US EURODLR FUTURES: Post-LIBOR Settle Update: 3M Benchmark Resumes Rise
Lead quarterly EDM2 trades weaker at 98.315 (-0.015), near overnight low after latest LIBOR settles resume, new 2-year highs for 3M: at 1.09829% (+0.03558) after climbing +0.05200 last week.
- Balance of Whites (EDU2-EDH3) trade steady to -0.010 lower, Reds through Blues (EDM3EDH6) -0.010-0.035 lower, Golds (EDM6-EDH7) -0.040-0.050.
- Inversion creeping forward: Red Sep (EDU3) currently trading 96.66 vs. Red Jun (EDM3) at 96.645 -- low measure of confidence in forward policy and/or Fed managing a soft landing/avoiding recession has been priced in for months.
- Levels start to flatten out (dis-invert) around late Blue Sep'25-Dec'25 trading 97.035-.025.
- Week opener: Hard to draw any conclusions from Monday's post-Easter Holiday trade. Limited option and underlying futures volumes with much of Europe still out for and extended weekend.
- Underlying FI futures kicked off the new week moderately lower, holding to narrow ranges. Option trade mixed with better put trade in Treasury options, unwinding or positioning for a rebound ahead of the next Fed blackout that kicks off Friday at midnight, traders anticipating a 50bp hike at the next FOMC on May 4.
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AUSSIE 10-YEAR TECHS: (M2) Bearish Outlook Strengthens
- RES 3: 98.755 - High Sep 23
- RES 2: 98.430/460 - High Dec 21 / 06
- RES 1: 98.130 High Feb 3
- PRICE: 97.395 @ 16:59 GMT Mar 18
- SUP 1: 97.345 - Low Mar 18
- SUP 2: 97.253 - 3.0% Lower Bollinger Band
- SUP 3: 97.168 - 0.5% 10-dma envelope
Aussie 10y futures edged to fresh cycle lows Friday, reinforcing the downside bias present in Aussie fixed income markets. The move lower exposes next support posted at the 3.0% Lower Bollinger Band at 97.253, but support is expected stronger into the 0.5% 10-dma envelope - which crosses at 97.168 currently. Outlook remains resolutely bearish through the futures roll.
US TSYS: Short End Under Pressure On Hawkish Fed Speak
Bonds finished strong Friday, but off early highs to near middle of session range, short end weaker as market digested hawkish comments from Fed Gov Waller on CNBC, StL Fed Bullard dissenter essay and Richmond Fed Barkin in the first half.
- Barkin said the central bank's "gradual" interest rate path shown in forecasts this week depicting seven interest rate increases will not drive an economic decline, while the normalization of the balance sheet can work in the background and will begin soon.
- Yield curves bull flattened with 3s, 5s and 7s inverting vs. 10s in the first half on continued heavy short end selling and strong buying in long end (30YY falling to 2.4014% low. Note: late 2s10s Block steepener:
- +20,000 TUM2 106-17.25, post-time bid vs.
- -10,750 TYM2 124-17.5, well through 124-21 post-time bid
- US Biden/China Xi call headlines filtering through -- Xi sounding dovish Russia war in Ukraine: "confrontation not beneficial to anyone .. conflicts, confrontation not beneficial to anyone".
- Not much substance from Russia Pres Putin address at Luzhniki stadium in Moscow: 'The concert is dedicated to the eighth anniversary of Crimea's reunification with Russia" Tass, before video of event cut out.
- Pres Biden will travel to Brussels, Belgium on Wednesday next week, expected to speak at European council summit on Thursday, followed by G7 meeting. No set times, TBA.
USDCAD TECHS: Extends This Week’s Bear Cycle
- RES 4: 1.2964 High Dec 20 and a key resistance
- RES 3: 1.2924 High Dec 22
- RES 2: 1.2871/2901 High Mar 15 / High Mar 8 and a key resistance
- RES 1: 1.2735 20-day EMA
- PRICE: 1.2617 @ 17:16 GMT Mar 18
- SUP 1: 1.2587 Low Mar 3 and a near-term bear trigger
- SUP 2: 1.2552 76.4% retracement of the Jan 19 - Feb 24 rally
- SUP 3: 1.2499 Low Jan 21
- SUP 4: 1.2454 Low Jan 19 and a key support
USDCAD continues to weaken, extending the reversal from Tuesday’s 1.2871 high. The Mar 11 low of 1.2694 has been breached and this clear break signals potential for a deeper retracement that opens 1.2587 next, the Mar 3 low and a key near-term support. From a trend perspective, moving average studies still highlight a bull cycle. Clearance of 1.2901, Mar 8 high, is required though to highlight a resumption of the uptrend.
