STIR: Minor Dovish Moves In Fed Rate Path On The Day Holding

• Tsy futures are trading off mid-morning lows (TYU5 currently -4 at 111-17 vs. 111-11.5 low) ahead of the $70B 5Y note auction (91282CNK3) at 1300ET, WI is currently running at 3.877%, 19.4bp rich to last month's stop.
• May auction recap: reaction was positive: 5s richened about 0.5bp on the 2s5s7s butterfly, with 10Y yields down 1.4bp to 4.477%. Typically solid with the 4.071% high yield representing a 0.4bp trade-through versus the 4.075% when-issued yield at auction cutoff. Bid-cover of 2.39x - in line with the 5-auction average.
• This was the 6th 5Y auction in the last 7 to trade through with more solid peripheral statistics than usual: A record (going back to data from the early 2000s) high 78.4% takedown by indirects (seen by some as a proxy for foreign investors) was a highlight, and well up from the 69.0% prior 5-auction average.
• Primary dealers took down just 9.2% of competitives, below the 11.7% average of the prior 5 auctions, and the lowest since January 2023 - which was in turn the lowest on record (going back to the early 2000s).

• RES 4: 112-23   High May 1 and key resistance 
• RES 3: 112-04+ High May 2 
• RES 2: 111-30/31+ 76.4% of May 1-22 downleg / 1.0% 10-dma env 
• RES 1: 111-24   Intraday high
• PRICE:‌‌ 111-17 @ 16:53 BST Jun 25
• SUP 1: 110-23   50-day EMA         
• SUP 2: 110-10+/109-28 Low Jun 16 / Low Jun 6 / 11 
• SUP 3: 109-12+ Low May 22 and the bear trigger
• SUP 4: 109-09+ Low Apr 11 and key support

Treasury futures are holding on to this week’s gains. Price has traded above resistance at 111-14+, the Jun 5 high and 61.8% of the May 1 - 22 downleg. The clear break of this hurdle strengthens a bullish cycle and has opened 111-30, a Fibonacci retracement. Clearance of 111-30 would strengthen current conditions. Initial pivot support to watch lies at 110-23, the 50-day EMA. A clear breach of this EMA would signal a potential reversal.  

• -5,000 TYQ5 111.5 straddles 131-130 ref 111-16
• -8,000 TYQ5 110.25/112.75 strangles, 36 ref 111-16