US TSYS: Massive Deficit Estimates Tied to Tax/Spending Bill Weighing on Bonds
May-21 19:44
- Treasuries look to finish near late Wednesday session lows, curves bear steepening: 2s10s +6.792 at 58.019 - highest level since May 1. Heavier volumes tied to Jun/Sep Tsy futures rolls, 5s well over 1M.
- No economic data, headline or outright flow to site for the move other than trepidation over Pres Trump's tax & spending bill estimated to increase the deficit appr $3.3 trillion over 10 years. Lawmakers continued to debate the bill and passage remained uncertain despite Pre Trump personally haranguing GOP holdouts.
- Treasury futures extend session lows after the $16B 20Y Bond auction (912810UL0) tailed, drawing a high yield of 5.047% vs 5.035% When-Issued yield at the cutoff; 2.46x bid-to-cover vs. 2.63x prior. Bonds yield climbed to 5.0955% intraday high - last seen late October 2023. 10Y yield up to 4.5825% (+.0956).
- The Jun'25 10Y futures contract slipped to 109-13.5 low (-25) briefly -- through initial technical support at 109-18.5 (May 15 low) before bouncing to 109-19 - strengthening a bearish theme and exposing key support at 109-08, Apr 24 low and a bear trigger.
- Cross asset update: Gold up 33.4 at 3323.42, stocks weaker with rise in bond yield (SPX emini -95.0 to 5864.75), Crude retreating (WTI -0.62 at 61.41).
- Look ahead to Thursday's data: Weekly Claims at 0830ET, Flash PMIs at 0945ET, Exist Home Sales at 1000ET and KC Fed Mfg Activity at 1100ET.
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US TSYS: Tariff Tied Headline Risk & Fed Independence Meddling
Apr-21 19:42
- Treasuries look to finish mostly lower Monday, curves twist steeper as the short end outperforms a sell-off in the long end, risk sentiment hampered as stocks hold at or near session lows.
- Headline risk continues to rattle markets, latest focus partially tied to headlines that the WH is in the process of replacing Sec of Defense Hegseth following reports of another Signal Chat leak made the rounds. Politico reported GOP Rep Bacon said "Hegseth should Go". Conversely, WH Press Sec Leavitt just said the NPR report is false.
- Global trade remains the greater concerns, markets await something concrete in tariff negotiations vs. hopes and promises that talks with dozens of countries is going well, while Pres Trump berates Fed Chairman Powell and reiterating a call for "preemptive cuts".
- Curves near late highs: 2s10s currently +13.246 65.492 vs. 66.377 high, 5s30s +8.604 at 94.411. Jun'25 10Y futures -13.5 at 110-24 vs. late overnight low of 110-22. Technical at 110-15/109-08 (Low Apr 15 / 11 and the bear trigger). In turn, projected rate hike pricing gain momentum vs. morning levels (*) as follows: May'25 at -4bp (-3.4bp), Jun'25 at -19.8bp (-19bp), Jul'25 at -43.6bp (-40.1bp), Sep'25 -63.4bp (-59.9bp).
- Stocks reacting negatively, extending lows with SPX eminis slipping to 5127.25 low, Consume Discretionary and IT sectors underperforming. US$ broadly weaker, BBG index -8.47 at 1216.21.
- Tuesday Data Calendar: several Fed speakers, Richmond Fed data and Tsy $69B 2Y Note Sale.
US STOCKS: Late Equities Roundup: Hugging Lows
Apr-21 18:54
- Stocks are holding near deep session lows in late Monday trade, Consumer Discretionary and Information Technology sectors continue to underperform with lack of clarity and communication over trade negotiations widely sited.
- Currently, the DJIA trades down 1258.06 points (-3.21%) at 37884.8, S&P E-Minis down 180.5 points (-3.4%) at 5132 (April 10 lows, still off April 7 low of 4832.00, The Nasdaq down 596.8 points (-3.7%) at 15689.37.
- Information Technology and Consumer Discretionary sectors continued to underperform, semiconductor makers primarily weighing on the IT sector: Super Micro Computer -7.60%, Arista Networks -6.04%, NVIDIA -5.76%, Palo Alto Networks -5.47%, Oracle -5.41% and Broadcom -4.91%.
- The Consumer Staples sector weighed down by Tesla -6.91%, DoorDash -5.87%,Chipotle Mexican Grill -4.48%, Carnival -4.22%, Ross Stores -4.01% and TJX Cos -3.93%.
- A mix of Financials, interactive media and pharmaceuticals outperformed in late trade: Discover Financial Services +3.34%, Fidelity National Information +3.00%, Netflix +1.40%, Moderna +1.34% and Dollar General +1.15%.
- Equity earnings resume after the close: Hexcel Corp, Medpace Holdings Inc, W R Berkley Corp, AGNC Investment Corp and Western Alliance Bancorp reporting.
PIPELINE: Corporate Bond Update, $5B American Express 4Pt Priced
Apr-21 18:25
- Date $MM Issuer (Priced *, Launch #)
- 04/21 $5B *American Express $1.6B 4NC3 +98, $400M 4NC3 SOFR+126, $1.5B 6NC5 +108, $1.5B 11NC10 +128
- 04/21 $700M Excelerate Energy 5NC2
- 04/21 $2B QXO Inc. 7NC3 investor calls
