US TSYS: Mildly Firmer With Early Close, Trump Iran Deliberations Continue
Jun-19 17:13
- Treasury futures dealt mildly firmer at the early close on Juneteenth day, with TUU5 at 103-21 3/8 (+ 00 7/8) and TYU5 at 110-28 (+ 03).
- TYU5 saw a session high of 110-31+ on continued geopolitical escalation fears captured by WTI +2.9% and ESM5 -0.9%.
- It remained within yesterday’s range which included a snap 111-08 on the FOMC decision and dot plot. Resistance is seen at 111-13 (Jun 13 high) and 111-14+ (Jun 5 high and 61.8% retrace of May 1-22 downleg) whilst support is seen at 110-10+ (Jun 16 low).
- Trump is still to decide on striking Iran - CBS reports he deems it “necessary” to disable the Fordow nuclear site.
- Volumes have been unsurprisingly extremely thin, only just above 250k for TY.
- In rates space, SOFR futures ranged from flat to 3 ticks firmer in 2027 contracts, retracing part of yesterday’s steepening on the FOMC dot plot and Powell’s presser (SFRZ5/Z6 -0.625 vs -0.65 pre Fed and an overnight high of -0.59).
- The terminal SOFR yield of 3.25% (SFRH7) continues to imply a little over 100bp of cuts for the rest of the cycle.
- As for the near-term path, Fed Funds futures still point to a next cut coming in October with a cumulative 30.5bp priced. The 48bp cumulative to year-end is close to the more dovish than most expected 50bp indicated in the dot plot.
- Attention will likely continue to be firmly on Trump’s Iran deliberations. Tomorrow meanwhile sees a thin docket headlined by the Philly Fed manufacturing survey for June and with no Fedspeak scheduled for the first day of the FOMC blackout lifted.
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EURUSD TECHS: Trend Structure Remains Bullish
May-20 17:00
- RES 4: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1608 High Nov 9 2021
- RES 2: 1.1440/1573 High Apr 23 / 21 and the bull trigger
- RES 1: 1.1293/1381 High May 9 / High May 2 - 6
- PRICE: 1.1255 @ 16:35 BST May 20
- SUP 1: 1.1102/65 50-day EMA and a pivot level / Low May 12
- SUP 2: 1.1026 38.2% retracement of the Feb 3 - Apr 21 bull cycle
- SUP 3: 1.0943 Low Apr 10
- SUP 4: 1.0857 50.0% retracement of the Feb 3 - Apr 21 bull cycle
EURUSD continues to trade above last week’s low and recent weakness appears corrective. A key support at the 50-day EMA, at 1.1102, remains intact. A clean break of this average would undermine the uptrend and highlight a stronger reversal. Key trend signals still highlight an uptrend. A key resistance to watch is 1.1381, the May 2 - 6 high. Clearance of this level would signal the end of the correction and highlight a bullish break.
FED: Hammack On Three Distinct Scenarios
May-20 16:58
Cleveland Fed’s Hammack (’26 voter) told Axios that the the White House tax bill or its deregulatory efforts complicates forecasts amidst “tremendous uncertainty”. She had said May 10 that there is a strong case for holding mon pol steady and that it will take time for hard data to show govt policy changes.
- “There are a number of other policies that are still yet to be implemented that could have offsetting effects" on trade policy.
- "We don't want to overreact to trade — that's certainly the topic of conversation right now — because there are other policies that are coming into play”.
- On the upcoming SEP projections to be submitted at the Jun 17-18 FOMC meeting: "I'm grateful that I have four weeks to work on coming up with a modal case, because right now I haven't really been operating with a base case […] I've been operating in a couple different scenarios." "To come up with a modal case that you have a lot of confidence in, I think at this particular moment is going to be really challenging,"
- She talks on three scenarios, which can be found in the full Axios piece, here.
PIPELINE: Corporate Bond Update, $7B Siemens 7Pt Launched
May-20 16:56
- Date $MM Issuer (Priced *, Launch #)
- 05/20 $7B #Siemens $1B 3Y +40, $500M 3Y SOFR+64, $1B 5Y +55, $1B 7Y +65, $1.5B 10Y +75, $1.25B 30Y +85, $750M 40Y +95
