FOREX: Greenback Receives Boost from Above-Estimate ISM/JOLTS Data
Jan-07 18:06
- The US dollar pared initial losses on Tuesday, as both US ISM Services data and Jolts Job opening beat consensus expectations. The USD Index is up 0.15% on the session, although notably the DXY still sits just below the levels before the release of the WaPo tariff article during Monday trade.
- EURUSD has echoed this sentiment with the early push back above 1.04 being met with solid resistance around Monday’s highs ~1.0435. Spot trades closer to 1.0370 as we approach the APAC crossover and will look to the old November low at 1.0335 as initial support.
- Despite being unchanged on the session, USDJPY has traded with significant volatility with multiple two-way intra-day swings. Overnight, the pair traded multi month highs of 158.42, before encountering comments from the Japanese Finance Minister around excessive FX moves which halted the yen’s decline and saw USDJPY print a session low of 157.38.
- The US data then took us back to exactly the match the highs, before the pessimistic price action in equities led the pair lower once more to current levels around 157.70.
- In similar vein, both AUD and NZD spent the European session outperforming before risk off sentiment drove both these currencies back to unchanged levels ahead of the close.
- The Swiss franc is a touch softer on the session following a lower-than-expected core inflation print, with EURCHF briefly trading up to a near 2-month high around 0.9440. USDCHF has risen 0.35%, and is reapproaching the 0.91 handle, with medium term targets of 0.9158 and 0.9250 well defined.
- Australia CPI highlights the APAC calendar on Wednesday, before focus will turn to US ADP employment, jobless claims and the release of the December Fed meeting minutes.
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MNI UST Issuance Deep Dive: Dec 2024 (2/2)
Dec-06 21:53
Throughout November’s policy and market volatility, though, Treasury auctions largely impressed, with 5 of 7 nominal coupon sales trading through.
- Auction Results: November’s nominal coupon auctions were generally strong, with five out of seven auctions trading-through, of which four saw a positive reading on MNI’s Relative Strength Indicator (RSI). The remaining two auctions; 3 and 20-year auctions tailed. See page 2.
- Upcoming Supply: Issuance resumes next week with sales of $58B in 3Y Note, $39B in 10Y Note (reopen), and $22B in 30Y Bond (reopen). December is set to see $15B in nominal Treasury coupon sales, in addition to $22B in 5Y TIPS and $28B FRN for a total of $365B – slightly below the Oct and Nov totals of $369B which were joint-highest since Oct 2021.
- MNI's review includes a calendar of upcoming auctions and buyback operations.
US TSYS/SUPPLY: MNI UST Issuance Deep Dive: Dec 2024 (1/2)
Dec-06 21:51
MNI's latest US Treasury Issuance Deep Dive has just been published (PDF link here):
November proved a dramatic month for Treasuries. Yields were volatile before and after the Nov 5 election - after ending October at 4.28%, 10Y yields peaked at five-and-a-half-month high just above 4.50% mid-month before closing November just below 4.18%, as markets attempted to price in the implications of a Republican “sweep”.
- Also buffeting rates was speculation over the would-be successor to Treasury Secretary Yellen. President-elect Trump’s selection of hedge fund manager Scott Bessent was greeted with bull flattening in the curve, implying perhaps that he’s seen as more cautious on fiscal deficits than some of the alternatives (he has expressed support for halving the annual budget shortfall to 3% of GDP).
- The first quarterly Refunding process of Bessent’s Treasury is in early February, by which point we may start to have a better sense of the incoming administration’s approach to both fiscal policy and to more issuance-specific considerations such as duration management.
- Bessent for instance has argued that Yellen’s Treasury erred from a risk management perspective by boosting short-duration issuance, and there are suggestions he would be in favor of reversing course, telling Bloomberg in June “When rates are very low, you should extend duration…I think it’s very unfortunate what Secretary Yellen’s doing. She’s financing at the front end, and she’s making a bet on the carry trade, which is not good risk management.”
US LABOR MARKET: MNI US Employment Insight: Soft Enough To Keep Fed Cutting
Dec-06 21:05
Our latest Employment Insight has just been published and emailed to subscribers.
