OUTLOOK: Price Signal Summary - Trendline Support In Gilts Remains Exposed

• EURUSD (9th Jan) 1.1900p, trades for 0.0087 in 3.3k.
• EURUSD (9th Jan) 1.1750p, trades for 0.0019 in 4.92k.

• MNI: BRAZIL DEC FLASH IPCA-15 +0.25% M/M

Treasuries have firmed throughout Asia and London trading, with assistance from JGBs paring previous losses and a dovish repricing in EUR STIR following Schnabel yesterday (despite her broadly clarifying pre-ECB meeting remarks). Year-end factors could also be at play. Today’s focus will be on a solid data docket before further issuance, the latter highlighted by the 5Y but with some added attention on bills after yesterday’s preference for longer-dated maturities. 

• Cash yields are 0.5-2.5bp lower, bull steepening with curves pulling back a little further off recent highs.
• TYH6 trades at session highs of 112-16 (+05) on tiny cumulative volumes of 125k.
• It reverses yesterday’s further losses which saw a low of 112-09+ (not troubling support at 112-06, Dec 16 low) but is only back at the low end of Friday’s range and is still a way off resistance at 112-21+ (50-day EMA).
• Data: Weekly ADP (0815ET), GDP Q3 (0830ET), Durable goods Oct prelim (0830ET), Philly Fed non-mfg (0830ET), Weekly Redbook retail sales (0855ET), IP/cap util Nov & Oct (0915ET), Conf Board consumer survey Dec (1000ET), Richmond Fed mfg Dec (1000ET)
• Coupon issuance: $70B 5Y Note - 91282CPR6, US Tsy $28B 2Y FRN - 91282CPG0 (1300ET). Yesterday’s 2Y tailed by 0.2bp and bid-to-cover slipped from 2.68 to 2.58, whilst last month’s 5Y also tailed by 0.2bp but with the bid-to-cover nudging higher from 2.38 to 2.41.
• Bill issuance: US Tsy $75B 6W & $50B 52W bill auctions (1130ET). Yesterday’s six-month offering was preferred to the three-month with Fed rate expectations potentially at play.
• Politics: Trump doesn’t have any public events scheduled