US TSYS: Digesting Mixed Messaging From July FOMC Minutes
Aug-20 19:54
- Treasuries look to finish modestly higher Wednesday, off midday highs after slightly mixed messaging from the July FOMC minutes regarding the inflation outlook, labor market, and ultimately policy.
- Tsy Sep'25 10Y contract trades +4 at 111-28.5 after the bell vs. 112-00.5 high, Initial technical support well below at 111-11 (50-day EMA); resistance above at 112-15.5 (High Aug 5 and the bull trigger). Curves mixed: 2s10s -1.699 at 53.911, 5s30s +.196 at 108.438.
- A majority of participants judged the upside risk to inflation as the greater of these two risks, while several participants viewed the two risks as roughly balanced. "Almost all participants viewed it as appropriate to maintain the target range for the federal funds rate at 4.25% to 4.5%".
- Limited data: MBA composite mortgage applications edged -1.4% (sa) lower last week to hold onto most of its refi-driven 11% increase the week prior. Indeed, new purchase applications increased 0.1% after 1.4% whilst refis dipped -3.1% after 23.0%.
- DJIA index staged a late session rebound while Nasdaq traded weaker - weighed by chip stocks amid reports the Trump admin "may seek equity in any such firms awarded federal grants under the Biden-era CHIPS Act."
- The Greenback see-sawed lower (BBDXY -.35 at 1206.64) adopting a more neutral position headed into Friday's Jackson Hole appearance from Chair Powell.
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OPTIONS: US Options Roundup - July 21 2025
Jul-21 19:35
Monday's US rates/bond options flow included:
- FVQ5 108 puts sold at 2.5 in 2.5k
- FVU5 108.25 Puts vs 108-13 45% Seller 26.5s 2500x
- TYQ5 111.5/113.5/115.5 call fly sold at 6 in 1K
- TYU5 112.00 calls vs. 111-08 paper paid 0-28 in 20K
- TYU5 112.50 calls vs 111-03, 20%. paper paid 0-17 on 30K
- TYU5 110/112 strangle, paper paid 0-45 on ~18.6K
- TYU5 111/110 Put 1x2 paid 3s in 1.5k
- TUU5 103.25 Puts paid 3 in 2.5k
- TYU5 110/112 Strangle paid 45 in 19K
- SFRU5 95.9375/ 96.00/ 96.0625/ 96.125 call condor bought for 0.75 in 4K
EQUITIES: Fading Gains After Holding Projection Resistance
Jul-21 19:30
Equities are holding on to earlier gains but have faded (S&P 500 about 0.2% from the session highs) headed in to the close.
- There's no evident catalyst to the move which looks more like profit-taking. Resistance in e-mini futures identified by our tech analyst (6381.50 1.764 proj of the Apr 7 - 10 - 21 price swing) held (6374.00 session high).
- Leading gains on the S&P have been communication services (+1.9%) on strong performances by Verizon (+4.5%) on a pre-market earnings beat, and Alphabet (+2.7% reports earnings on Wednesday) among others.
- Other notable sector movers include materials (+0.9%) and consumer discretionary (+0.7%), with health care (-0.4%) and energy (-0.8%) names fading.
- No notable earnings reports after market Monday, picking up Tuesday morning pre-market with Coca-Cola and Rtx Corp.
AUDUSD TECHS: Finds Support Below The 50-Day EMA
Jul-21 19:30
- RES 4: 0.6700 76.4% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6688 High Nov 7 ‘24
- RES 2: 0.6603 High Nov 11 ‘24
- RES 1: 0.6595 High Jul 11 and the bull trigger
- PRICE: 0.6531 @ 17:11 BST Jul 21
- SUP 1: 0.6455 Low Jul 17
- SUP 2: 0.6435 23.6% retracement of the Sep 9 - Jul 11 bull leg
- SUP 3: 0.6373 Low Jun 23 and a bear trigger
- SUP 4: 0.6357 Low May 12
The trend set-up in AUDUSD remains bullish. Support at the 50-day EMA, at 0.6490, has been breached, however, the pair has found support just below the average. A clear break of this EMA would highlight a stronger reversal and signal scope for an extension initially towards 0.6435, a Fibonacci retracement. Key short-term resistance has been defined at 0.6595, clearance of this hurdle would resume the uptrend.
