UK FISCAL: PM Refuses To Rule Out Removing Chancellor After Local Elections

• On the commodity front, short-term trend conditions in Gold are unchanged, they remain bearish and the recovery from the Mar 23 low is considered corrective. Note that the downtrend is in oversold territory and a stronger corrective bounce would allow this condition to unwind. Key near-term resistance is at $4818.6, the 50-day EMA. For bears, a resumption of the bear leg would open $3945.2, a 1.236 projection of the Jan 29 - Feb 2 - Mar 2 price swing.
• A bull wave in WTI futures remains intact and the sharp pullback on Mar 23 has proved to be corrective. A key support zone to monitor is the area between $88.25 - $77.61, the 20- and 50-day EMA values. A clear break of this support zone is required to signal a possible trend reversal. On the upside, sights are on $104.50, the 76.4% retracement of the Mar 9 - 10 sell-off.

The latest weekly CFTC CoT report showed asset managers building on their overall net long position in Tsy futures, while leveraged funds trimmed their net short in the week ending March 24.

• Broader non-commercial accounts added to net shorts in TU, TY & WN futures, while trimming net shorts across FV and UXY futures. They also trimmed a small net long in US futures. The cohort is still net short across much of the curve, with the modest net long in US futures providing the exception to the wider theme. The reduction in FV net shorts was particularly sizeable. See the table below for the exacts of the positioning movement for this cohort.

Source: MNI - Market News/CFTC/Bloomberg Finance L.P.

Treasuries are modestly firmer across the curve, extending Friday’s gains in cross-asset moves that were more typical of traditional risk-off periods, despite equity futures seeing a sizeable bounce off overnight lows. President Trump told the FT that the US could “take the oil in Iran” whilst the WSJ reports he is weighing a military operation to extract nearly 1,000lbs of uranium from Iran. 

• Cash yields are 2.5-3.7bp lower from Friday’s close, with declines led by the belly.
• Declines in yields are led entirely in real terms, with the 5Y yield of -3.7bps for example driven by +0.2bp for the breakeven and -3.8bp for the real yield.
• TYM6 trades at 110-13+ (+08+) off an earlier high of 110-17+, on solid cumulative volumes of 445k.
• Friday’s equity pressure saw more traditional risk-off behavior with core fixed income firming, helping TYM6 lift off a fresh low of 109-24 early in the US session.
• Short-term gains have been corrective though, with resistance seen at 111-01+ (Mar 25 high), and a bear cycle remains in place with support at that 109-24 before 109-22+ (Fibo projection of Mar 10-13-18 price swing).
• Data: Dallas Fed mfg Mar (1030ET)
• Fedspeak: Fed Chair Powell in moderated discussion (1030ET, Q&A only), NY Fed’s Williams on economy (1600ET, text + Q&A) – see STIR bullet
• Bill issuance: US Tsy $89B 13W & $77B 26W bill auctions (1130ET)
• Politics: Trump in White House internship program photo (1015ET), Trump in policy meeting (1330ET), Trump in signing time (1600ET)