US TSYS: Off Lows, Awaiting Trump Response To Court Ruling And 0830ET Data
May-29 10:59
- Treasuries are pulling back off lows, in more uniform moves now having at first mostly reversed a sizeable bear flattening seen with the Asia open in reaction to the U.S. Court of International Trade ruling that Trump's April 2 tariffs superseded his executive authority.
- US desks filtering in appeared to help push the long end to new latest lows although moves were at a steady pace and have also been pared quickly in recent trading.
- Cash yields are 2.3-4.5p higher, with increases led by 5s and 7s whilst 2s lag the day’s sell-off. Today’s 7Y supply could be helping this underperformance at the margin, although follows yesterday’s strong 5Y which traded through by 0.4bp and saw a record high for indirect take-up.
- 2s10s at 50.6bp (+1.3bp) has lifted off overnight lows of 47.5bp whilst 5s30s at 91.1bp (-0.7bp) has lifted off 87bps.
- TYU5 trades at 109-30+ (-09+) on solid volumes of 490k considering the roll is nearly complete.
- It’s off an earlier low of 109-26 that came close to tentative support at 109-25+ (Friday’s low) but still a little off troubling firmer support at 109-12+ (May 22 low). In case a corrective bounce resumes, resistance is seen at 110-21 (50-day EMA) for close to a key 110-23 (May 16 high).
- Today sees markets awaiting Trump’s response to the court ruling before data attention on GDP revisions and jobless claims including a payrolls reference period for continuing claims.
- Data: 2nd Q1 GDP/PCE revisions (0830ET), Jobless claims (0830ET), Pending home sales Apr (1000ET)
- Fedspeak: Barkin (0830ET), Goolsbee (1040ET), Kugler (1400ET), Daly (1600ET), Logan (1825ET)
- Coupon issuance: US to sell $44bn 7Y notes - 91282CNF4 (1300ET)
- Bill issuance: US to sell $75bn 4W bills, $65bn 8W bills (1130ET)
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EQUITIES: A quick drop lower in US and European Equities
Apr-29 10:57
- A quick drop in Equities on both sides of the Pond, seems more likely Earning driven, with very little moves in Bonds or FX.
Pfizer earnings were bad, GM were also on the messy side and UPS is set to cut Jobs. - Desks continue to ascertain the near and the much longer term negative impact from the Tariffs debacle.
- In terms of outright flows, we have not seen any notable volume size order going through, and the low liquidity exacerbate some of these quick moves.
OUTLOOK: Price Signal Summary - USDJPY Trend Needle Continues To Point South
Apr-29 10:44
- In FX, short-term weakness in EURUSD is considered corrective and the trend structure remains bullish. Moving average studies are in a bull-mode position signalling a dominant uptrend, and the latest move down is allowing an overbought condition to unwind. A resumption of gains would open 1.1608 next, the Nov 9 2021 high. Key short-term support is unchanged at the 20-day EMA, at 1.1236. A break of this average would signal scope for a deeper retracement.
- Bullish trend conditions in GBPUSD remain intact and Monday’s positive start to the week reinforces current conditions. A fresh cycle high yesterday highlights a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Moving average studies are in a bull-mode position too, signalling a dominant uptrend. Sights are on 1.3510, the 1.236 projection of the Feb 28 - Apr 3 - 7 price swing. Support to watch lies at 1.3180, the 20-day EMA.
- The recovery that started Apr 22 in USDJPY is considered corrective. Resistance to watch is 144.24, the 20-day EMA. A clear break of this level would signal scope for a stronger recovery. Resistance at the 50-day EMA, is at 147.05. Moving average studies are in a bear-mode position highlighting a dominant downtrend. A resumption of the trend would open 139.79 next, a 1.382 projection of the Feb 12 - Mar 11 - 28 price swing.
CANADA: Carney's Liberals Look Around To Potential Allies To Face Down Trump
Apr-29 10:44
With almost every riding (seat) declared, PM Mark Carney and his centre-left Liberal party will, in the days ahead, be looking to secure either a coalition or a confidence-and-supply agreement with opposition parties that will enable the gov't to command a majority in the House of Commons.
- The default option may be to work with the left-wing New Democratic Party (NDP). However, with the NDP set to win just seven seats, this would only put the gov't three seats over the 172 majority threshold. The other option would be the regionalist/separatist Bloc Quebecois. BQ's (likely) 23 seats would ensure the passage of legislation. The Bloc could demand concessions in the form of greater federal funding for Quebec or further regional devolution in exchange for support.
- The event that spurred the Liberals' recovery - US President Donald Trump's aggressive stance on tariffs and sovereignty - will likely ensure requisite parliamentary support for Carney when it comes to facing down the US. Any party perceived to be putting its own interests ahead of the country on trade could face a further public backlash.
- Earlier this morning, Public Safety Minister David McGuinty told MNI that "there’s an opportunity here to retool and reboot the economy. There’s some good ideas on all sides of the House, we’ve got to get them and then we’ve got to implement them.” For full article, see "MNI INTERVIEW: Carney To Work With Opposition, BQ- Minister' or contact sales@marketnews.com for access.
