US TSYS: Open Gains Reversed, Geopol Remains In Focus With Thin Docket Ahead
Jun-20 10:47
- Treasuries have more than reversed gains seen on the Asia open after the Juneteenth holiday which saw cash closed and futures close early.
- The intraday moves better reflect a firmer risk environment following the White House reporting yesterday (after the early close for rates and equity futures) that Trump will make a decision on whether to strike Iran within two weeks rather than anything more imminent.
- Cash yields are 0.5-2bp higher from Wednesday’s close, with increases led by the long end.
- Curves steepen slightly but are within ranges, with 2s10s at 46.9bp (+1.4bp) and 5s30s at 91.1bp (+1.1bp).
- TYU5 trades at session lows of 110-21+ (-04) from Wednesday’s settle on sluggish volumes at ~250k. It’s close to yesterday’s low of 110-21 in thin holiday trading prior to at the time risk-off moves on geopolitical tensions.
- Support is seen at 110-10+ (Jun 16 low) before 109-28 (Jun 6/11 lows) but resistance at 111-13 (Jun 13 high) before a key 111-14+ (Jun 5 high & 61.8% retrace of May 1-22 downleg) is still watched.
- Today sees a light docket, with data led by the Philadelphia Fed manufacturing survey for a second look at June activity after the Empire survey surprised lower on Monday.
- Data: Philly Fed mfg Jun (0830ET), Conference Board Leading index May (1000ET)
- Fedspeak: None currently scheduled on the first day with the FOMC blackout lifted
- Trump attends national security meeting at 1100ET - closed press (per Roll Call)
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PIPELINE: Corporate Bond Roundup: ADB, OKB, Turkiye & Kommunalbanken on Tap
May-21 10:44
- Date $MM Issuer (Priced *, Launch #)
- 05/21 $Benchmark Turkiye 7Y 7.75%a
- 05/21 $Benchmark Kommunalbanken +5Y SOFR+49
- 05/20 $Benchmark ADB 5Y SOFR+42
- 05/21 $Benchmark OKB 3Y +34
- $18.75B Priced Tuesday led by $7B Siemens 7-tranche package
GILT AUCTION RESULTS: Soft 4.00% Oct-31 Gilt Auction
May-21 10:41
Soft 4.00% Oct-31 Gilt auction: The bid-to-cover ratio of 2.74x was the weakest on record for this line. The average bid-to-cover ratio for the seven auctions (including the launch) going back to February 2024 was 3.09x.
- The lowest accepted price of 97.740 was also below the 97.7625 pre-auction mid-price. The secondary price of the Gilt is now 97.758.
- The auction tail was 0.7bps, above March’s 0.5bps but slightly below December’s 0.8bps.
- It’s possible that this morning’s BBG outages impacted demand at today’s auction.
FOREX: USD Slips as Markets Recorrelate with Long-End Weakness
May-21 10:39
A phase of dollar sales is helping pressure USD/JPY toward the overnight lows, with the dollar again pressured by weakness in the US long-end. The US curve is again steepening, with 30y yields higher by near 6bps on the day and equities weakening as the 'Sell the US' theme resumes.
- As has been the case in recent weeks, EUR is main beneficiary here - keeping $1.14 as the S/T upside target. EUR/GBP has printed a new high at 0.8459, shrugging off the entirety of the UK CPI tripped weakness to keep focus on 0.8470 the 50-dma.
- After a sluggish start hindered by Bloomberg Terminal connectivity problems, volumes in currency futures are picking up here, with near 7,000 contracts traded in JPY futures on the move. That's near $600mln cash equivalent on the latest USD/JPY sales.
