US 10YR FUTURE TECHS: (M5) Sold Hard Off Highs
May-02 16:31
- RES 4: 113-22 1.382 proj of the Apr 11 - 16 - 22 price swing
- RES 3: 113-04 76.4% retracement of the Apr 7 - 11 bear leg
- RES 2: 112-20+ Intraday high
- RES 1: 112-17+ 1.0% 10-dma envelope
- PRICE: 111-04+ @ 17:14 BST May 2
- SUP 1: 111-02 50-dma
- SUP 2: 110-16+/109-08 Low Apr 22 / 11 and the bear trigger
- SUP 3: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
- SUP 4: 108-21 Low Feb 19
Treasury futures took another leg lower Friday on the back of a firmer NFP print. This sees prices comfortably through the first real support at the 20-day EMA, below which 110-16+ marks the Apr 22 low and next notable downside level. Recent gains resulted in a break of 111-25, 50.0% of the Apr 7 - 11 bear leg. However, the lack of follow through here shows the bullish S/T trend signal may be under threat. The bear trigger remains 109-08, the Apr 11 low.
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US STOCKS: Midday Equities Roundup: Off Lows After Musk Headlines
Apr-02 16:26
- Stocks ignored today's event risk associated with Pres Trump's reciprocal tariff announcement after the close, rebounding to modestly higher after Politico report that Elon Musk will step back from "governing partner" role in the next few weeks. Several new outlets have announced over the last couple days that Musk would be stepping down from DOGE by the end of May.
- Currently, the DJIA trades up 137.35 points (0.33%) at 42128.63, S&P E-Minis up 27.25 points (0.48%) at 5702.25, Nasdaq up 138.1 points (0.8%) at 17587.66.
- Consumer Discretionary and Information Technology sectors outperformed at midday, Caesars Entertainment +4.39%, DoorDash +3.86%, Williams-Sonoma +3.76%, Tesla +3.61% and CarMax +3.25% buoyed the Consumer Discretionary sector.
- Chip stocks supported the Tech sector with Oracle Corp +2.68%, Hewlett Packard Enterprise +2.30%, Palantir Technologies +2.26% and Dell Technologies +2.22%.
- Consumer Staples and Energy sectors continued to underperform with Altria Group -3.49%, Philip Morris International -1.85%, Mondelez International -1.82% and Hershey -1.62% weighing on Consumer Staples.
- Oil and Gas stocks leading laggers included Chevron Corp -0.95%, Hess -0.90%, Baker Hughes -0.83% and Phillips 66 -0.76%.
BUNDS: Recent Recovery Shows First Sign Of Running Out Of Steam [2/2]
Apr-02 16:26
- Futures positioning appeared to be tilting towards the recent recovery coming to a halt soon, with OI data pointing towards ongoing shorts liquidation.
- Further, the IV skew on June expiry Bund options moved back into positive territory today as 25d call vol exceeded that of put vol, reaching its highest level since underlying RXM5 became active.
- From a technical perspective, the latest recovery to today's high of 129.62 is considered corrective, however, the breach of the 20-day EMA and a print above resistance at 129.41 (Jan 14 low) strengthens a bullish theme and opens the 130.00 handle and 130.26 (Fibo retracement). Key short-term support to watch lies at 127.74 (Mar 25 low). Clearance of this level would highlight a reversal.
- With 10Y Bund yields currently at 2.71%, analysts appear to be divided in view on the direction of travel from here. UBS earlier today extended the target on their "long 10-Year Bund position to 2.60% (from 2.70%) and the stop to 2.80% (from 3.05%)", while Goldman Sachs, also earlier today, revised their end-2025 Bund forecast to 2.80% (from 3.00%). GS said they "expect weaker growth outcomes to outweigh inflation concerns for the ECB, taking front-end yields lower and curves steeper. But eventual fiscal loosening should keep Bund yields near current levels".
BUNDS: Recent Recovery Shows First Sign Of Running Out Of Steam [1/2]
Apr-02 16:26
- Despite some sizeable tightening since late last week, the Tsy/Bund yield differential at 147bp stands around 15bps wider than at its March 11 low of 132bps. It highlights what has been a robust recovery in Bunds since mid-March with June contract gaining ~240 ticks since then despite today's sell-off (RXM5 currently at 128.95, -0.32).
- One driver here has been the recent dovish repricing of mid-term ECB policy - around 60bp of cuts are currently being priced through the December meeting, 18bps more than on March 7. However, our reading of recent Governing Council rhetoric incl. last week's MNI sources piece is that the STIR shift has only limited room to extend; this is especially the case taking into account momentum in services inflation remains elevated. See our view on the most recent data here, and our full EZ HICP review here.
- Additionally, the narrative behind that dovish move was at least partially the tightening of financing conditions on the back of a more expansionary fiscal stance - given recent EGB strength, this argument has also run out of steam a little.
- Domestically in Germany, CDU/CSU/SPD coalition talks are ongoing - the parties are reported to agree on providing some sort of tax relief to boost economic conditions but consensus is yet to be met on how that is going to be delivered. Concrete public details appear sparse so far, talks are expected to finish in the course of next week according to media reports.
