US TSY OPTIONS: Large Dec'25 30Y Bond Buy

The DMO has announced it will be looking to sell GBP1.6bln of the 1.125% Sep-35 linker (ISIN: GB00BT7HZZ68) at its auction next Wednesday, October 1.

• RES 4: 1.4019 38.2% retracement of the Feb 3 - Jun 16 bear leg 
• RES 3: 1.3968 High May 20 
• RES 2: 1.3925 High Aug 22 and the bull trigger
• RES 1: 1.3897 Intraday high 
• PRICE: 1.3892 @ 15:30 BST Sep 24
• SUP 1: 1.3790/3727 50-day EMA / Low Aug 29 and a bear trigger  
• SUP 2: 1.3709 61.8% retracement of the Jul 23 - Aug 22 bull cycle
• SUP 3: 1.3658 76.4% retracement of the Jul 23 - Aug 22 bull cycle 
• SUP 4: 1.3637 Low Jul 25  

Today’s rally in USDCAD undermines a recent bearish theme as the pair extends the recovery from the Sep 17 low. The pair has pierced resistance at 1.3890, the Sep 11 high. This exposes key resistance at 1.3925, the Aug 22 high and the bull trigger. Clearance of this hurdle would highlight an important short-term bullish break. Initial support to watch lies at 1.3790, the 50-day EMA.

New single-family home sales soared in August to 800k on a seasonally adjusted annualized basis, a 20.5% rise from 664k in July (rev from 652k). A slight decline had been expected to 650k, but instead sales jumped to the highest rate since January 2022.

• There was no explanation for the surge in the Census Bureau release. For now we treat this reading with caution, and consider it an anomaly that's likely to see reversion in coming months.
• It's at odds with continued decade-plus lows in NAHB single-family homebuilder sentiment through September, and comes ahead of the recent improvement in mortgage rates (which in any case haven't seen an appreciable rise in mortgage purchase applications).
• We know from the NAHB report that builder incentives for buyers hit a 5-year high in August (66% used such incentives), which may also have played a factor.
• With August typically a down month for sales M/M on a non-seasonally-adjusted basis (only 2 of the prior 10 years saw NSA rises in August), the SA will have provided a boost too: NSA sales were 66k sales in August, up 10k from July and 56k in August 2024. 9k of the 10k Y/Y jump was in the South, so there may have been a one-off explanation for this.
• All four national regions saw sizeable increases in sales - while the Northeast saw a 72% M/M increase, that was from a low base (31k from 18k), the biggest contributor was the 25% rise in the South (530k from 425k).
• This implied a sudden tightening of inventory: months of supply vs current sales fell to a 25-month low 7.4 from 9.0.
• % Y/Y prices rose 1.9% to $413.5k (not seasonally-adjusted), but remained below the month-of-August peak of $441k in 2023.