US TSY FUTURES: Mix Of Positioning Swings Thursday, Bias Towards Cover

• GBPUSD remains unchanged on Wednesday, broadly consolidating a dip following yesterday’s softer-than-expected labour market data and holding steady around 1.35. Yesterday’s price action prompted cable to reach initial support at its 20-day EMA. A clear break of this average would suggest potential for a deeper correction and expose the 50-day EMA for direction, at 1.3306.
• Separately, EURGBP has moderately extended yesterday’s rally, bolstered by the breach of key short-term resistance around 0.8440. Price developments highlight a stronger reversal, potentially exposing 0.8541, the May 02 high.
• Interestingly, JP Morgan recently noted that GBPUSD continues to bullishly pressure the confluence of longer-term trend line and channel resistance between 1.3557-1.36, but the lows of rally momentum in that area has also triggered bearish momentum divergence signals.
• They also highlighted a potential ending diagonal pattern suggesting bullish trend exhaustion. In their view, a break below the 1.3416 would confirm a short-term bearish trend reversal and target a deeper pullback towards 1.3140-1.3280 support zone. That area that includes the 50-day MA, Jan-Apr trend line, chart pivots, and Apr Fibonacci retracement levels is critical to the health of the broader rally structure.

• Fed Funds implied rates for 2025 meetings are close to late May’s most hawkish levels since February, with a next cut fully priced for Oct and less than two cuts fully priced to year-end.
• There has been little net impact on near-term meetings from the US appeals court late yesterday ruling that tariffs can stay in place longer or the more recent China statement following two days of US-China talks in London.
• That’s ahead of today’s CPI report for May. An upside surprise could tee up a hawkish Fed next week, emboldening more members to pencil in at most one cut in 2025.
• MNI US CPI Preview: https://media.marketnews.com/USCPI_Prev_Jun2025_a86717a017.pdf
• Cumulative cuts from 4.33% effective: 0bp Jun, 3.5bp Jul, 16.5bp Sep, 28bp Oct and 43.5bp Dec.
• The SOFR implied terminal yield of 3.41% (SFRZ6, +2bp) is still a little off Friday’s post-payrolls close of 3.435% at what was its highest since May 14. 

Speaking as part of the final leaders' debate of the current session of the House of Representatives, PM Shigeru Ishiba counters recent reports about the prospect of cash handouts ahead of the House of Councillors election due by late July. Reuters reports Ishiba saying that it is "not true that the gov't is currently considering providing cash handouts" and that people "should be cautious about any plans that would deteriorate already tattered state finances." 

• This would seem to counter a report in Asahi Shimbun, claiming that Ishiba's conservative Liberal Democratic Party (LDP) and its coalition allies Komeito are considering a 'payment scheme' to 'combat price rises'.  Shimbun: "There will be no income restrictions, and every citizen will receive 20,000 yen (USD137) in cash. An additional 20,000 yen will be provided to households not subject to resident tax."
• Ishiba, responding to a question from the leader of the Japanese Communist Party, said cutting the consumption tax was "not appropriate,".
• There has been speculation that main opposition centre-left Constitutional Democratic Party (CDP) leader Yoshihiko Noda could submit a no=confidence motion in Ishiba's minority gov't, but reports claim that Noda may delay this until after the sidelines summit between the PM and US President Donald Trump on the sidelines of the G7 summit in Canada running 15-17 June.