BONDS: EGBs-GILTS CASH CLOSE: Long-End Weakness Cements Bear Steepening Move

• RES 4: 112-15   61.8% retracement of the Apr 7 - 11 sell-off
• RES 3: 112-12+ High Jul 1 and a bull trigger
• RES 2: 111-13+/111-28 High Jul 10 / High Jul 3 
• RES 1: 111-01   20-day EMA  
• PRICE:‌‌ 110-14+ @ 17:18 BST Jul 16
• SUP 1: 110-08+ Low Jul 14 & 16        
• SUP 2: 110-03   76.4% retracement of the May 22 - Jul 1 bull leg
• SUP 3: 109-28   Low Jun 6 and 11
• SUP 4: 109.25   Low May 27

Treasury futures traded lower yesterday, but held just above lows through the Wednesday session. The contract has breached an important support at 110-17, 61.8% of the May 22 - Jul 1 bull leg. Note that price has also traded through a trendline support at 110-23+. The line is drawn from the May 22 low. This strengthens a bearish theme and a continuation would open 110-03, the 76.4% retracement. Resistance to watch is 111-13+, Jul 10 high. Initial resistance is at 111-01, the 20-day EMA.    

• Near-term rates are back close to where they were before the initial CBS headlines, judging by Fed Funds futures, although haven’t fully reversed the move.
• That includes a cumulative 15.5bp of cuts for the Sept FOMC (vs 14.5bp pre-headlines, 13.5bp pre-PPI and 16bp pre yesterday’s CPI) or 46bp for the Dec FOMC.
• Further out the curve, SOFR futures initially fully reversed the move but have since lifted again, not fully accepting the apparent reversal from Trump re Bloomberg headlines that it’s highly unlikely Powell will be fired.
• Of course, Powell’s term as Fed Chair is due to expire May 2026 and Trump is very explicitly quoted as saying he is “ONLY INTERESTED IN 'LOW INTEREST PEOPLE' FOR FED CHAIR" – bbg - not that should be surprising by his continued calls for significantly lower rates including at 1%.
• SFRZ6 sits +0.07 on the day at 96.780, 2 ticks higher than pre-CBS headlines vs post headline highs of 96.815.

President Donald Trump has addressed recent reporting that he could fire Fed Chair Jerome Powell, ahead of a bilateral meeting with the Crown Prince of Bahrain. LIVESTREAM

• Asked if he could fire Powell, Trump says: "He's always been too late... he should have cut interest rates a long time ago... The only time he cut them was to [benefit Democrats]... I think he does a terrible job..."
• Trump continues: "He's a terrible Fed Chair... We're not planning on [firing Powell], but we're very concerned."
• Trump says, noting the justification the White House is investigating for Powell's dismissal: "He's doing a little renovation [at the Fed's DC headquarters] for $2.5 billion. Building a renovation and they have a close to $900 million overrun, but the biggest overrun is the cost overrun for interest rates... We should be paying three points lower and would save a trillion dollars a year in interest..."
• Reiterates: "He's doing a lousy job, but we're not talking about [firing him]. Fortunately, we get to make a change in the next eight months."
• After downplaying reporting, Trump declined to "rule out" firing Powell but said it's highly unlikley, "unless there's fraud involved" with the Fed renovation - appearing to keep the option on the table.
• The implied probability of firing Powell in 2025 dropped from 40% to 20%, per Polymarket. However, it should be noted that Trump often misdirects the press before a major decision to maintain strategic ambiguity. For example, ahead of airstrikes on Iran.