MEXICO: JP Morgan Base Case Remains For 50bp Banxico Rate Cuts In May And June

• Treasury futures are holding broadly weaker levels ahead midday, 10Y yield +.1458 to 4.4386% ahead of the $39B 10Y Note auction re-open, WI currently 4.441%, 13.1bp cheap to last month's 4.31% auction.
• March auction recap: Treasury futures inched off moderately weaker levels after the $39B 10Y note auction reopen (91282CMM0) stopped through: drawing 4.310% high yield vs. 4.314% WI; 2.59x bid-to-cover vs. 2.48x prior.
• Peripheral stats: indirect take-up receded to 67.41% vs. 71.55% prior; direct bidder take-up climbed to 19.51% from 13.61% prior; primary dealer take-up 13.08% vs. 14.84% prior.

• RES 4: 114-10   High Apr 7 and the bull trigger 
• RES 3: 113-09+ 76.4% retracement of the Apr 7 - 9 sell-off
• RES 2: 112-21+ 61.8% retracement of the Apr 7 - 9 sell-off  
• RES 1: 112-08   High Apr 7
• PRICE:‌‌ 110-26+ @ 15:50 BST Apr 9
• SUP 1: 110-01   Intraday low
• SUP 2: 109-29   Trendline support drawn from the Jan 13 low 
• SUP 3: 109-13+ Low Feb 24 
• SUP 4: 108-26+ 76.4% of the Jan 13 - Apr 7 bull cycle    

A sharp sell-off in Treasury futures this week has resulted in a breach of both the 20- and 50-day EMAs. Attention is on trendline support at 109-29, drawn from the Jan 13 low. A clear break of this support would strengthen a bearish threat. Note that the steep sell-off could still be a corrective pullback that has allowed an oversold trend condition to unwind. Initial resistance to watch is 112-08, yesterday’s high. A break would highlight a possible early reversal.          

• Stocks have see-sawed off early overnight lows ahead midday despite China (84%) and the EU (E21B) announcing retaliatory tariffs against the US Wednesday morning. Currently, the DJIA trades down 3.06 points (-0.01%) at 37632.5, S&P E-Minis down 0.25 points (-0.01%) at 5020.25, Nasdaq up 126.9 points (0.8%) at 15391.6.
• Information Technology and Consumer Discretionary sectors outperformed in the first half, hardware and semiconductor makers buoyed the tech sector: Advanced Micro Devices +5.28%, Intel Corp +4.69%, Apple +3.90%, Skyworks Solutions +3.68% and Teradyne +3.05%.
• The Consumer  Discretionary sector was supported by: Tesla +3.51%, Wynn Resorts +2.81%, Expedia Group +1.87%, Chipotle Mexican Grill +1.78% and MGM Resorts International +1.61%
• On the flipside, Utilities and Health Care sectors underperformed, alternative energy providers weighing on the former: Entergy Corp -3.52%, Evergy -3.32%, NiSource -2.91%, Duke Energy -2.72% and NextEra Energy -2.71%.
• Meanwhile, pharmaceuticals weighed on the Health Care sector: Bristol-Myers Squibb -5.73%, AbbVie -5.68%, Incyte Corp -4.88%, Regeneron Pharmaceuticals -4.77% and Eli Lilly -4.53%.
• Reminder, banks kick off the latest earnings cycle this Friday with Bank of New York Mellon, Wells Fargo & Co, JPMorgan Chase and Morgan Stanley reporting.