US 10YR FUTURE TECHS: (H5) Bullish Cycle Remains Intact
Feb-07 11:24
- RES 4: 110-25 High Dec 12
- RES 3: 110-19 76.4% retracement of the Dec 6 - Jan 13 bear leg
- RES 2: 110-03+ High Dec 6
- RES 1: 109-30 61.8% retracement of the Dec 6 - Jan 13 bear leg
- PRICE: 109-19+ @ 11:14 GMT Feb 7
- SUP 1: 108-20+ Low Feb 4
- SUP 2: 108-06/107-06 Low Jan 23 / 13 and the bear trigger
- SUP 3: 107-04 Low Apr 25 ‘24 and a key support
- SUP 4: 106-11 2.00 proj of the Oct 1 - 14 - 16 price swing
A bull phase in Treasury futures remains in play and the contract is holding on to its latest gains. Price has traded through the 50-day EMA of 109-11. This highlights potential for a stronger reversal and sights are on 109.30, a Fibonacci retracement. On the downside, initial support to watch is unchanged at 108-20+, Tuesday’s low. Clearance of it would signal a reversal and the end of a corrective cycle.
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GILTS: Further Selling
Jan-08 11:24
Further weakness in gilts accompanies pressure for GBP in FX trade, with the market in price discovery mode after finding fresh multi-decade highs in 30-Year yields and registering the highest level seen since ’23 in 10-year yields.
- Yields now 2.5-5.0bp higher across the curve, while futures trade as low as 90.75.
- Technicals for 10s & futures outlined in the prior post.
- No fresh UK headline triggers, but continued erosion of already limited fiscal headroom adds to wider pressure stemming from a reassessment of global term premium, hawkish U.S. data and a heavy start to ’25 IG supply, as well as medium-term structural headwinds for gilts.
- SONIA futures +0.5 to -9.0. Dec low in SFIZ5 untested. Nov low in SFIZ6 broken.
PIPELINE: Wednesday Data Calendar: ADP, Jobless Claims, FOMC Minutes, 30Y R/O
Jan-08 11:22
- US Data/Speaker Calendar (prior, estimate)
- 8-Jan 0700 MBA Mortgage Applications
- 8-Jan 0815 ADP Employment Change (146k, 139k)
- 8-Jan 0830 Fed Gov Waller eco-outlook (text, Q&A)
- 8-Jan 0830 Initial Jobless Claims (211k, 215k)
- 8-Jan 0830 Continuing Claims (1.844M, 1.860M)
- 8-Jan 1000 Wholesale Trade Sales MoM (-0.1%, 0.2%)
- 8-Jan 1000 Wholesale Inventories MoM (-0.2%, -0.2%)
- 8-Jan 1130 US Tsy $64B 17W bill auction
- 8-Jan 1300 US Tsy $22B 30Y re-open (912810UE6)
- 8-Jan 1400 Dec FOMC Meeting Minutes
- 8-Jan 1500 Consumer Credit ($19.239B, $10.500B)
GBP: Cable Extends Session Losses amid Pressure on Gilts
Jan-08 11:20
- The higher UK yields offering little support to sterling, with the dollar bid gaining further traction and prompting cable to slide the best part of 40pips in recent trade. Momentum picked up through the early session lows of 1.2440, with spot printing lows of 1.2409 so far.
- The trend condition in GBPUSD remains bearish and the sharp sell-off on Jan 2 confirmed a resumption of the medium-term downtrend. The bear trigger is 1.2353 (Jan 2 low) and below here, the focus will be on the 2024 lows at 1.2300.
