US TSYS: Sharper Sell-Off As US Filters In, TYA Away From Key Resistance
Jun-13 10:48
- Treasuries have seen pushes lower with US desks filtering in, for a sharper extension of the paring of early overnight sizeable gains seen initially on Israel strikes on Iran. Strikes are reportedly ongoing, including further strikes on nuclear facilities.
- WTI futures are off overnight highs but have climbed strongly for the past three hours, currently +9%.
- All major benchmarks are now a little lower on the day, with cash yields circa 1.5bp higher across the curve.
- Treasuries see relative outperformance to European FI: with 10Y yields +1.2bps vs +5bp for Gilts, +5-5.5bp for peripherals, +3.7bp for OATs and +2.1bp for Bunds. This relative haven flow is echoed in the USD index.
- 10Y yields are currently 4.371% (+1.2bp) having lifted firmly from an overnight low of 4.3082%. The 4.30% level equated to 111-14 for TYU5.
- TYU5 has recently hit session lows of 110-27+ (- 06+) before lifting a couple ticks, after an overnight high of 111-13. There have been large cumulative volumes of 710k.
- The earlier high stopped just short of a key short-term resistance at 111-14+ (Jun 5 high and 61.8% retrace of May 1-22 downleg). Clearance would be bullish with next resistance at 111-20 (1.0% 10-dma envelope). Support meanwhile is seen at 110-17+ (20-day EMA) before 109-28 (Jun 6/11 lows).
- Data: U.Mich consumer survey Jun prelim (1000ET)
- Trump attends a National Security Council Meeting at 1100ET - closed press.
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OUTLOOK: Price Signal Summary - Key Support In Gold Remains Intact
May-14 10:46
- On the commodity front, the latest pullback in Gold still appears corrective. Key short-term support to watch is $3202.0, the May 1 low. A clear break of this level would undermine the short-term bullish theme and signal scope for a deeper retracement. This would open $3164.3, 61.8% of the Apr 7 - Apr 22 upleg. Note that the 50-day EMA is at $3164.5 - a key support too. The M/T trend remains bullish, a reversal would refocus attention on $3500.1, the Apr 22 high and bull trigger.
- In the oil space, a downtrend in WTI futures remains intact and S/T gains are considered corrective. For now, the corrective cycle remains in play and price has traded through the 20-day EMA. Key resistance to watch is $63.55, the 50-day EMA. It has been pierced, a clear break of it would highlight a stronger reversal. This would open $66.41, the Apr 4 high. For bears a reversal lower would refocus attention on $54.67, the Apr 9 low and bear trigger.
GERMANY: Merz To Hold First Government Declaration at 12:00 BST / 13:00 CEST
May-14 10:35
- German Chancellor Merz is scheduled hold his first government declaration today at 12:00 BST, following the currently ongoing survey of the federal government.
- The declaration will be resembling an 'Agenda 2030' according to prior comments of CDU General Secretary Linnemann, focussing on energy cost and tax cuts as well as skilled worker shortage and bureaucracy reduction. We assume the announcement will bolster plans lined out in the coalition agreement and earlier media reports which we reported on ('Coalition To Focus First on Energy, Rent Freezes, Pension Level, Labour' - MNI, May 08 ). The measures do appear reasonable in principle but the success of especially the bureaucracy reduction plans will also depend on their implementation.
- Key measures are likely to include
- a general 5ct/kWh energy price reduction
- the introduction of an 'industrial electricity price'
- accelerated investment write-offs for enterprises, followed by enterprise tax reductions starting 2028
- a E2000/month tax-free income allowance for pensioners
- unemployment insurance reform intended to increase incentives to take on work
- Additionally, CDU highlighted in their 'Agenda 2030' draft published in January here their plans to "at least halve the number of commissioners [there have been 66 such positions advising the last federal administration] and to manage the federal ministries with 10% fewer staff than before.
US 10YR FUTURE TECHS: (M5) Bear Mode Condition
May-14 10:35
- RES 4: 112-20+ High May 1 and a bull trigger
- RES 3: 112-01+ High May 2
- RES 2: 111-22 High May 7 and a key near-term resistance
- RES 1: 111-01 20-day EMA
- PRICE: 110-07+ @ 11:24 BST May 14
- SUP 1: 109-30 Low May 13
- SUP 2: 109-08 Low Apr 24 and key support
- SUP 3: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
- SUP 4: 108-21 Low Feb 19
Treasury futures maintain a softer tone following recent weakness. Support at 110-01+, 76.4% of the Apr 11 - May 1 bull leg, has been cleared. The breach strengthens a bearish theme and exposes a key support at 109-08, the Apr 24 low and a bear trigger. Key near-term resistance has been defined at 111-22, the May 7 high. A move above this level is required to signal a potential reversal.
