STIR: Net Long Setting Dominated After PPI Data
OI data suggests that net long setting dominated in most SOFR futures through the blues on Thursday, as softer-than-expected PPI data (and the readthrough for the Fed’s preferred PCE inflation gauge) promoted fresh dovish flows.
- A reminder that most contracts were trading just off the most hawkish levels seen since March/April ahead of the data, owing to the moderation in Sino-U.S. trade tensions seen over the weekend/early Monday.
| 15-May-25 | 14-May-25 | Daily OI Change |
| Daily OI Change In Packs |
SFRH5 | 1,032,945 | 1,032,716 | +229 | Whites | +39,537 |
SFRM5 | 1,212,783 | 1,214,375 | -1,592 | Reds | +15,285 |
SFRU5 | 1,084,372 | 1,049,704 | +34,668 | Greens | +17,963 |
SFRZ5 | 1,128,811 | 1,122,579 | +6,232 | Blues | +1,290 |
SFRH6 | 783,860 | 763,875 | +19,985 |
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SFRM6 | 758,057 | 755,777 | +2,280 |
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SFRU6 | 745,326 | 745,647 | -321 |
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SFRZ6 | 860,654 | 867,313 | -6,659 |
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SFRH7 | 686,078 | 679,175 | +6,903 |
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SFRM7 | 584,834 | 581,445 | +3,389 |
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SFRU7 | 376,289 | 371,858 | +4,431 |
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SFRZ7 | 397,687 | 394,447 | +3,240 |
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SFRH8 | 263,003 | 258,976 | +4,027 |
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SFRM8 | 187,909 | 188,624 | -715 |
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SFRU8 | 151,507 | 154,262 | -2,755 |
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SFRZ8 | 164,219 | 163,486 | +733 |
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US-JAPAN: Trump To Attend Meeting w/Japan's Chief Trade Negotiator
President Donald Trump posts on Truth Social: "Japan is coming in today to negotiate Tariffs, the cost of military support, and “TRADE FAIRNESS.” I will attend the meeting, along with Treasury & Commerce Secretaries. Hopefully something can be worked out which is good (GREAT!) for Japan and the USA!". As the first country to come to the US for negotiations following the suspension of 'reciprocal' tariffs, the meeting will be watched closely not just in Tokyo, but in the capitals of other US allies for signs of how the Trump administration will treat its friends when it comes to trade talks.
- As the FT reports "Diplomats said Japan’s status as a “guinea pig” in trade talks might give it an advantage over other countries, but also made it a test case of just how hard the US administration was prepared to hit friends and foes. Japan’s trade surplus with the US is among the 10 biggest in the world."
- Bloomberg reports that Treasury Sec Scott Bessent and USTR Jamieson Greer are keen to discuss currency issues. However, Japan's Economic Revitalisaiton Minister and chief trade negotiator Ryosei Akazawa does not have the currency portfolio under his command. Instead, this is managed by Finance Minister Katsunobu Kato.
- Earlier in the week, Japanese PM Shigeru Ishiba said in a parliamentary committee session that "We do not intend to make one compromise after another to conclude negotiations swiftly," potentially indicating of a hard-line stance to be adopted by the Japanese negotiators.
LOOK AHEAD: Wednesday Data Calendar: Retail Sales, IP/Cap-U, Fed Chair Powell
- US Data/Speaker Calendar (prior, estimate)
- 16-Apr 0700 MBA Mortgage Applications (20.0%, --)
- 16-Apr 0830 Retail Sales Advance MoM (0.2%, 1.4%), Ex Auto (0.3%, 0.4%)
- 16-Apr 0830 Retail Sales Control Group ((1.0%, 0.6%)
- 16-Apr 0830 NY Fed Services Business Activity (-19.3, -12.1)
- 16-Apr 0915 Industrial Production MoM (0.7%, -0.2%)
- 16-Apr 0915 Capacity Utilization (78.2%, 77.9%)
- 16-Apr 0915 Mfg (SIC) Production (0.9%, 0.2%)
- 16-Apr 1000 Business Inventories (0.3%, 0.2%)
- 16-Apr 1000 NAHB Housing Market Index (39, 38)
- 16-Apr 1130 US Tsy $60B 17W bill auction
- 16-Apr 1200 Cleveland Fed Hammack moderated Q&A w/ text
- 16-Apr 1300 US Tsy $13B 20Y Bond reopen (912810UJ5)
- 16-Apr 1330 Fed Chair Powell Economic Club of Chicago, outlook (text, Q&A)
- 16-Apr 1600 Net Long-term TIC Flows (-$45.2B, --); Total Flows (-$48.8B, --)
- 19-Apr 1900 KC Fed Schmid & Dallas Fed Logan on economy (no text, Q&A)
US 10YR FUTURE TECHS: (M5) Retracement Mode
- RES 4: 113-04 76.4% retracement of the Apr 7 - 11 bear leg
- RES 3: 112-12 61.8% retracement of the Apr 7 - 11 bear leg
- RES 2: 111-25 50.0% retracement of the Apr 7 - 11 bear leg
- RES 1: 111-09+ Intraday high
- PRICE: 110-31+ @ 11:20 BST Apr 16
- SUP 1: 110-15+/109-08 Low Apr 14 / 11 and the bear trigger
- SUP 2: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
- SUP 3: 108-21 Low Feb 19
- SUP 4: 108-03+ Low Dec 12 ‘24 and a key support
Treasury futures have traded higher so far this week. The climb has resulted in a breach of both the 20- and 50-day EMAs. For now, the latest bounce is considered corrective and the contract is retracing the steep sell-off between Apr 7 - 11. The next resistance to watch is 111-25, 50.0% of the Apr 7 - 11 bear leg. A resumption of weakness would refocus attention on 109-08, the Apr 11 low. A break of this level would resume the downtrend.
