US TSYS: Risk Sentiment Sours Ahead Friday's CPI Annual Revisions
Feb-12 20:34
- Treasuries drifting near late Thursday session highs, indeed the best levels since mid-December as risk sentiment on stocks soured earlier.
- Stocks reversed early Thursday gains and look to finish near the lowest levels of the week as increased capital expenditures weighed on computer software and services. Additionally, Financials underperformed as Bitcoin retreated 2%, as did mining stocks as Gold shed appr $150.0/oz.
- Treasury futures extended highs (USH6 +1-06 at 117-09) after the $25B 30Y auction (912810UR7) stopped through: 4.750% high yield vs. 4.772% WI; bid-to-cover at 2.66x vs. 2.42x prior. Primary dealer take-up retreats to record low of 5.88% vs. 11.59% prior.
- USD index holding close to unchanged levels on the session and EURUSD holding a very contained 38pip range. Most notable adjustments are being seen for AUD crosses, with the likes of AUDCHF and AUDJPY declining close to 1%, although the price action has had a sense of relative stability compared to other asset classes throughout the period of waning sentiment.
- Earlier, Weekly jobless claims surprised a little higher on both an initial and continuing basis. Initial claims still dipped a little after last week’s surprisingly large increase in what looks like a reversal of weather disruption, although residual seasonality more broadly looks to explain recent trends (both lower and now higher).
- Focus turns to Friday's Eurozone GDP, labour market and trade data as well as appearances by BOE's Pill, while the global focus will be on the US CPI release.
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AUDUSD TECHS: Key Support Zone Intact For Now
Jan-13 20:30
- RES 4: 0.6872 38.2% retracement of the 2021 - 2025 L/T downtrend
- RES 3: 0.6858 1.000 proj of the Nov 21 - Dec 10 - 18 price swing
- RES 2: 0.6795 0.764 proj of the Nov 21 - Dec 10 - 18 price swing
- RES 1: 0.6767 High Jan 7 and the bull trigger
- PRICE: 0.6677 @ 16:13 GMT Jan 13
- SUP 1: 0.6664 Low Jan 9
- SUP 2: 0.6630 50-day EMA
- SUP 3: 0.6593 Low Dec 18
- SUP 4: 0.6553 Low Dec 3
Recent weakness in AUDUSD still appears corrective and this has allowed an overbought condition to unwind. Initial firm support at 0.6681, the 20- day EMA, has been pierced, a clear break of it would expose support at the 50-day EMA, at 0.6630. The area between the two EMAs still represents a key support zone. For bulls, a resumption of the uptrend would open 0.6795 next, a Fibonacci projection.
US TSYS: Late Treasury Roundup: Deciphering December CPI Inflation Data
Jan-13 20:17
- Treasuries look to finish higher Tuesday - but well off this morning's knee-jerk post-CPI data highs as markets continue to digest multiple anomalies in the data set stemming from a reversal of November holiday sale discounting for goods products, along with sampling issues from the use of bimonthly metro area surveys (with no October data for comparison due to no survey that month).
- Currently, TYH6 trades +4 at 112-08.5 vs. 112-14 high, key short-term resistance is unchanged at 112-31, the Dec 18 high. 10Y yield -.0078 at 4.1674%.
- The range of significant anomalies on both ends of the table in the December data, and even within categories, has little obvious pattern, making the signal difficult to discern other than that the report overall should be taken with some caution.
- Within the core categories, the big surprise was that there was zero inflation in core goods prices despite anticipation that there would be "payback" in particular for unusually low holiday sales-related goods prices in November (along with continued expectations of tariff passthrough).
- Dollar strength has been most notable against the yen on Tuesday, with an impressive pre-data rally overnight consolidating post release as the domestic political backdrop in Japan continues to weigh on yen sentiment.
- Look ahead: tomorrow's data includes PPI, Retail Sales and Existing Home Sales data. Bank earnings resume tomorrow: Bank of America, Wells Fargo and Citigroup on Wednesday, Goldman Sachs, Blackrock and Morgan Stanley on Thursday.
US TSY FUTURES: BLOCK: Mar'26 2Y Sale
Jan-13 20:10
-5,000 TUH6 104-08.37, post time bid at 1503:21ET, DV01 $191,000.
