OUTLOOK: Price Signal Summary - Resistance In Gilts Remains Intact
May-29 11:02
* In the FI space, a bullish theme in Bund futures remains intact and the latest pullback appears ...
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US TSYS: Modestly Lower Ahead of Bessent Briefing and Data
Apr-29 11:00
- Treasuries are mildly lower on the day after a late open for cash with a Japan holiday despite recent downward pressure in equity futures.
- The net move lower after yesterday’s sizeable bull steepening has been aided by the WSJ reporting after the close yesterday that Trump is expected to soften the impact of auto tariffs.
- Bessent at 0830ET in a White House briefing with Leavitt today drew some short-lived optimism on trade deal progress yesterday, and will be watched today.
- Data will also be important, including trade, JOLTS and consumer confidence, along with earnings (including Booking, Snap, Starbucks, Visa after the close) and Trump headlines.
- Cash yields are 1-2bp higher across the curve, consolidating yesterday’s bull steepening with 2s10s for example at 52bps.
- TYM5 trades at 111-25+ (-04+) on particularly low volumes of 215k although the Japan holiday will have impacted at the margin.
- It has pulled back off yesterday’s high of 111-31 having cleared resistance at 111-25 (50% retrace of Apr 7-11 bear leg). This undermines a recent bearish theme, opening the round 112-00 before 112-12 (61.8% retrace of Apr 7-11 bear leg).
- Data: Advance goods trade balance Mar (0830ET), Wholesale/retail inventories Mar P/Mar (0830ET), FHFA/S&P CoreLogic House prices Feb (0900ET), JOLTS Mar (1000ET), Conf. Board consumer survey Apr (1000ET), Dallas Fed services Apr (1030ET)
- Bill issuance: US Tsy $70B 6W bill auction (1130ET)
- In case missed yesterday, Treasury's latest borrowing estimates were slightly higher than MNI's estimates, at $514B for the Apr-Jun quarter and $554B for the Jul-Sep quarter (MNI had pencilled in $500B for each quarter). There may have been some disappointment given Treasury did not lower the quarter-end TGA cash targets, which had been expected by some, but the current quarter's borrowing requirements are - excluding the effect of TGA cash rebuild - actually $53B lower than estimated at the last refunding in February. It could tilt the balance on Wednesday’s full QRA to no change in guidance on nominal coupon sizes being unchanged for “at least the next several quarters”, a positive development for Treasuries.
OUTLOOK: Price Signal Summary - Bear Threat in WTI, remains present
Apr-29 11:00
- On the commodity front, Gold continues to trade below its recent highs. The trend needle points north and the latest move down appears corrective. The retracement has allowed an overbought condition to unwind. Moving average studies are unchanged, they remain in a bull-mode position highlighting a dominant uptrend. The next objective is $3547.9, the 1.764 projection of the Feb 28 - Apr 3 - Apr 7 price swing. Initial firm support to watch lies at 3231.3, the 20-day EMA.
- In the oil space, a medium-term bearish theme in WTI futures remains intact and the recovery that started on Apr 9 appears corrective. The move higher has allowed an oversold trend condition to unwind. Recent weakness resulted in the breach of a number of important support levels, reinforcing a bearish threat. A clear resumption of the bear cycle would open; $58.29, the Apr 10 low, and $53.72, the 2.236 projection of the Feb 20 - Mar 5 - Apr 2 price swing. Resistance to watch is $65.59, the 50-day EMA.
EQUITIES: A quick drop lower in US and European Equities
Apr-29 10:57
- A quick drop in Equities on both sides of the Pond, seems more likely Earning driven, with very little moves in Bonds or FX.
Pfizer earnings were bad, GM were also on the messy side and UPS is set to cut Jobs. - Desks continue to ascertain the near and the much longer term negative impact from the Tariffs debacle.
- In terms of outright flows, we have not seen any notable volume size order going through, and the low liquidity exacerbate some of these quick moves.
