STIR: Minor Dovish Moves In Fed Rate Path On The Day Holding
Jul-25 16:39
- Fed Funds implied rates have seen a modest dovish move today, with the Dec’25 rate 1bp lower after a 2bp intraday decline.
- It’s primarily on disappointing core durable goods orders (which are now tracking at -1.7% annualized in Q2 after a booming 9.2% in Q1) before Trump said he got the impression from Powell that he might be ready to lower rates. There have been few other drivers since then.
- There was no notable reaction in July pricing from the Trump-Powell comments, unsurprising with the committee-nature of the FOMC and existing (mostly patient) Fedspeak prior to the media blackout ahead of next week's FOMC decision. Only two members on the committee have explicitly voiced willingness for a July cut.
- September cuts increased by 1bp on the headlines but have since reversed most of it, although meetings further out have held more of the initial impact.
- Cumulative cuts from 4.33% effective: 0.5bp for Wed, 17.5bp Sep, 28bp Oct, 44bp Dec, 52.5bp Jan and 64.5bp Mar.
- The SOFR implied terminal yield of 3.225% (SFRH7) is just 0.5bp lower on the day, within the 3.1-3.3% range in July to date.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US TSYS/SUPPLY: Preview 5Y Auction: Current WI 19.4Bp Rich to Last Month's Stop
Jun-25 16:05
- 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).
US 10YR FUTURE TECHS: (U5) Bull Cycle Remains Intact
Jun-25 15:57
- 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.
US TSY OPTIONS: Aug'25 10Y Vol for Sale
Jun-25 15:46
- -5,000 TYQ5 111.5 straddles 131-130 ref 111-16
- -8,000 TYQ5 110.25/112.75 strangles, 36 ref 111-16
