MEXICO: Investment Weak For Now, But Finance Ministry Sees Improvement Ahead

• Treasuries are modestly lower across the curve, for the most part having remained within yesterday’s range although with 30s earlier extending lows as yields briefly tried to test 5.00%.
• Today sees focus on the JOLTS report but with Musalem and the Beige Book also worth watching from a Fed angle as well as potential headlines from President Trump from 1100ET onwards.
• Cash yields are 1.2-2.8bp higher on the day, with increases led by the belly and 30s lagging.
• 30Y yields earlier topped out at 4.9997% (currently 4.974%) having last exceeded 5.00% on Jul 18.
• Curves again saw fresh ytd steeps overnight before pulling back, with 5s30s hitting 124.6bps and currently at session lows of 122.5bps ahead of the US session.
• TYZ5 trades at 112-03 (-01+) on mild volumes of 270k, having coming close to yesterday’s low of 111-31 but remained within range throughout.
• Yesterday’s low probed support at 111-31+ (20-day EMA) after which lies 111-19 (50-day EMA) with the recent pullback deemed corrective. Resistance is seen at 112-20+ (Aug 28/29 high).
• Data: MBA mortgage applications (0700ET), JOLTS Jul (1000ET), Factory orders Jul (1000ET), Wards vehicle sales Aug
• Fedspeak: Musalem on economy and policy (0900ET), Beige Book (1400ET)
• Bill issuance: US Tsy $65B 17W bill auction (1130ET)
• Politics: Trump in bilateral meeting with President of the Republic of Poland (1120ET, WH press pool)
• Note that the District Court-level decision in Fed Gov Cook's lawsuit didn't materialize yesterday as the judge gave the Justice Department until Thursday to file another brief.

• On the commodity front, Gold remains in a clear bull cycle. This week’s gains have resulted in a breach of key resistance at $3500.1, the Apr 22 high, and delivered a fresh all-time high in the yellow metal. The break confirms a resumption of the primary uptrend and an extension of the sequence of higher highs and higher lows. The next objective is the $3600.00 handle. Initial firm support to watch lies at $3396.2, the 20-day EMA.
• In the oil space, a bear cycle in WTI futures remains intact and the latest bull phase appears to be a correction. This short-term corrective cycle remains in play and Tuesday’s rally reinforces this likelihood. Initial resistance to watch is $66.56, the Aug 4 high. Key short-term resistance has been defined at $69.36, the Jul 30 high. Clearance of this level would cancel a bear theme. For bears, a stronger resumption of weakness would pave the way for a move towards $57.71, the May 30 low.

• RES 4: 113-06   2.236 proj of the Jul 15 - 22 - 28 price swing
• RES 3: 113-00   Round number resistance  
• RES 2: 112-28+ 2.000 proj of the Jul 15 - 22 - 28 price swing  
• RES 1: 112-20+ High Aug 28 / 29 
• PRICE:‌‌ 112-02+ @ 11:37 BST Sep 3
• SUP 1: 111-31+ 20-day EMA
• SUP 2: 111-19   50-day EMA
• SUP 3: 111-13+ Low Aug 18 and a key support  
• SUP 4: 110-25   Low Aug 1 

The trend outlook in Treasury futures is bullish and the latest pullback appears corrective. Recent gains delivered a print above 112-15+, the Aug 5 high and a bull trigger. A breach of this hurdle confirms a resumption of the current bull cycle and signals scope for an extension towards the 113-00 handle. Moving average studies are in a bull-mode position, reinforcing a bull theme. First support to watch is 111-31+, the 20-day EMA.