMA providing almost perfect support on three occasions since mid-November.
- Price action has taken spot considerably closer to a key medium-term target at 215.88, the July 2008 high. Above here, 219.45 is another meaningful target, the 76.4% retracement of the 2007-2011 range.
- Analysts continue to cite post-budget positioning adjustments as driving the recent optimism for GBP, however, as Rabo note, this may only have a little further to run near-term as they await the release of monthly UK November GDP data on Jan 15 to provide fresh direction.
- Separately Goldman Sachs say that while much of the Sterling price action throughout 2025 was driven by the ebb and flow of UK fiscal risk premium, they think the stage is set for a much more ‘conventional’ form of underperformance in 2026 driven by data, policy, and valuation.
EURIBOR OPTIONS: Call Spread buyer
Jan-12 11:54
0RM6 98.00/98.25cs, bought for 3.5 in 10k
