US TSYS: Losses Pared To Consolidate Thursday Rally On Soft Labor Data
Nov-07 11:50
- Treasuries have pared earlier losses with equity futures extending some overnight weakness, leaving Treasuries broadly consolidating yesterday’s rally on a collection of soft lower tier data releases.
- There’s no BLS payrolls report today with the government shutdown ongoing, with today’s data instead likely highlighted by the preliminary U.Mich consumer survey for November despite susceptibility to early responses from those of differing political affiliation. The latest MNI data shutdown guide is here.
- Cash yields are back to just 0-0.5bp higher across the curve.
- TYZ5 trades at 112-27+ (+ 01) having recently lifted ~5 ticks, with modest overnight volumes of 285k.
- Yesterday’s high of 112-30 came close to a key near-term resistance at 113-02 (Nov 5 high) after which lies 113-18+ (Oct 28 high). A key near-term support remains exposed at 112-06 (Sep 25 low) although before that lies 112-09+ (Nov 5 high).
- Data: Manheim used cars Oct final (0900ET), U.Mich consumer survey Nov prelim (1000ET), NY Fed consumer survey Oct (1100ET), Consumer credit Sep (1500ET)
- Fedspeak: Jefferson on AI & economy (0700ET), Miran on stablecoins and mon pol (1500ET) – see STIR bullet
- Speaking overnight, NY Fed's Williams said "Based on recent sustained repo market pressures and other growing signs of reserves moving from abundant to ample, I expect that it will not be long before we reach ample reserves"
- Politics: Trump greets Hungary PM (1130ET) before bilateral lunch (1145ET), Trump departs for Florida (1530ET)
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OUTLOOK: Price Signal Summary - Bunds Rally Through Resistance
Oct-08 11:49
- In the FI space, Bund futures have rallied sharply higher today and in the process cleared initial resistance at 128.84, the 61.8% retracement of the Sep 10 - 25 bear leg. The breach signals scope for a stronger recovery and potentially exposes key resistance at 129.44, the Sep 10 high. The next resistance is 129.07, the 76.4% retracement. The Oct 7 low of 128.25, has been defined as a key short-term support.
- Gilt futures traded lower Tuesday, extending the latest pullback but price has recovered.. Attention is on the near-term support at 90.26, the Sep 26 low. A breach of this level would signal scope for an extension towards 89.94, a Fibonacci retracement point. Note that on the continuation chart, moving average studies are in a bear-mode position, highlighting a dominant downtrend. Key medium-term support lies at 89.36, the Sep 3 low. First resistance to watch is 91.08, high Oct 1. A break would be a bullish short-term development.
US TSY FUTURES: BLOCK: Dec'25 2Y Buy
Oct-08 11:45
- +5,000 TUZ5 104-08.25, post time offer at 0727:44ET, DV01 $196,500.
- The 2Y contract trades 104-08.25 last (+.12)
JPY: Official Language, FX Price Action Yet to Mirror Pre-Intervention Patterns
Oct-08 11:28
- The scale and pace of the JPY move this week will be triggering speculation of official intervention in FX markets which, if confirmed, would be the first formal intervention since July last year. Nonetheless, price action and official behaviour so far has not met the pattern of historical formal intervention.
- We are yet to see the usual, more aggressive verbal jawboning that has historically preceded intervention (language including "deeply concerned about FX moves", "will take appropriate response if excessive FX moves"). FinMin Kato's language yesterday appeared more restrained: "refraining from commenting on market moves", "will closely watch any excessive moves".
- We also note USD/JPY's 1 month and 3 month rate of change is comfortably below levels that prevailed during previous intervention episodes. Both metrics are around +2% firmer, which is elevated but well within historical norms.
- That said, a number of xxx/JPY crosses are entering technically overbought territory on the recent rally - triggered by Takaichi's LDP victory and the subsequent backtracking of BoJ rate hike expectations.
- With EURJPY, CHFJPY extending to new alltime highs and short-term momentum measures all accelerating (USDJPY dmas should form a golden cross (50-dma > 200-dma) in the next few days), markets are clearly looking through Takaichi advisor Honda's comments on Monday that USDJPY beyond 150.00 is "a bit too much".
Fig 1: USD/JPY 1mth & 3mth Rate Of Change - Within Historical Norms
Source: Bloomberg Finance L.P./MNI
