US TSYS: Modestly Lower On Thin Volumes, Durable Goods Ahead
Jul-25 10:54
- Treasuries have stabilized after moving modestly lower overnight, outperforming EGBS throughout.
- A hawkish BOJ sources piece and yesterday’s ECB press conference has likely helped drive losses on the day, with the earlier shift higher in EGB yields appearing flow-driven.
- Today sees preliminary durable goods headline the docket whilst President Trump flies to Scotland.
- Cash yields are 0.5-2.3bp higher on the day, with increases lead by 30s.
- 30Y yields are 4.957% are off yesterday’s high of 4.989% having pulled back below 5% this week after a brief clearance last week for the first time since May.
- TYU5 trades at 110-25+ (-01) on particularly thin cumulative volumes of 195k, having remained within yesterday’s range throughout.
- Yesterday’s low of 110-19+, an hour after jobless claims as the ECB press conference was wrapping up, saw a step closer to a key support at 110-08+ (Jul 14/16 low). Resistance meanwhile is seen at 111-14+ (Jul 22 high).
- Data: Durable goods Jun prelim (0830ET), KC Fed services Jul (1100ET). Durable goods will mark one of the last updates before next week’s Q2 GDP advance release.
- Politics: Trump leaves the White House en route to Scotland (0800ET) with open press.
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US TSYS: Mildly Lower; NATO Headlines, 5Y Supply And Housing Data Ahead
Jun-25 10:51
- Treasuries are inching lower as US desks filter in but are little changed on the day awaiting fresh drivers, having faded an earlier modest rally that came about with limited headlines.
- President Trump has disputed a Pentagon assessment that US airstrikes only had a limited impact by delaying the Iranian nuclear program by months.
- Trump is in the Netherlands today for a pared back NATO summit.
- Cash yields are 0.5-1bp higher on the day.
- 2s10s is mechanically steeper at 50.5bp (+3.2bp) after the new 2Y entered the benchmark after yesterday’s 2Y auction.
- 5s30s are little changed at 97.5bp (+0.3bp) having tested recent highs with 100.4bp yesterday.
- TYU5 deals at 111-18 (- 03) on modest cumulative volumes at 285k. An overnight high of 111-24 extended recent gains seen after Monday’s clearance of 111-14+.
- Resistance is eyed at 111-30 (76.4% of May 1-22 downleg) and 111-31+ (1.0% 10-dma envelope).
- Data: MBA mortgage applications (1200ET), New home sales May (1000ET), Building permits May revisions (tbd)
- Fedspeak: Goolsbee on podcast (0800ET), Powell testifies before Senate Committee (1000ET, text + Q&A)
- Coupon issuance: US Tsy $28B 2Y FRN Note re-open (1130ET), US Tsy $70B 5Y Note - 91282CNK3 (1300ET).
- Last month’s 5Y suction was strong, with a 0.4bp trade through (its sixth trade through in the past seven auctions) and record high indirect take-up at 78.4%. Yesterday’s 2Y auction meanwhile saw a small stop (0.2bp) and a bid-to-cover at 2.58x for almost identical to the 2.57x prior.
- Bill issuance: US Tsy $63B 17W bill auction (1130ET)
JPY: GBPJPY is testing the 2025 high
Jun-25 10:50
- The Yen continues to see broader losses, this has been a one way move throughout the early European session, at a new intraday low against the USD, AUD, EUR, NZD and the GBP.
- As noted on the Govie Cash open, regarding Charts, worth keeping an eye on the GBPJPY, while it managed a 198.195 high on Monday, most will be watching the 198.256 level, the January and the 2025 high.
- GBPJPY is now testing that 2025 high, and a clear break through that level opens to the December high at 198.96 (see chart).
(Chart source: Bloomberg Finance LP/MNI).
OUTLOOK: Price Signal Summary - Bear Threat In Oil Futures Still Present
Jun-25 10:37
- On the commodity front, a bullish theme in Gold remains intact and the latest pullback is considered corrective - for now. Medium-term trend signals are bullish too - moving average studies are in a bull-mode position, highlighting a dominant uptrend. Resistance at $3435.6, the May 7 high, has recently been pierced. A clear break of this level would strengthen the uptrend and open $3500.1, the Apr 22 all-time high. Initial key support to monitor is $3287.7, the 50-day EMA.
- In the oil space, WTI futures maintain a softer tone following the reversal from Monday’s high. Support to watch is at the 50-day EMA, at $64.50. 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. On the upside, 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.
