US TSYS: Modest Twist Flattening, ISM Services Later On
Jun-04 10:48
- Treasuries sit slightly twist flatter on the day, having remained within yesterday’s range across all benchmark tenors overnight.
- The long end appeared to be helped off lows by Reuters reporting the BoJ is considering slowing the pace of tapering in its bond purchases from next fiscal year onward. It’s not a new idea but helped some demand for JGB futures even if they’ve since pared gains.
- Trade discussions: President Trump on Truth Social: "I like President XI of China, always have, and always will, but he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!"
- Separately, the EC’s Sefcovic said on X that there has been a productive and constructive discussion with USTR Greer. “We're advancing in the right direction at pace - and staying in close contact to maintain the momentum.”
- Today sees primary data focus on ISM Services although with some sensitivity to ADP and final PMIs before the Fed’s Beige Book for an update on what the Fed is hearing in liaison programs ahead of the Jun 17-18 decision.
- Cash yields are 0.6bp higher (3s) to 1.2bp lower (30s).
- 5s30s at 94.6bp (-1.8bp) is back to Friday’s levels.
- TYU5 trades at 110-15 (00+) on very low volumes of just 215k. It has remained within yesterday’s range throughout.
- Resistance continues to be watched at 110-30 (May 30 and Jun 2 highs), having topped out at 110-26+ yesterday, whilst support is seen at 109-26 (May 29 low) after which lies a bear trigger at 109-12+ (May 22 low).
- Data: MBA mortgage apps (0700ET), ADP May (0815ET), S&P Global US serv/comp final PMIs (0945ET), ISM Services May (1000ET)
- Fedspeak: Bostic & Cook moderate Fed Listens event (0830ET) – see STIR bullet – before Beige Book (1400ET)
- Bill issuance: US Tsy $60B 17W bill auction (1130ET)
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Historical bullets
US 10YR FUTURE TECHS: (M5) Support Remains Exposed
May-05 10:47
- RES 4: 113-22 1.382 proj of the Apr 11 - 16 - 22 price swing
- RES 3: 113-04 76.4% retracement of the Apr 7 - 11 bear leg
- RES 2: 112-20+ High MAy 1 and key new-term resistance
- RES 1: 112-01+ High Apr 2
- PRICE: 111-07+ @ 11:36 BST May 5
- SUP 1: 111-02 Low Mar 2 / 50-dma
- SUP 2: 110-30+ 50-day EMA
- SUP 3: 110-16+/109-08 Low Apr 22 / 11 and the bear trigger
- SUP 4: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
A sharp reversal lower in Treasury futures last week undermines the recent bull cycle. The contract has breached the 20-day EMA, and sights are on support at the 50-day EMA, at 110-30+. A clear breach of this average would strengthen a bearish threat and expose 110-16+, the Apr 22 low. For bulls, price needs to trade above key short-term resistance at 112-20+, the May 1 high, to reinstate a bullish theme.
US TSYS: Spring Holidays Dampens Volumes, Focus on Midweek FOMC
May-05 10:43
- Treasuries are running mixed on very light overnight volumes (TYM5 <190k) with multiple Spring holidays around the globe: Japan, China, HK, South Korea, as well as the UK, EU is open however.
- Focus on Wednesday's FOMC rate annc at 1400ET. The FOMC is expected to extend its series of rate holds to a third meeting in May, keeping the Fed funds target rate at 4.25-4.50% while maintaining its forward guidance in the Statement.
- Monday data (prior, est): S&P Global US Services PMI final (51.4, 51.2), Composite (51.2, 51.2) at 0945ET; ISM Services Index (50.8, 50.3), Prices Paid (60.9, 61.4), New Orders (50.4, 50.0) & Employment (46.2, 46.0) at 1000ET.
- US Treasury auctions: $76B 13W & $68B 26W bill auctions at 1130ET followed by $58B 3Y Note auction (91282CND9) at 1300ET.
- Tsy Jun'25 10Y contract trades +3.5 at 111-08.5 (yld 4.3121, +.0038), lower half of narrow overnight range (111-06 low, 111-13.5 high). Curves twist steeper with Bonds lagging mildly firmer 2s-10s: 2s10s +2.636 at 50.868, 5s30s +2.664 at 89.544.
- Cross asset roundup: Bbg US$ index lower (-4.32 at 1220.19), Crude weaker (WTI -.70 at 57.59), Gold surges to 3313.22 (+72.73).
LOOK AHEAD: Monday Data Calendar: S&P Services/Comp PMIs, ISM Services, 3Y Note
May-05 10:20
- US Data/Speaker Calendar (prior, estimate)
- 5-May 0945 S&P Global US Services PMI final (51.4, 51.2), Comp (51.2, 51.2)
- 5-May 1000 ISM Services Index (50.8, 50.3), ISM Prices Paid (60.9, 61.4)
- 5-May 1000 ISM Services New Orders (50.4, 50.0), Employ (46.2, 46.0)
- 5-May 1130 US Tsy $76B 13W & $68B 26W bill auctions
- 5-May 1300 US Tsy $58B 3Y Note auction (91282CND9)
