ECB: Rehn Sees Real Chance for EUR to Become More Important
ECB'S REHN: RISKS TO INFLATION ARE TWO-SIDED" -bbg REHN: CAN'T ALLOW INFLATION UNDERSHOOT TO SHIFT E...
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US 10YR FUTURE TECHS: (U5) Pierces Key Resistance
- RES 4: 112-04+ High May 2
- RES 3: 111-25 High May 7
- RES 2: 111-05+ High May 9
- RES 1: 110-30 High May 30 and today’s intraday high
- PRICE: 110-20+ @ 11:26 BST Jun 2
- SUP 1: 109-26/12+ Low May 29 / 22 and the bear trigger
- SUP 2: 109-09+ Low Apr 11 and key support
- SUP 3: 109-00 Round number support
- SUP 4: 108-25+ 0.764 proj of the Apr 7 - 11 - May 1 price swing
A bear cycle in Treasury futures remains in play for now, and recent short-term gains still appear corrective. However, the contract has breached an important resistance at 110-23, the May 16 high. A clear break of this level would undermine a bearish theme and highlight a stronger reversal, exposing 111-05+, the May 9 high. On the downside, a reversal lower would refocus attention on the bear trigger at 109-12+.
STIR: Mix Of Long Setting & Short Cover Seen In SOFR Futures On Friday
OI data points to net short cover in 6 of the front 7 SOFR futures on Friday, as most contracts finished higher come settlement.
- A mix of net long and short cover then became evident further out the strip.
| 30-May-25 | 29-May-25 | Daily OI Change |
| Daily OI Change In Packs |
SFRH5 | 1,066,650 | 1,065,881 | +769 | Whites | -22,995 |
SFRM5 | 1,468,871 | 1,480,333 | -11,462 | Reds | -14,158 |
SFRU5 | 1,112,569 | 1,124,355 | -11,786 | Greens | +4,269 |
SFRZ5 | 1,068,365 | 1,068,881 | -516 | Blues | -4,334 |
SFRH6 | 766,815 | 772,877 | -6,062 |
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SFRM6 | 751,370 | 754,985 | -3,615 |
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SFRU6 | 700,853 | 706,891 | -6,038 |
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SFRZ6 | 843,880 | 842,323 | +1,557 |
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SFRH7 | 661,068 | 662,922 | -1,854 |
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SFRM7 | 594,033 | 591,868 | +2,165 |
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SFRU7 | 421,009 | 419,137 | +1,872 |
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SFRZ7 | 420,285 | 418,199 | +2,086 |
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SFRH8 | 287,494 | 286,665 | +829 |
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SFRM8 | 211,083 | 212,592 | -1,509 |
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SFRU8 | 164,162 | 162,800 | +1,362 |
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SFRZ8 | 173,635 | 178,651 | -5,016 |
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STIR: Fed Rates A Little Off Last Week’s Dovish Ending Point
- Fed Funds implied rates are nearly 2bp higher from Friday’s close for the Dec’25 FOMC.
- It’s on a return to some inflationary rather than growth negative concerns from US policies (following Trump’s doubling of steel and aluminum tariffs to 50%) plus spillover from higher oil on weekend OPEC deliberations and Ukraine-Russia strikes.
- Cumulative cuts from 4.33% effective: 0.5bp Jun, 6.5bp Jul, 21.5bp Sep, 35.5bp Oct and 53bp Dec.
- SOFR implied yields are seen bottoming at 3.255% (SFRZ6, +1.5bp) as they continue to test what had been a rough range of 100 +/-5bp of cuts from current effective rates seen over the past three weeks.
- Fed Gov. Waller (permanent voter) at a Bank of Korea conference said overnight that he sees the economy on the path to his “good news” rate cut scenario for later this year, rather than the larger/faster cuts under the alternative bad news/high tariff scenario previously laid out. He doesn’t expect tariff-driven inflation to persist (echoing his previous sentiment although with no sign of a discussion on the matter in last week’s FOMC minutes) and expects job cuts to remain modest.
- Ahead, Powell is unlikely to materially touch on mon pol but will be watched just in case whilst both Logan and Goolsbee have spoken recently, on May 30 and May 29.
- Logan (’26 voter) in moderated Q&A (no text)
- Goolsbee (’25 voter) in moderated Q&A (text tbd)
- Powell (permanent voter) in opening remarks at Board of Governors International Finance 75th anniversary (text only). The conference is to recognize the division’s history.
