IRAN: Marine Traffic In Gulf Will Be Regulated By Iran, Coordinated With Oman

Treasuries sold off sharply Friday in a bear steepening move.

• Weakness in US rates has been basically continuous since early afternoon Thursday, with the long end suffering most. There has been no obvious single catalyst to the session's sell-off in Tsys alongside global peers, and overall it appears to be an accumulation of factors.
• They include lingering inflation concerns concerns amid a lack of tangible progress in resolving the US-Iran impasse (after robust inflation data earlier in the week appeared to have limited initial impact) following the Trump-Xi summit, with oil prices finding a renewed bid (WTI up 4%).
• To this we would add the resurgence of political/fiscal risk premia in the UK (with the Prime Minister's leadership under threat from more left-wing elements of his party) boosting long-end Gilt yields in particular.
• Latest US levels point to the highest 10Y yield close in a year, with 30Y since October 2023 (up 20bp in a week): 2-Yr yield is up 6.2bps at 4.0793%, 5-Yr is up 10.7bps at 4.2598%, 10-Yr is up 11.6bps at 4.5973%, and 30-Yr is up 10.1bps at 5.1272%. Jun 10-Yr futures (TY) down 30.5/32  at 109-05 (L: 109-4.5 / H: 109-29.5)
• Next week's key data include are regional Fed surveys, flash US PMIs, jobless claims for the May payroll reference period, and housing data. Also on the agenda is the release of the minutes to the FOMC’s April meeting (Wed), the focus of which will be on the Committee’s discussion about changing its rate guidance. MNI's full preview is here.

• RES 4: 1.3899 High Apr 8 
• RES 3: 1.3869 76.4% retracement of the Mar 31  - May 1 bear leg
• RES 2: 1.3808 61.8% retracement of the Mar 31  - May 1 bear leg
• RES 1: 1.3793 High Apr 14 
• PRICE: 1.3756 @ 16:52 BST May 15
• SUP 1: 1.3643 Low May 8 
• SUP 2: 1.3550/26 Low May 1 / Low Mar 9 
• SUP 3: 1.3524 1.0% 10-dma envelope
• SUP 4: 1.3482 Low Jan 30 and key support

A corrective cycle in USDCAD remains in play and this week’s gains reinforce this condition. The pair has traded through 1.3711, the 50-day EMA. This highlights a stronger S/T reversal and opens 1.3808, a Fibonacci retracement point. For bears, a reversal would mark the end of the correction and pave the way for a move towards 1.3526, the Mar 9 low and the next key support. A clear break of this level would open 1.3482, the Jan 30 low.

Friday's US rates/bond options flow included:

• TYM6 110/109.50ps vs TYN6 109/108ps vs TYN6 111c, bought the July for -9 (receive) in ~15k
• USM6 110.00 puts paper paid 110 on ~7K