US TSYS: Mildly Twist Steeper Awaiting An Important Docket
Aug-15 10:51
- Treasuries have seen the front end keep to a narrow range overnight ahead of an important docket but the longer end biased lower by EGBs, which see more sizeable losses in a continuation of prior bear steepening trends rather than a fresh catalyst.
- Today sees important data releases including retail sales, import prices, industrial production and the U.Mich consumer survey, Chicago Fed’s Goolsbee offering his latest view after yesterday’s strong PPI report and then the Trump-Putin meeting at 1500ET.
- Cash yields are 0.5bp lower (2s and 3s) to 1bp higher (20s and 30s).
- 5s30s sits at 107.0bps as it starts to eye ytd highs of 108.5bps seen in the aftermath of the Aug 1 nonfarm payrolls report.
- TYU5 trades at 111-26 for near unchanged on the day, on subdued cumulative volumes of 225k ahead of an important docket.
- Yesterday’s pre-PPI high of 112-14 stopped just short of testing resistance at 112-15+ (Aug 5 high). The contract remains some way from support at 110-19+ (Jul 24 low) despite the pullback, although some may look at 111-19+ as a tentative level in puzzling trading after the initially dovish reaction to Tuesday’s CPI report.
- Data: Retail sales Jul (0830ET), Import prices Jul (0830ET), IP & Cap util Jul (0915ET), U.Mich consumer survey Aug prelim (1000ET), Business inventories Jun (1000ET), TIC Flows Jun (1600ET)
- Fedspeak: Goolsbee on CNBC (0830ET) – see STIR bullet
- Politics: President Trump departs the White House for Anchorage at 0645ET, with scope for subsequent headlines from the press travel pool, before the Trump-Putin meeting at 1500ET.
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US TSYS: Broadly Consolidating Yesterday’s CPI-Induced Breach Of TYA Support
Jul-16 10:50
- Treasuries trade modestly twist flatter on the day although broadly speaking consolidate yesterday’s sell-off on the June CPI report with its signs of increased tariff passthrough.
- Treasuries outperform Gilts across the curve owing to stronger than expected UK CPI, whilst they underperform EGBs at the front end but track in line further out the curve.
- Cash yields are 0.7bp higher (2s) to 1.8bp lower (30s).
- The 10Y yield, currently at 4.473%, saw an overnight high of 4.493%, having last cleared 4.50% on Jun 11.
- TYU5 trades at 110-11+ (+ 02+) on solid cumulative volumes of 375k, albeit keeping to narrowing ranges of 110-08+ to 110-13+.
- It consolidates yesterday’s push lower to that 110-08+, seen multiple times since then, in a move that breached an important support at 110-17 (61.8% of May 22 – Jul 1 bull leg). It has also traded through trendline support at 110-23+, strengthening a bearish theme and opening 110-03 (76.4% retrace of the same bull leg).
- Data: MBA mortgage applications (0700ET), PPI Jun (0830ET), NY Fed services Jul (0830ET), IP/Cap util Jun (0915ET)
- Fedspeak: Barkin repeats speech (0830ET, text + Q&A), Hammack on community development (0915ET, text only), Gov. Barr on financial regulation (1000ET, text + Q&A), Beige Book (1400ET), Bostic on fox business network (1530ET), NY Fed's Williams on economic outlook and policy (1830ET, text + Q&A).
- Bill issuance: US Tsy to sell $65bn 17-W bills (1130ET)
EQUITIES: Big Banks Still Dominating Earnings Schedule; MS, BofA & GS All Due
Jul-16 10:41
Awaiting results from Bank of America in around 10 minutes times - continuing the theme of big bank earnings that should dominate this week. Highlights today include:
- 1145BST/0645ET: Bank of America
- 1230BST/0730ET: Morgan Stanley, Goldman Sachs
- Pre-Market: Prologis, Progressive Corp
- After-Market: United Airlines
Our full schedule including timings, EPS and revenue estimates here: https://media.marketnews.com/MNIUSEARNINGS_110725_c282a28044.pdf
OUTLOOK: Price Signal Summary - USDJPY Bulls Remain In The Driver's Seat
Jul-16 10:40
- In FX, a corrective cycle in EURUSD remains in play and the pair traded lower Tuesday. Support at the 20-day EMA, at 1.1655, has been cleared. This shifts the focus to the 50-day EMA, at 1.1505. A clear break of the average is required to highlight a stronger reversal. For now, the move down appears corrective and trend signals continue to highlight a dominant uptrend. A resumption of gains would open 1.1829, the Jul 1 high and a bull trigger.
- A short-term bear cycle in GBPUSD remains in place and this week’s move down reinforces current bearish conditions. The pair has breached both 20- and 50-day EMAs. Yesterday’s move down resulted in a break of trendline support at 1.3440. The trendline is drawn from the Jan 13 low and the breach strengthens a bearish threat, exposing 1.3371 initially, the Jun 23 low. Initial firm resistance to watch is 1.3555, the 20-day EMA.
- A short-term bull cycle in USDJPY remains firmly in place and this week’s gains reinforce current conditions. The latest rally has resulted in a breach of resistance at 148.03, the Jun 23 high, and a move through key resistance at 148.65, the May 12 high. Clearance of both levels strengthens the bull theme and opens 149.38, 50.0% of the Jan 10 - Apr 22 bear leg. On the downside, support to watch is 145.44, the 50-day EMA.
