US TSYS: Marginally Firmer In Asia
TYM3 deals at 113-22+, +0-03, a touch off the top of the 0-06+ range on volume ~90k.
- Cash tsys sit 1-2bps richer across the major benchmarks, light bull steepening is apparent.
- Tsys marginally firmed on spillover from the bid in NZGBs in lieu of the RBNZ signalling that the current level of rates will be the peak after hiking the OCR 25bps to 5.50%.
- For the remainder of the Asian session tsys held richer, dealing in narrow ranges with little follow through on moves.
- FOMC dated OIS priced a terminal rate of ~5.20% in July with ~50bps of cuts in 2023.
- In Europe today UK PPI and CPI prints headline. Further out we have the minutes from the May FOMC meeting. Fedspeak from Gov Waller will cross. We also have the latest 5-Year supply.
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AUSSIE BONDS: Treads Water Ahead Of Q1 CPI On Wednesday
ACGBs sit little changed (YM -1.0 and XM flat) at or near bests after trading in a narrow range in the Sydney session. With local news flow light ahead of tomorrow’s ANZAC Day holiday, ACGBs have been willing to be guided by US Tsys. US Tsys are marginally richer in Asia-Pac trade.
- Cash ACGBs are flat to 1bp cheaper with the AU-US 10-year yield differential -4bp at -10bp.
- Swap rates are 1bp lower with EFPs 2bp tighter.
- Bills strip is steeper with pricing flat to -4.
- Q1 CPI data is scheduled for release on Wednesday and is expected to confirm that inflation peaked at the end of 2022. According to BBG consensus, annual headline inflation is expected to slow to +6.9% from 7.8% in Q4. Trimmed Mean CPI is expected to print +1.4% Q/Q and +6.7% Y/Y versus +1.7% and +6.9%.
- According to market pricing, however, the deceleration in underlying inflation may not be enough to keep the RBA on hold with a cumulative 22bp of tightening priced by August.
- ACGB futures will trade normal SYCOM hours on either side of tomorrow’s holiday and be guided by a raft of second-tier releases with the Chicago & Dallas Feds, S&P/CS House Prices Index and New Home Sales as the highlights.
EURUSD TECHS: Trading Above Support At The 20-Day EMA
- RES 4: 1.1185 High Mar 31 2022
- RES 3: 1.1127 1.00 projection of the Mar 15 - 23 - 24 price swing
- RES 2: 1.1076 High Apr 1 2022 and high Apr 14
- RES 1: 1.1000 High Apr 17
- PRICE: 1.0981 @ 05:47 BST Apr 24
- SUP 1: 1.0913 20-day EMA
- SUP 2: 1.0831 Low Apr 10
- SUP 3: 1.0817 50-day EMA
- SUP 4: 1.0788 Low Apr 3
EURUSD trend signals remain bullish and recent weakness appears to be a correction. Price is trading above 1.0913, the 20-day EMA and moving average studies are in a bull mode position, highlighting an uptrend. The bull trigger is unchanged at 1.1076, Apr 14 high, a break would open 1.1127, a Fibonacci projection and 1.1185, Mar 31 2022 high. On the downside, clearance of the 20-day EMA would signal scope for a deeper retracement.
US TSY OPTIONS: FVM3 108.00 Puts Given
More selling noted in the FVM3 108.00 puts, with ~2K given at 0-15+ in recent trade. delta -23%. Earlier these were sold at 0-16.
