BONDS: EGBs-GILTS CASH CLOSE: Gilts Regain Some Ground Amid EGB Weakness
Nov-20 19:32
European yields traded mixed Thursday, with Gilts outperforming Bunds for the first time in 3 sessions.
- EGBs and Gilts were on the back foot in early trade as risk appetite picked up alongside equities (thanks largely to Nvidia's solid earnings report overnight). 10Y Bund yields touched fresh multi-year highs in a broader steepening move.
- The session's worst levels were seen immediately after the release of the postponed US employment report for September, which showed stronger job gains than anticipated.
- However yields would descend from then on, in part because of a higher-than-expected US unemployment rate in the report, as well as a pullback in equities that extended through the European bond cash close.
- The German curve bear steepened modestly on the day, with the UK's bull flattening. Periphery spreads failed to solidify early narrowing and closed modestly wider.
- Friday's schedule is highlighted by flash November PMIs. The docket also includes a public sector finances update from the UK alongside retail sales data and an appearance by BOE's Pill; in the Eurozone we get French confidence and Q3 negotiated wages data, with multiple ECB speakers including Lagarde making appearances.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 0.1bps at 2.019%, 5-Yr is up 0.1bps at 2.295%, 10-Yr is up 0.5bps at 2.716%, and 30-Yr is up 1.7bps at 3.349%.
- UK: The 2-Yr yield is down 1.3bps at 3.793%, 5-Yr is down 1.1bps at 3.99%, 10-Yr is down 1.6bps at 4.586%, and 30-Yr is down 2.5bps at 5.423%.
- Italian BTP spread up 1.5bps at 75.7bps / French OAT up 0.7bps at 75.7bps
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US TSYS: Tsys Hold Near Highs, New Record High for DJIA, Gold Record Decline
Oct-21 19:31
- Treasuries holding narrow, higher range since gaining early Tuesday - apparently sensitive to a couple social media posts by Pres Trump while stocks dipped too after he posted retribution on Hamas if they continue "to act badly, in violation of their agreement with us."
- Second half risk-off coincided with Pres Trump expecting "$20T in US until year end", while Trump anticipates having "a good deal with Xi" the meeting in S Korea at end of the month may NOT happen.
- Currently, the Dec'25 10Y contract trades +5.5 at 113-24.5 vs 113-27.5 high. Moving average studies are in a bull-mode position and this set-up continues to highlight a dominant uptrend. Sights are on 114-10, the Apr 7 high (cont) and the next key resistance. Firm support lies at 113-01+, the 20-day EMA.
- Projected rate cut pricing steady to mildly mixed vs. late Monday levels (*): Oct'25 at -24.2bp (-24.7bp), Dec'25 at -49.2bp (-50bp), Jan'26 at -64.2bp (-63.7bp), Mar'26 at -78.2bp (-77bp).
- Stocks remain mixed late Tuesday, the DJIA outperforming after managing to mark a new record high of 47,125.66 in the first half. Reporting earnings after the close: Netflix, Capital One Financial, Mattel, Western Alliance Bancorp (in the hot seat last week after announcing bad loan losses), Omnicom, EQY and Texas Instruments.
- Precious metals sold off sharply on Tuesday, with spot gold currently down by 5.6% at $4,113/oz and silver down by 7.7% at $48.4/oz, albeit off session lows. Platinum and palladium have also fallen by 5-6%.
AUDUSD TECHS: Candle Pattern Highlights A Potential Reversal
Oct-21 19:30
- RES 4: 0.6726 1.236 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 3: 0.6660/6707 High Sep 18 / 17 and a bull trigger
- RES 2: 0.6629 High Sep 30 & Oct 01 and key short-term resistance
- RES 1: 0.6548 50-day EMA
- PRICE: 0.6486 @ 15:45 BST Oct 21
- SUP 1: 0.6440 Low Oct 14
- SUP 2: 0.6415 Low Aug 21 / 22 and a bear trigger
- SUP 3: 0.6373 Low Jun 23
- SUP 4: 0.6357 Low May 12
AUDUSD is in consolidation mode. Price action on Oct 14 continues to highlight a possible reversal pattern - a hammer candle. It signals the end of the bear cycle that started Sep 17. Note that MA studies have remained in a bull-mode position during the latest bear leg, highlighting a dominant M/T uptrend. Initial resistance is 0.6548, the 50-day EMA. A breach of 0.6440, the Oct 14 low, would cancel the reversal signal and reinstate a bear threat.
US TSYS: Late SOFR/Treasury Option Roundup
Oct-21 19:07
SOFR/Treasury options trade mixed on modest volumes Tuesday as the US Gov enters shutdown day 20. Underlying futures modestly higher (TYZ5 113-23.5 +4.5) while US$ firmer. Projected rate cut pricing steady to mildly mixed vs. late Monday levels (*): Oct'25 at -24.2bp (-24.7bp), Dec'25 at -49.2bp (-50bp), Jan'26 at -64.2bp (-63.7bp), Mar'26 at -78.2bp (-77bp).
- SOFR Options:
- -5,000 SFRZ5 96.25/96.37/96.50/96.62 call condors, 7.25 vs. 96.37/0.10%
- -3,000 SFRH6 96.50 straddles, 31.75 vs. 96.65/0.32%
- -2,000 SFRZ5 96.25/96.50/96.75 call flys. 9.5 ref 96.38
- +5,000 3QM6 96.00/97.50 put over risk reversals, 1.5
- -2,500 2QM6 96.37/97.37 call over risk reversals, 0.5 vs. 96.875/0.45%
- +1,000 2QH6 96.93 straddles, 44.0 vs. 96.875/0.04%
- +5,000 SFRX5 96.12/96.25 2x1 put spds 0.5 ref 96.375
- 13,000 SFRX5 96.75/96.87 call spds, cab
- -3,000 SFRZ5 96.50/96.62 call spds, 1.25
- Treasury Options:
- Block: 6,750 USZ5/USF6 123 call spds, 25 vs. 473 TYZ5 at 119-11
- 8,000 USZ5/USF6 111 put spds, 8
- Block, 11,640 USZ5 110/USF6 111 put diagonal/calendar spread, 10 net
- 3,525 TYZ5 114/114.5 call spds vs. 113/113.5 put spds ref 113-24
- 5,000 TYZ5 114/116 call spds call spds 28 ref 113-26
- 2,000 TYZ5 113/114 put spds, 29 ref 113-24.5
- 2,000 TYZ5 114/115.5 2x3 call spds ref 113-26
- 3,000 TYZ5 114 calls, 39 ref 113-25
- 1,500 TYX5 112.75/113.5/114.5 broken call flys
- 2,500 TYG6 111/116 3x1 put over risk reverals (putx3)
- 3,000 TYF6 116/117.5 call spds vs. 2,000 TYF6 114.5 calls ref 113-16.5
- -1,500 TYZ5 113.5 calls, 43 vs. 113-16.5/0.52%
- 1,800 TYF 111.5/115.5 strangles ref 113-16.5
- +4,300 TYZ5 115.5 calls, 14 vs. 113-29/0.15%
- +2,000 TYX5 114/114.25/114.5 call flys, 2 vs. 113-24/0.08%
- 2,000 TYX5 113.25/113.75 1x2 call spds, 6 ref 113-20.5
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