US TSYS: Risk-On AS Mkt Takes Adaptive Fed Seriously?
May-13 19:38
FI markets traded weaker after the bell -- 30Y Bond around upper half of the week's range but well off Thursday's highs. Little react to morning data (import prices lower than exp at +0.0%; U/Mich sentiment 59.1 vs 64 est, "lowest reading since 2013").
- Tsy 30Y Bond futures holding to narrow channel on the way down (30YY taps 3.0959 high vs. 2.9531% early Thu), curves bear steepening: 2s10s +5.017 at 33.449, 5s10s +2.367 at 4.881.
- Rates under pressure w/ focus back on Fed policy after Fed Chair Powell said he's prepared to consider larger than 50bp hikes in Marketplace interview late Thu (after downplaying 75bp moves at his press conference last week), as the committee adapts to "incoming data and the evolving outlook".
- Not that the correlation is a factor these days, but Equities did have a nice rebound on the day, SPX emini futures +99.0 at 4026.25.
- Commodities: WTI Crude Oil (front-month) holding strong +4.05 at $110.18; Gold weaker at $1807.95 -13.77.
- Next Monday Data Calendar:
- Empire Manufacturing (24.6, 15) at 0830ET
- NY Fed Williams moderated discussion, no text at 0855ET
- US Tsy $45B 13W, $42B 26W bill auctions at 1130ET
- Net Long-term TIC Flows ($141.7B, --) Net TIC Flows ($162.6B, --) at 1600ET
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AUDUSD TECHS: Bearish Short-Term Outlook
Apr-13 19:30
- RES 4: 0.7762 76.4% retracement of the Feb ‘21 - Jan ‘22 downleg
- RES 3: 0.7716 High Jun 16 2021
- RES 2: 0.7643/61 2.0% 10-dma envelope / High Apr 5
- RES 1: 0.7519 High Apr 7
- PRICE: 0.7422 @ 16:39 BST Apr 13
- SUP 1: 0.7392 Low Apr 13
- SUP 2: 0.7376 Low Mar 22
- SUP 3: 0.7361 50-day EMA
- SUP 4: 0.7283 Low Mar 17
The current AUDUSD bear cycle remains intact following the recent pullback from resistance at 0.7661, Apr 5 high. Note that price activity on Apr 5 confirmed a bearish candle - a shooting star - and the subsequent move lower reinforces this pattern. The 20-day EMA at 0.7449, has been breached. This opens the 50-day EMA at 0.7361. Key resistance is at 0.7661 and also represents the trigger for a resumption of bullish activity.
STIR FUTURES: Fed Hikes Trimmed In 2H2022
Apr-13 19:19
- FOMC-dated Fed Funds futures pricing 48.5bps for May and 93bps for June. Hikes through to year-end have fallen further since the initial snap lower after CPI yesterday, currently at 205bps.
- Fed Governor Waller is tentatively scheduled to speak with CNBC shortly (approx 1525ET).
- He said on Apr 11 that the Fed is doing all it can to avoid "collateral damage" from raising interest rates, being a "blunt-force tool" that can act as a "hammer" on the economy.
- His comments before that on Mar 24 regarding QT were with hindsight in line with what FOMC members generally agreed at the Mar 15-16 meeting (MBS sales could be considered after balance sheet runoff was well under way, with the aim of the SOMA portfolio primarily made up of Tsys).
US TSY FUTURES: BLOCK, 5Y Sale
Apr-13 19:01
- -5,440 FVM2 105-30.12, post-time bid at 1455:30ET, 105-30 last (+3.25)
