GILTS: Little reaction to the BOE purchase results
30-year gilt yields remain in the 3.90-3.95% range and barely move on the BOE long-dated purchase results.
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US TSY FUTURES: Bonds Bounce: Drone Season?
US Tsy 30Y bonds leading bounce off recent session lows, equities turn lower (ESU2 -6.0 at 4025.0), trading desks citing uptick in China/Taiwan tensions for risk-off move: headlines re: Taiwan fired warning shots at China drone spotted near an offshore island.
- Tweet from Global Times editor Hu Xijin makes the rounds: "I advise the Taiwan troops not to shoot blindly. It's better to throw stones. If you shoot a drone that ordinary people play with, then that's that. But if you shoot the PLA's drones, you may trigger a war."
- Yield curves extend inversion with short end lagging the bid:
- 3M10Y -7.324, 12.465 (L: 7.102 / H: 16.641)
- 2Y10Y -4.166, -36.655 (L: -36.878 / H: -31.941)
- 2Y30Y -4.227, -23.169 (L: -23.205 / H: -18.214)
- 5Y30Y -1.471, -2.862 (L: -2.992 / H: -0.431)
US 10YR FUTURE TECHS: (Z2) Remains Vulnerable
- RES 4: 120-02+ High Aug 15
- RES 3: 119-18 High Aug 17
- RES 2: 118-25+ 50-day EMA
- RES 1: 118-00/17+ High Aug 26 / 20-day EMA
- PRICE: 117-05 @ 14:32 BST Aug 30
- SUP 1: 116-28+ Low Aug 29
- SUP 2: 116-08 Low Jun 28
- SUP 3: 116-01+ 76.4% retracement of the Jun 14 - Aug 2 bull run
- SUP 4: 114-26 Low Jun 16
The Treasuries outlook remains bearish and the contract traded lower Monday, breaching last week’s low of 117-06 on Aug 24/25. This highlights a resumption of the current bear cycle and opens 116-08 next, the Jun 28 low. Further out, attention is on 116-01+, a Fibonacci retracement. Initial resistance has been defined at 118-00, Friday’s high. The 50-day EMA, at 118-25+ marks a firmer resistance.
TAIWAN: Military-For First Time Warning Shots Fired At Chinese Drone
Wires carrying comments from the Taiwanese military stating that for the first time it had fired warning shots at what it stated was a Chinese drone near an offshore island.
- Military states that following the warning shots, the drone headed towards the Chinese mainland.
- Given the recent escalation in tensions between Beijing and Taipei, the risks associated with military exercises and other perceived incursions into airspace/waters claimed by other countries are likely to remain elevated.
