US TSYS: Risk-Off Pauses While Risk Factors Remain
Feb-27 21:13
- The steady risk-off support in Treasuries since mid-February paused Thursday, curves rebounding off two-week lows (partially tied to late 5Y/30Y Ultra steepener Block). Treasuries nearly breached the highest levels since mid-December but quickly retreated following this morning's data:
- Initial claims were higher than expected at 242k (sa, cons 221k) in the week to Feb 22, after an upward revised 220k (initial 219k); Core PCE inflation was revised up in the second Q4 release, although at 2.65% annualized from an initial 2.50%, it was exaggerated on screens by rounding to 2.7%; Pending home sales in January fell much more sharply than expected (-4.6% vs -0.9% expected, -4.1% prior rev from -5.5%).
- Pres Trump confirmed a March 4 timeline for tariffs on Canada, Mexico and China, with the latter including an additional 10% tariff on top of the already in place 10%.
- The Jun'25 10Y contract trades -4.5 at 110-24 after the bell, inside technicals: resistance at 110-29.5 (High Feb 26), support below at 110-00 (High Feb 7 and a recent breakout point).
- Cross asset: Stocks retreated, weighed by tech stocks (SPX eminis -94.50 at 5876.25); Gold plummeted (-41.61 at 2874.780); Crude rallied (WTI +1.53 at 70.15). Bbg US$ index clung to session highs for much of the session: BBDXY +7.74 at 1294.13.
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ASIA: Coming Up In The Asia-Pac Session On Wednesday
Jan-28 21:07
| 2200GMT | 0600HKT | 0900AEDT | New Zealand RBNZ Chief Economist Conway Speaks |
| 2350GMT | 0750HKT | 1050AEDT | Japan BOJ Minutes of Dec. Meeting |
| 0030GMT | 0830HKT | 1130AEDT | Australia 4Q CPI |
| 0335GMT | 1135HKT | 1435AEDT | Japan to Sell 5-Year Climate Transition Bonds |
| 0500GMT | 1300HKT | 1600AEDT | Japan Jan Consumer Confidence Index |
USDCAD TECHS: Key Directional Triggers Defined
Jan-28 21:00
- RES 4: 1.4654 2.0% 10-dma envelope
- RES 3: 1.4564 3.500 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4516 High Jan 21
- PRICE: 1.4399 @ 16:44 GMT Jan 28
- SUP 1: 1.4261 Low Jan 20
- SUP 2: 1.4253 50-day EMA
- SUP 3: 1.4120 Low Dec 11
- SUP 4: 1.4011 Low Dec 5
USDCAD is trading inside a range. Recent price action highlights resistance at 1.4516, the Jan 21 low, and support at 1.4261, the Jan 20 low. Both levels represent important short-term directional triggers. The trend condition is bullish and a clear breach of 1.4516 would confirm a resumption of the bull cycle. For bears, a move through 1.4261 and 1.4253, the 50-day EMA, would instead highlight a possible reversal.
US DATA: House Prices Losing Some Steam Amid Weak Sales Activity
Jan-28 20:45
House price gains came in a little stronger than expected in November, with the S&P Corelogic 20-City aggregate rising 0.41% M/M (0.30% expected), and prior revised up 0.03pp to 0.35%.
- However the FHFA price index was merely in line at 0.3% M/M and decelerated from 0.5% prior.
- And both aggregates - while still solid on a Y/Y basis - have decelerated from recent highs. The S&P CL Y/Y metric was 4.3%, up from 4.2% prior, but well off the 10+% readings in summer 2023; likewise the FHFA Y/Y at 4.2% (a 17-month low) was well below the 8-9% readings of summer 2023.
- The momentum indices are mixed: for the FHFA, momentum has picked up moderately (3M SAAR at 6.0% in Nov, an 8-month best), but S&P momentum fell to the weakest in 18-months (3.8%).
- To be sure, prices remain buoyant: the S&P index hit an 18th consecutive all-time high. But as the FHFA noted re the weakening Y/Y rises, “The slowdown in price growth is likely due to higher mortgage rates contributing to cooling demand", while S&P Dow Jones identified "below-trend" growth in prices.
- Higher rates have not dampened prices. But we continue to highlight historically weak sales activity - amid high mortgage rates - inhibiting price discovery, perhaps best seen in some of the lowest inventories-to-sales ratios in modern history for existing homes.
- Again, it will probably take a sharp drop in mortgage rates, a rise in unemployment - or both - for the housing market to get out of its prolonged period of stasis.
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