US TSYS: Post-Claims Lows Mostly Hold, Fedspeak and House CR Vote Eyed
Sep-19 10:45
- Treasuries hold close to yesterday’s jobless claims driven lows and in the case of 30s actually pushed a little through those lows but have since pared that move.
- Gilts provide some additional selling impetus after larger than expected monthly government borrowing, although have also pared losses.
- Cash yields are 1-2bp higher across the curve. 10Y yields at 4.1255% (+2.1bp) earlier hit 4.1351% to essentially yesterday’s 4.1352%.
- TYZ5 trades at 112-26+ (-05) on thin cumulative volumes of 215k.
- Yesterday saw a low of 112-23+ (marking initial support) after initial jobless claims surprised lower despite some continued signs of Texas fraud and continuing claims fell for a fourth consecutive week for further away from cycle highs.
- With a corrective pullback in play, subsequent support could be seen at 112-15+ (Aug 5/14 high), whilst resistance remains the bull trigger at 113-29 (Sep 11 high).
- Data: No notable releases scheduled
- Fedspeak: Miran on CNBC (1100ET), Daly on fireside chat on AI (1430ET), Miran on Fox Business (1600ET) – see STIR bullet
- Politics: At 1020 ET, the House is expected to vote on a 'clean' GOP CR to extend government funding through Nov 21. Despite regular conservative criticism of CRs, the bill is expected to pass. After which, Speaker Johnson (R-LA) is likely to recess the House until after the October 1 shutdown deadline.
- Later on, Trump signs executive orders (1500ET)
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SONIA: Calendar spreads are dominating the flows
Aug-20 10:37
Dominating flow in the Sonia strip, not too surprisingly has been in Flatenners following the touch higher UK Inflation.
Aside from the 11k SFIU5Z5 spread that has traded in 11.8k, pushing back Rate cut bets.
- SFIZ5/H6 has traded in 31k spread to the downside.
- SFIZ5/M6 in 22k also to the sell side.
- SFIZ5/Z6 has traded in 51.1k lots, mostly to the sell side.
The SFIZ5/H6, SFIZ5/M6 have seen their largest single moves since the US NFP, but for the SFIZ5/Z6, this the most notable single move since 8th May.
OUTLOOK: Price Signal Summary - GBPUSD Bull Cycle Still In Play
Aug-20 10:36
- In FX, a consolidation mode dominates for now in EURUSD. The trend set up however, remains bullish. A resumption of gains would expose key resistance and the bull trigger at 1.1829, the Jul 1 high. Clearance of this level would resume the uptrend. Support to watch lies at 1.1588, the 50-day EMA. Major support rests at 1.1392, the Aug 1 low.
- The latest pullback in GBPUSD for now, appears corrective and a bullish condition remains intact. Recent gains resulted in a breach of resistance at 1.3589, the Jul 24 high. This signals scope for a climb towards 1.3636, the 76.4% retracement of the bear leg between Jul 1 and Aug 1. Initial firm support to watch is 1.3449, the 50-day EMA. A clear break of it would signal a possible reversal.
- USDJPY remains in consolidation mode. A bearish threat is present as the pair trades closer to its recent lows. Sights are on support at 145.86, the Jul 24 low. Clearance of this level would highlight a stronger S/T reversal and strengthen the bearish engulfing signal on Aug 1. This would open 144.69, a trendline drawn from the Apr 22 low. Initial firm resistance to watch is 148.52, the Aug 12 high.
OPTIONS: Larger FX Option Pipeline
Aug-20 10:35
- EUR/USD: Aug21 $1.1600(E1.3bln), $1.1700(E1.6bln), $1.1750(E2.0bln), $1.1800(E3.0bln); Aug25 $1.1640-55(E2.0bln)
- USD/JPY: Aug21 Y145.95-00($1.2bln), Y146.70-80($1.8bln); Aug22 Y147.90($1.4bln)
- AUD/USD: Aug21 $0.6590-00(A$1.8bln); Aug25 $0.6510-25(A$1.1bln)
