US TSYS/TIPS: Limited Paring Of German Fiscal and Potential Tariff Relief Losses
Mar-05 12:06
- Treasuries trade a little firmer through 2-10Y tenors but it’s only broad consolidation of the sharp push lower seen yesterday on a rapid increase in German fiscal plans plus Lutnick hinting at tariff relief for Canada and Mexico.
- Growth negative tariff impacts had outweighed the inflationary angle in recent sessions).
- Cash yields are 4bps lower (2s) to near unchanged (20s/30s).
- 2s10s has climbed further to 28.5bps (+3bp) for levels last sustained in early February.
- TYM5 sits at 111-04 (-04) on another heavy overnight session with cumulative volumes at 730k.
- It has seen a swing from yesterday’s high of 112-01, stopping just short of resistance at 112-02 (Fibo projection). The daily trend condition is overbought and a pullback would be considered corrective with firm support seen at 110-00 (Feb 7 high).
- Data: MBA mortgage data (0700ET), ADP employment Feb (0815ET), S&P Global Services/comp PMI Fed final (0945ET), ISM Services Feb (1000ET), Factory orders Jan (1000ET)
- Fedspeak: Beige Book (1400ET) – see STIR bullet.
- Bill issuance: US Tsy $60B 17W bill auction (1130ET)
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STIR: SONIA FIX - 03/02/25
Feb-03 11:58
| SONIA FIX - Source: BBG/ICE | ||
| 1M | 4.48650 | -0.0317 |
| 3M | 4.45900 | -0.0163 |
| 6M | 4.36110 | -0.0251 |
| 12M | 4.22150 | -0.0399 |
US TSYS: Significant Twist Flattening On Long-Threatened Tariff Unveiling
Feb-03 11:54
- Treasuries continue to demonstrate significant twist flattening following President Trump actually imposing long-threatened tariffs over the weekend (to be effective Feb 4).
- Trump has unveiled 25% tariffs on all Canadian goods except for a partial carve-out with 10% on energy (including oil & electricity), along with 25% tariffs on Mexico and 10% on China plus threats of upcoming tariffs on the EU. The measures take effect at 0001ET on Tuesday leaving only a small window for last-minute negotiations.
- Cash yields are 7.5bp higher (2s) to 2.2bp lower (30s) with the pivot after 10s.
- 2s10s at 27bps (-7.5bps) is at lows since late December.
- TYH5 is within session ranges at 108-29+ (+ 02+) on heavy cumulative volumes nearing 770k (~1.6x recent averages).
- A bullish corrective cycle is intact as 109-10+ (50-day EMA) remains exposed. It has been pierced but a clear break would strengthen a bullish theme and open 109-31 (Dec 18 high). The medium-term trend condition is bearish. It hit 108-21+ shortly after the open probe 108-23+ (20-day EMA) with initial firm support seen at 108-06 (Jan 23 low).
- Data: S&P Global US PMIs Jan final (0945ET), ISM mfg Jan (1000ET), Construction spending Dec (1000ET)
- Fedspeak: Bostic talks on economic outlook (1230ET), Musalem welcoming remarks (1830ET) – see STIR bullet.
- Bill issuance: US Tsy $84B 13W & $72B 26W bill auctions (1130ET)
OUTLOOK: Price Signal Summary - Trend Structure in Gold Remains Bullish
Feb-03 11:47
- On the commodity front, a bull cycle in Gold remains in play. Last week’s extension higher resulted in a print above $2790.1, to record a fresh all-time high. The climb confirms a resumption of the primary uptrend and maintains the bullish price sequence of higher highs and higher lows. Attention is on $2817.6 next, the 1.236 projection of the Nov 14 - Dec 12 - 19 price swing. The first key support to watch is $2687.5, the 50-day EMA. The 20-day EMA is at $2728.1.
- In the oil space, last week’s move down in WTI futures marked an extension of the current corrective cycle. The 20-day EMA has been breached and attention is on support around the 50-day EMA, at $72.26. A clear break of the 50-day average would suggest scope for a deeper retracement. On the upside, a reversal higher would refocus attention on $79.48, the Apr 12 ‘24 high and a key resistance.
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