US TSYS: Modestly Twist Flatter On Low Volumes Ahead Of An Important Docket
Apr-30 10:53
- Treasuries trade twist flatter as the front end modestly pares latest gains whilst the long end consolidates and in the case of 2-s and 30s builds upon prior gains.
- Weaker than expected Caterpillar results have weighed on equities but with little sign of spillover into Treasuries.
- Futures volumes have been subdued overnight ahead of a particularly heavy docket before further risk events after the equity cash close with results from Meta and Microsoft.
- Today sees the Treasury QRA at 0830ET (MNI preview) along with multiple data releases that include Q1 GDP (mini preview here) and March PCE (here).
- Cash yields are 1bp higher (2s and 3s) to 2bp lower (20s and 30s).
- 10Y yields at 4.162% eye 4.15% for the first time since early Apr 8, i.e. comfortably pre-tariff pause levels.
- TYM5 trades at 112-06 (+01) in a narrow range, consolidating yesterday’s rally with an overnight high of 112-09.
- Prior clearance of 111-25 (50% retrace of Apr 7-11 bear leg) has undermined a prior bearish theme and the contract has again stepped closer to latest resistance at 112-12 (61.8% retrace of the same bear leg). To the downside, support at 111-07+ (20-day EMA).
- Data: Weekly MBA data (0700ET), ADP employment Apr (0815ET), GDP Q1 advance (0830ET), Employment Cost Index Q1 (0830ET), MNI Chicago PMI Apr (0945ET), PCE report Mar (1000ET), Pending home sales Mar (1000ET)
- Bill issuance: US Tsy $60B 17W bill auction (1130ET)
- Full Treasury Quarterly Refunding Announcement (0830ET). Recent market volatility has reduced the possibility that Treasury will adjust its guidance that it will keep nominal coupon auction sizes unchanged for "at least the next several quarters", as changing this would signal an intention to increase bond supply in the near future. That view was further boosted by details in Monday's borrowing estimates.
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OUTLOOK: Price Signal Summary - Gold Bulls Remain In The Driver's Seat
Mar-31 10:50
- On the commodity front, the trend condition in Gold is unchanged, it remains bullish. Today’s strong gains highlight a bullish start to this week’s session and confirm a continuation of the primary uptrend. The rally also once again, highlights fresh all-time highs for the yellow metal. Sights are on the $3151.5, a 3.000 projection of the Nov 14 - Dec 12 - 19 price swing. Support to watch lies at $2992.4, the 20-day EMA. A pullback would be considered corrective.
- In the oil space, despite recent gains, a bearish trend condition in WTI futures remains intact, and gains this month are considered corrective. However, a key resistance at $69.17, the 50-day EMA, has been pierced. The breach strengthens a bullish theme and opens $70.98, the Feb 25 high. For bears, a reversal lower would expose the bear trigger at $64.85, the Mar 5 low. Clearance of this level would resume the downtrend and open $63.73, the Oct 10 ‘24 low.
EQUITIES: Stoxx 50 Futures Move Closer To Next Support
Mar-31 10:44
Euro Stoxx 50 futures see a more convincing break below 5,200.00 at the second time of asking.
- Nothing much in the way of a fresh headline catalyst to drive the latest leg of the sell off, with early NY reaction to overnight price swings perhaps factoring in.
- Oil has pulled back from session highs, another potential factor aiding the move.
- The break below 5,200.00 obviously deepens the bearish technical threat in Euro Stoxx 50 futures. Next support seen at the Feb 4 low (5,160.00).
US TSYS: Risk-Off Start To Quarter-End
Mar-31 10:43
- Treasuries have been confined to relatively tight ranges since opening markedly higher in Japan trading, reflecting broad risk-off flows on a combination of tariff concerns ahead of April 2 "Liberation Day" and geopolitical fears
- Goldman Sachs for example have marked up their 12-month US recession probability from 20% to 35% on the assumption of a 15pp increase in the average US tariff rate vs 10pp previously.
- Cash yields are 4.5-6bp lower on the day, with declines led by the front end.
- 2Y yields have stabilized around 3.85% (touched Mar 11 but last sustainably lower in Oct 2024) whilst 10Y yields have stabilized around 4.20% (hit a few times throughout March).
- 2s10s at 35bp (+1bp) remains off last week’s recent high of above 38bps.
- TYM5 trades at 111-18 (+11+) off an earlier high of 111-22+, on strong overnight volumes of 545k. Resistance at the March 20 high (111-17+) has been pierced, with bulls now looking to force a break above the March 11 high (111-25) as they aim to build further on last week's gains. Attention is on key resistance at 112-01 (Mar 4 high).
- Data: MNI Chicago PMI Mar (0945ET), Dallas Fed mfg Mar (1030ET)
- Bill issuance: US Tsy $76B 13W & $68B 26W Bill auctions (1130ET)
