US TSYS: Modest Bear Steepening, 10Y Supply And Trump Deliberations In Focus
Aug-06 10:59
- Treasuries are cheaper and steeper with similar moves seen in EGBs. It’s a quiet docket ahead, with likely added attention on 10Y supply at 1300ET.
- WTI futures are +1.7% whilst S&P 500 futures are +0.2% having halved earlier gains (along with fixed income moving off lows).
- President Trump is set to make an announcement from the Oval Office at 1630ET according to Roll Call, topic unknown. He yesterday said he will decide on Fed Governor Kugler’s replacement by the end of the week, which could rule that out, but potential topics include a decision on Russian secondary sanctions or the appointee of new BLS commissioner.
- Cash yields are 0.6-3.2bp higher, with increases led by 30s.
- The steepening sees only a partial retracement of Mon/Tue flattening away from Friday’s post-payrolls steeps. 5s30s have seen the more pronounced moves, currently at 102.5bp (+2bp) having hit joint ytd highs of circa 108.5bps with Monday’s Asia open.
- TYU5 trades at 112-02+ (-07), close to session lows of 112-00 on another overnight with subdued cumulative volumes of 230k.
- It pulls back further from what is now latest resistance at 112-15+ from the Aug4/5 overnight high (after which lies 112-23, May 1 high)). Support is some way lower at 110-19+ (Jul 24 low).
- Data: MBA mortgage applications (0700ET)
- Fedspeak: Cook & Collins (1400ET), Daly (1610ET, incl text) – see STIR bullet
- Coupon issuance: US Tsy $42B 10Y Note auction - 91282CNT4 (1300ET). Last months’ 10Y saw a small 0.3bp stop along with mixed internals including bid-to-cover rising from 2.52 to 2.61 but indirect take retreating from 70.6% to 65.4%.
- Bill issuance: US Tsy $65B 17W bill auction (1130ET)
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Historical bullets
OUTLOOK: Price Signal Summary - Bear Threat In WTI Remains Present
Jul-07 10:53
- On the commodity front, Gold is trading lower today. Recent weakness resulted in a breach of the 50-day EMA, and a trendline drawn from the Dec 30 ‘24 low and connected to the Feb 28 low. A clear break of both trend tools would signal scope for a deeper correction, and open $3245.5, May 29 low. Note that the latest recovery highlights a possible false trendline break. A resumption of gains would refocus attention on $3451.3, the Jun 16 high. The bear trigger is $3248.7, the Jun 30 low.
- In the oil space, WTI futures maintain a softer tone following the reversal from the Jun 23 high. Recent gains appear corrective. Support to watch is the 50-day EMA, at $64.84. It has been pierced, a clear break of it would signal scope for a deeper retracement. This would expose $58.87, the May 30 low. Initial resistance to watch is $71.20, the 50.0% retracement of the Jun 23 - 24 high-low range. Key resistance is at $78.40, the Jun 23 high.
EQUITIES: Large Commerzbank Rolling Put
Jul-07 10:45
CBK (19/06/26) 12p vs (18/06/27) 20p, bought the 2027 for 2.92 in 40k.
OUTLOOK: Price Signal Summary - USDJPY Trades Through The 50-Day EMA
Jul-07 10:43
- In FX, the trend condition in EURUSD remains bullish with price trading closer to its recent highs. Moving average studies are in a bull-mode position highlighting a clear uptrend and note too that corrections, when they do occur, have been shallow. This reinforces the trend condition. A resumption of gains would signal scope for a climb towards 1.1851, the Sep 10 2021 high. Key short-term support to watch lies at 1.1630, the 20-day EMA.
- A bull cycle in GBPUSD remains in play and the latest pullback appears to be a correction. Support to watch is 1.3602, the 20-day EMA. A clear break of it would signal scope for a deeper correction towards the 50-day EMA at 1.3462. Key resistance and the bull trigger has been defined at 1.3789, the Jul 1 high. Clearance of this hurdle would resume the uptrend. Note that MA studies are in a bull-mode position - this suggests the M/T uptrend remains intact.
- USDJPY has started the week on a firmer note. Price has breached the 50-day EMA, at 144.91, and a close above it would highlight a stronger reversal. This would expose 146.19, the Jun 24 high. For now, gains still appear corrective. Moving average studies are in a bear-mode position, signalling a dominant downtrend. A resumption of weakness would open 142.12, the May 27 low and a key short-term support.
