US TSYS: Key TY Support Still Exposed Despite Friday Rally
- Treasuries have pared losses that were seen with the late cash open (Japan holiday), trading back close to Friday’s close that appeared to be spurred by Fed Gov Waller but with a possible exaggeration by month-end factors.
- Crude oil futures rolling over have helped support intraday moves.
- Today’s docket is centered on the ISM manufacturing survey for October before the week’s data turns more firmly to the labor market. We also hear what should be broadly dovish Fedspeak after Friday’s hawkish start to post-FOMC appearances barring a more dovish Waller late on.
- With President Trump back from his Asia trip, focus increasingly turns to the ongoing government shutdown which is set to become the longest in US history.
- Cash yields are 0.5-1bp lower on the day.
- TYZ5 trades at 112-25+ (+04) as it holds close to a high of 112-27+ seen late Friday, with thin volumes only just inching above 200k in part owing to the Japan holiday.
- Resistance is seen at 113-06 (20-day EMA) but a key support remains exposed at 112-06 (Sep 25 low). Before that though, 112-16 (Oct 30 low) and 112-14 (Oct 9 low).
- Treasury financing requirements released today at 1500ET. That's part of the U.S. Treasury’s first Refunding process of the 2026 fiscal year ahead of the full announcement on Wednesday at 0830ET. The QRA is likely to largely keep a steady approach to issuance policy, including leaving nominal Treasury coupon auction sizes unchanged for the 7th consecutive quarter. We also do not expect Treasury’s guidance on coupon issuance to change in this Refunding round.
- Data: S&P Global mfg PMI Oct F (0945ET), ISM mfg Oct (1000ET), Wards vehicle sales
- Fedspeak: Miran (~0715ET), Daly (1200ET), Cook (1400ET) – see FED bullet.
- Bill issuance: US Tsy $86B 13W & $77B 26W bill auctions (1130ET)
- Politics: Trump participates in Virginia Tele-Rally (1900ET), Trump participates in New Jersey Tele-Rally (1930ET)
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USDCAD TECHS: Fresh Cycle High
- RES 4: 1.4111 High Apr 10
- RES 3: 1.4045 3.0% Upper Bollinger Band
- RES 2: 1.4019 38.2% retracement of the Feb 3 - Jun 16 bear leg
- RES 1: 1.3989 200-dma
- PRICE: 1.3953 @ 16:02 BST Oct 3
- SUP 1: 1.3897/3825 Low Sep 30 / 50-day EMA
- SUP 2: 1.3727 Low Aug 29 and a bear trigger
- SUP 3: 1.3689 Low Jul 28
- SUP 4: 1.3637 Low Jul 25
A bull cycle in USDCAD remains intact and yesterday’s break above the late September’s high, firms the bullish theme. This move higher also maintains the bullish price sequence of higher highs and higher lows. Note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4019, a Fibonacci retracement point. On the downside, first key support lies at 1.3825, the 50-day EMA.
AUDUSD TECHS: Support Remains Intact For Now
- RES 4: 0.6763 1.382 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 3: 0.6726 1.236 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 2: 0.6660/6707 High Sep 18 / 17 and key resistance
- RES 1: 0.6629 High Sep 30 & Oct 01
- PRICE: 0.6603 @ 16:01 BST Oct 3
- SUP 1: 0.6527/21 61.8% of the Aug 21 - Sep 17 bull leg / Low Sep 26
- SUP 2: 0.6484 76.4% retracement of the Aug 21 - Sep 17 bull leg
- SUP 3: 0.6463/6415 Low Aug 27 / Low Aug 21 / 22 and a bear trigger
- SUP 4: 0.6373 Low Jun 23
The AUDUSD uptrend remains intact and recent weakness appears to have been a correction. Support to watch lies at the 50-day EMA, at 0.6558. A clear break of this average would signal scope for a deeper retracement and expose 0.6527 once again, a Fibonacci retracement. For bulls, a stronger reversal higher would refocus attention on 0.6707, the Sep 17 high. Initial resistance to watch is 0.6629, the Sep 30 and Oct 1 high.
US TSYS/SUPPLY: September's Coupon Auctions Were Generally Solid (2/2)
September’s coupon auctions were generally solid, with three lines trading through, two coming out on the screws and two tailing slightly.
- Looking through the lens of MNI’s Relative Strength Indicator (RSI), five lines saw positive readings while two saw negative readings.
- The 3-year sale was the strongest auction of the month according to MNI’s RSI. The 3-year line traded through 0.7bps, the largest stop through in seven months. Meanwhile, the primary dealer take-up was just 8.4%, the lowest on record (data going back to 2003).
- The weakest sale of the month was the last – the 7-year line. This line saw the second consecutive 0.5bp tail, with the 12.0% primary dealer take-up above August’s 9.8% and July’s record low 4.1%.
September Auction Review:
- 2Y Note on-the-screws: 3.571% vs. 3.571% WI.
- 2Y FRN: 0.200% high margin vs. 0.195% prior
- 3Y Note trade-through: 3.485% vs. 3.492% WI.
- 5Y Note tail: 3.710% vs 3.709% WI.
- 7Y Note tail: 3.953% vs. 3.948% WI.
- 10Y Note trade-through: 4.033% vs. 4.047% WI.
- 10Y TIPS: 1.734% high yield vs. 1.985% prior
- 20Y Bond trade-through: 4.613% vs 4.615% WI.
- 30Y Bond on-the-screws: 4.651% vs. 4.651% WI.
