US NATGAS: Henry Hub Resumes Losses

• Treasury sells $13bn of the 20Y re-open at 1300ET (912810UJ5), in another test of duration demand although seemingly not as important as last week’s 10Y and 30Y offerings.
• Those auctions saw solid results and helped limit deleveraging pressures, including an all-time high for indirect take-up in the 10Y (assuaging fears of a slide in foreign demand) and a 2.5bp stop through for the 30Y.
• Bloomberg currently shows the WI yield at 4.8075%, off the day’s highs of 4.845% to modestly trim outright concession after the 4.632% high yield in March.
• 5s30s, an area of interest amidst deleveraging pressures of recent weeks, sits at 83bps (+3.4bp) for off last week’s high north of 95bp but holding the bulk of the steepening over the past month.
• 20Y auctions have been a mixed bag in recent months, stopping through by 1.4bp last month (largest since Jun 2024) but with a five-auction average tail of 0.6bp.
• There’s a similar story for bid-to-cover, at 2.78x in March (highest since Apr 2024) vs a five-auction average of 2.56x.
• Indirect take-up is likely again to receive attention. The 68.8% in March and a five-auction average of 66.6% weren't particularly unusual in either direction. 

Cleveland Fed’s Hammack (’26 voter, hawk) suggests a strong case for keeping rates on hold, although she does note business contacts reporting a pausing of some spending amidst uncertainty surrounding government policies. This ‘no need to hurry to adjust rates’ rhetoric has been repeated by many FOMC members. 

• She sees a “strong case to hold monetary policy steady in order to balance the risks coming from further elevated inflation and a slowing labor market”.
• “By many measures, the backward-looking data have been encouraging, but heightened uncertainty surrounding government policies is clouding the outlook and raising the risks of higher inflation and slower growth.”
• That said, anecdotal reports from business contacts in her district indicate softer activity: “Many indicate that they have paused some spending in light of increased uncertainty surrounding government policies, including tariffs, immigration, federal spending, and employment”.
• Reiterating comments from last week: “I would rather be slow and move in the right direction than move quickly in the wrong direction.”
• Two-sided risks to rates: "If the economy should falter and inflation decline, then it may be appropriate to ease policy by lowering the federal funds rate from its current level of 4-1/4 to 4-1/2 percent, perhaps even quickly. If the labor market remains healthy and inflation moves up persistently, then monetary policy may need to follow a more restrictive trajectory. But if elevated inflation is paired with a slowing labor market, then monetary policy will face some challenging tradeoffs. In that case, it will be important to ensure inflation expectations remain well anchored while assessing the likely magnitude and persistence of the misses to each side of our dual mandate goals."
• Her prepared remarks in full, here. 

• RES 4: 113-04   76.4% retracement of the Apr 7 - 11 bear leg 
• RES 3: 112-12   61.8% retracement of the Apr 7 - 11 bear leg
• RES 2: 111-25   50.0% retracement of the Apr 7 - 11 bear leg   
• RES 1: 111-09+ High Apr 16
• PRICE:‌‌ 111-04+ @ 16:50 BST Apr 16 
• SUP 1: 110-15+/109-08   Low Apr 14 / 11 and the bear trigger 
• SUP 2: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
• SUP 3: 108-21   Low Feb 19
• SUP 4: 108-03+ Low Dec 12 ‘24 and a key support 

Treasury futures traded higher this week. The climb has resulted in a breach of both the 20- and 50-day EMAs. For now, the latest bounce is considered corrective and the contract is retracing the steep sell-off between Apr 7 - 11. The next resistance to watch is 111-25, 50.0% of the Apr 7 - 11 bear leg. A resumption of weakness would refocus attention on 109-08, the Apr 11 low. A break of this level would resume the downtrend.