US TSYS: Flattening Theme Extends Ahead Of Payrolls
Feb-07 11:43
- Treasuries are broadly bear flatter. The front end is seemingly still weighed by some hawkish Fed commentary ahead of today’s payrolls report whilst the longer end continues to see some relative support from Tsy Sec Bessent’s mid-week comments around wanting 10Y yields lower helping the flattening theme and no change in Treasury Refunding guidance.
- MNI Payrolls Preview here.
- Cash yields are 0-1.5bp higher on the day, with increases led by 2s.
- 2s10s trades at 21bps (-1.3bp) for lows since Dec 23.
- TYH5 trades at 109-19 for near unchanged on the day amidst reasonable cumulative volumes for a pre-NFP overnight session of 305k (although still only about 70% of recent averages).
- The bull phase remains intact, with yesterday’s high of 109-29 coming close to resistance at 109-30 (61.8% retrace of Dec 6 – Jan 13 bear leg) after which lies 110-03+ (Dec 6 high). To the downside, support is seen at 108-02+ (Feb 4 low).
- Data: Nonfarm payrolls Jan (0830ET), U.Mich consumer survey Feb prelim (1000ET), Wholesale inventories/sales Dec F/Dec (1000ET), Consumer credit Dec (1500ET)
- Fedspeak: Bowman (0925ET), Kugler (1200ET) - see STIR bullet
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STIR: Next Fed Cut Still Seen In July, Waller Kicks Off Docket
Jan-08 11:38
- Fed Funds implied rates have lifted off overnight lows for back little changed on the day ahead of a solid docket for data and some important Fed commentary. They continue to imply a next rate cut only with the July meeting.
- Cumulative cuts from 4.33% effective: 1bp Jan, 9.5bp Mar, 15bp May, 23bp Jun, 27bp Jul and 37bp Dec.
- Gov. Waller (permanent voter) speaks on the economic outlook at an event in Paris at 0800ET (text + Q&A) before the FOMC minutes at 1400ET (preview here).
- Waller, who last year was an important mouthpiece for the Fed, last spoke on Dec 2 ahead of the Dec 17-18 FOMC decision. His support for a rate cut at that meeting drew a dovish reaction, and he also added that he expects rate cuts to continue over 2025 to neutral, with rates still “some distance” from neutral. In light of recent steepening themes, he at the time said that the long-run neutral rate is affected by fiscal policy.
US: Review Of President-Elect Donald Trump's Mar-a-Lago Press Conference
Jan-08 11:32
US President-elect Donald Trump delivered a wide-ranging press conference at his Mar-a-Lago resort in Florida on January 7, touching on various issues from energy to his foreign policy ambition of carving out a new US sphere of influence from Panama to Greenland.
- Please find below a full summary of the presser with analysis of the key comments related to foreign policy, tariffs, energy, and legislation.
Full article: Trump Press Conference Review
GILTS: Long Futures Positioning A Potential Factor In Sell Off
Jan-08 11:26
Elsewhere, a reminder that our latest positioning indicator update (published yesterday) pointed to long positioning in gilt futures. That could be adding further fuel to the sell off.
