US TSYS: Holding Near Highs After Soft ADP, ISM Services Data
Jun-04 19:52
- Treasuries look to finish near midday highs Wednesday, projected rate cuts through year end back above 50bp again after this morning's soft ADP private payroll and ISM Services data.
- The Sep'25 10Y contract trades +22 at 111-04.5 vs. 111-07 high, testing resistance at 111-05.5 (High May 9)
- The ISM services report for May showed a painful combination of another increase in prices paid (highest since late 2022) and new orders slumping (lowest since late 2022); the overall index hit its lowest (and first sub-50 reading) since Jun 2024.
- ADP employment increased just 37k (sa, cons 114k) in May after a marginally downward revised 60k (initial 62k) in April. Consensus currently stands at 120k for Friday's private payrolls release.
- Later in the session, the June 4 Beige Book reported that "economic activity has declined slightly since the previous report" while suggesting rising tariff-related inflationary pressures.
- Off session lows, the Greenback nevertheless reversed the prior session gains after data set a negative tone for the US dollar on Wednesday. USDJPY sits 0.85% lower on the session, having had a punchy 165 pip turnaround from the overnight highs.
- Focus turns to Thursday's weekly jobless claims, trade balance and unit labor costs.
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US TSYS: Focus Remains on Midweek FOMC, ISM Service 2Y Highs
May-05 19:32
- Treasuries look to finish lower Monday, off late session lows as rates bounced in reaction to reversal in stocks that had been climbing steadily off early session lows.
- Generally quiet session on lighter volumes (TYM5 <1M) with multiple Spring holidays around the globe: Japan, China, HK, South Korea, as well as the UK, EU is open however.
- Focus on Wednesday's FOMC rate annc at 1400ET. The FOMC is expected to extend its series of rate holds to a third meeting in May, keeping the Fed funds target rate at 4.25-4.50% while maintaining its forward guidance in the Statement.
- Treasury futures gap lower after higher than expected ISM Services data - climbing to the highest levels since January 2023 (51.6 from 50.8 vs 50.2 est; Employment Index 49.0 Vs Mar 46.2; New Orders Index 52.3 Vs Mar 50.4; Prices Index 65.1 Vs Mar 60.9.
- Jun'25 10Y currently -3 at 111-00 vs. 110-28.5 low (10Y yld at 4.3394%), through technical support at 110-30.5 (50-day EMA). A clear breach of this average would strengthen a bearish threat and expose 110-16+, the Apr 22 low.
- Cross asset: Still weaker BBG US$ index bounces to 1221.48 (-3.03); stocks weaker after paring losses all day: S&P eminis -20.5 at 5688.5.
AUDUSD TECHS: Northbound
May-05 19:30
- RES 4: 0.5682 High Nov 12 ‘24
- RES 3: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 2: 0.6528 High Nov 29 ‘24
- RES 1: 0.6494 High May 05
- PRICE: 0.6480 @ 15:08 BST May 5
- SUP 1: 0.6356/6321 20- and 50-day EMA values
- SUP 2: 0.6275 Low Apr 14
- SUP 3: 0.6181 Low Apr 11
- SUP 4: 0.6116 Low Apr 10
AUDUSD traded higher Monday as the pair starts the week on a bullish note. The breach of 0.6450, the Apr 29 high, marks the end of the recent pause in the bull cycle and confirms a resumption of the uptrend. Note that moving average studies are in a bull-mode position, highlighting an uptrend. Sights are on 0.6528, the Nov 29 ‘24 high. Initial key support to monitor is 0.6321, the 50-day EMA.
US TSYS: Late SOFR/Treasury Option Roundup: Still Mixed, Focus on FOMC
May-05 19:09
SOFR & Treasury options remained mixed lat eMonday, lighter volumes with multiple spring holiday closures in Asia and UK. Focus on Wednesday's FOMC policy annc, no rate change expected. Underlying futures weaker but off late session lows. Projected rate cut pricing vs. morning levels (*) as follows: May'25 steady at -0.5bp, Jun'25 at -7.3bp (-8.4bp), Jul'25 at -23.3bp (-25.5bp), Sep'25 -42.2bp (-46.9bp).
- SOFR Options:
- +15,000 SFRM5 95.68/95.75/95.81/95.87 put condors, 2.0 ref 95.78
- +8,000 0QM5 98.00 calls, 1.0 vs. 96.805/0.05%
- -2,500 SFRK5 95.62/95.68/95.75 2x3x1 put flys w/ SFRM5 95.62/95.75 put spds, 10.5 total
- +15,000 SFRU5 98.00 calls
- -10,000 SFRU5 96.43/96.62 call spds, 3.25
- +4,000 SFRU5 95.75/95.87 2x1 put spds, 0.5 ref 96.14
- 2,000 SFRH6 97.18/98.25 call spds vs. 0QH6 97.25/98.25 call spds, 2.5 net/0QH6 over
- +2,500 SFRH6 97.50/98.00 call spds, 7.5 ref 96.67
- +5,000 SFRN5 95.75/95.87 put spds 2.0 vs. 96.195/0.05%
- +4,000 0QM5/0QU5 97.00/97.50/98.00 call fly spd, 0.5 net
- +4,000 SFRZ5 95.93 puts, 9.5 ref 96.475
- 2,000 SFRK5 95.93/96.00 call spds ref 95.80
- over 3,500 SFRK5 96.06 calls, 0.5 ref 95.81
- Treasury Options:
- 7,500 TYM5 111.5 calls, 36 ref 111-01
- Block, 8,500 TYM5 112.5 calls, 14 ref 111-01
- +3,000 TYM5 111 straddles, 123 6.89% vol
- 4,000 TYM5 108 puts, 2 ref 111-01.5
- over 12,200 TYM5 113 calls, 10 ref 111-02
- -17,000 FVN5 110.5/111.5 call spds 5.5 ref 108-14.75
- 1,500 TYM5 111.75 straddles,
- over 7,000 TYN5 110.5 puts ref 111-08
- 2,000 TYM5 111/112 2x1 put spds
- over 7,500 TYM5 112 calls, 25 last
- 1,600 FVM5 107/107.5 put spds ref 108-14.25
- 2,000 TYM5 110.5/111.25 put spds, 22 ref 111-06.5
- over 3,200 TYM5 111.25 calls, 46 ref 111-08
- 1,000 TYM5 111/112/113/114 call condors
- 1,600 FVM5 107.25 puts ref 108-15.25
