US TSYS: Slightly Lower On The Day With The FOMC In Focus
Mar-19 11:05
- Treasuries are back little changed overnight, ahead of a thin docket before the FOMC decision, SEP and press conference later on.
- Cash yields are between 0.1-1.1bp higher on the day, with increases led by the belly.
- TYM5 sits at 110-22 (- 03+) on subdued cumulative volumes of 255k, comfortably within yesterday’s range throughout the overnight session.
- Support at 110-12+ (Mar 6/13 low) remains intact whilst the trend condition remains bullish with resistance at 111-25 (Mar 11 high).
- MNI Fed Preview here.
- The majority of analysts expects the FOMC to leave its Dot Plot funds rate medians unchanged in March compared with the December meeting. That would imply the Fed is still pencilling in 50bp of cuts in 2025 (to 3.9%) and 2026 (to 3.4%), with a further 25bp cut in 2027 (to 3.1%). The lack of conviction to resume the easing cycle comes in the context of significant government policy shifts posing arguably two-way risks to both the inflation and employment mandates, as well as mixed economic activity indicators and still-elevated inflation readings.
- Fed Funds implied rates only just fully price a next Fed 25bp cut with the July meeting and sub 60bp of cuts for 2025 as a whole.
- Data: MBA mortgage apps (0700ET), TIC flows Jan (1600ET)
- Fed: FOMC announcement including SEP (1400ET), Powell press conference (1430ET)
- Coupon issuance:
- Bill issuance: US Tsy $60B 17W bill auction (1130ET)
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US 10YR FUTURE TECHS: (H5) Remains Above Last Week’s Lows
Feb-17 11:04
- RES 4: 110-25 High Dec 12
- RES 3: 110-19 76.4% retracement of the Dec 6 - Jan 13 bear leg
- RES 2: 110-14 High Dec 14
- RES 1: 110-00 High Feb 7 and the bull trigger
- PRICE: 109-05+ @ 10:53 GMT Feb 17
- SUP 1: 108-04/00 Low Feb 12 / Low Jan 16
- SUP 2: 107-06 Low Jan 13 and the bear trigger
- SUP 3: 107-04 Low Apr 25 ‘24 and a key support
- SUP 4: 106-11 2.00 proj of the Oct 1 - 14 - 16 price swing
Treasury futures remain above last week’s lows and price has risen above the 50-day EMA. A continuation higher would expose key resistance and a bull trigger at 110-00, the Feb 7 high. For bears, recent weakness resulted in a break of 108-20+, the Feb 4 low, highlighting the end of the corrective cycle between Jan 13 - Feb 7. A continuation lower would open 108-00, the Jan 16 low, and expose 107-06, the Jan 13 low and bear trigger.
SONIA: Outright put buyer
Feb-17 10:59
SFIM5 95.60p, bought for 2 in 4k.
BONDS: BTP/Bund spread tests immediate support area
Feb-17 10:40
- The BTP/Bund spread is back at the 106.00bps level, 1.9bp tighter so far on the Day.
- The spread has found support multiple time at this level, back in December, January and also this Month.
- Technically, we could be having a falling wedge, would be bullish, but investors will be watching how it develops at these lower levels.
- A clear break through 106.00bps, opens to the Psychological 100.00, although better will be seen nearer the ~97.7bps area.
(Chart source: MNI/Bloomberg).
