OUTLOOK: Price Signal Summary - Fresh Cycle High In Gold

Treasuries are modestly bear steeper on very thin volumes after the weekend, helped lower by a further sizeable sell-off in JGBs after last week’s BoJ hike to leave Treasuries underperforming EGBs. Moves are aided by further increases for crude oil and US equity futures, ahead of a light docket headlined by 2Y supply. 

• Cash yields are 0.5-2.4bp higher, with increases led by 20s.
• 2s10s at 67.5bps (+1.3bp) remains close to last week’s high of 69.1bp at interesting levels that prior to a brief spike to 73.8bp in early April was last higher in early 2022.
• TYH6 trades close to session lows of 112-11+ (-04+) on particularly low volumes of 165k.
• It has pulled back from recent highs, leaving a key short-term resistance level at 112-31 (Dec 18 high). Support is seen at 112-06 (Dec 16 low) whilst downside focus would be on a bear trigger at 111-29 (Dec 10 low).
• Data: Chicago Fed National Activity Index Sep (0830ET) – data picks up tomorrow including long-awaited Q3 GDP data
• Coupon issuance: US Tsy $69B 2Y Note auction - 91282CPS4 (1300ET). Last month’s auction saw a small 0.2bp tail although details firmed with bid-to-cover of 2.68 after 2.59 and indirect take-up rising to 58.1% from 53.65%.
• Bill issuance: US Tsy $86B 13W & $77B 26W bill auctions (1130ET)
• Politics: Trump’s schedule hasn’t been released yet

• On the commodity front, the trend structure in Gold is unchanged, it remains bullish and today’s fresh cycle high reinforces current conditions. The break higher confirms a resumption of the primary uptrend. The metal has traded through the psychological $4400.0 handle and this opens $4441.3 next, a 1.236 projection of the Oct 28 - Nov 13 - Nov 18 swing. Initial firm support to watch lies at $4240.5, the 20-day EMA.
• The trend condition in WTI futures remains bearish and short-term gains are considered corrective. MA studies are in a bear-mode position, highlighting a dominant downtrend. A key support and the bear trigger at $56.11, the Oct 17 low, has been breached. Clearance of this level resumes the downtrend and opens $53.77, a 1.764 projection of the Jul 30 - Aug 13 - Sep 26 price swing. Key short-term resistance to watch is $61.25, the Oct 24 high. First resistance is at $58.74, the 50- day EMA.

RXG6 128/130cs, bought for 24 in 2k.