US TSYS: Strong Payrolls Dents But Doesn't Alter Bullish Phase, CPI On Horizon
Treasuries sit slightly firmer as US desks filter in after a steady overnight session that has kept to narrow ranges with yesterday’s nonfarm payrolls report digested. Today’s focus should be on latest weekly claims data before 30Y supply after yesterday’s 10Y was poorly received, with tomorrow's CPI report for January looming large.
- Cash yields are 0.6-1.6bp lower on the day.
- TYH6 trades at 112-11+ (+02+) in narrow ranges on reasonable cumulative volumes of 310k.
- It sits between yesterday’s latest high at 112-20 and the post-NFP low of 112-00, which probed support at 112-01 (20-day EMA). It does however continue to trade closer to recent highs and suggests the current bull cycle is intact, leaving subsequent resistance at 112-25 (61.8% retrace of Nov 25 – Jan 20 bear leg).
- Data: Weekly jobless claims (0830ET), Existing home sales Jan (1000ET)
- Fedspeak: Logan opening remarks (1900ET), Miran moderated discussion (1905ET) – see STIR bullet
- Coupon issuance: US Tsy $25B 30Y Bond auction - 91281UR7 (1300ET). Yesterday’s 10Y auction saw a 1.5bp tail (largest at a 10Y refunding since Aug 2024), the bid-to-cover slipping from 2.55x to 2.39x and the lowest indirect take-up since Aug 2025.
- Bill issuance: US Tsy $105B 4W, $95B 8W bill auctions (1130ET)
- Politics: Trump makes announcement with EPA Administrator (1330ET), Trump in policy meetings (1500ET and 1730ET).
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EQUITIES: JPM Beat on Most Metrics; Dimon Sees Markets Underpricing Risk
"*JPMORGAN 4Q FICC SALES & TRADING REV $5.38B, EST. $5.27B
*JPMORGAN 4Q INVESTMENT BANKING REV. $2.55B, EST. $2.65B
*JPMORGAN 4Q ADJ. REV. $46.77B, EST. $46.35B" - bbg
From Dimon's accompanying statement:
- Each line of business performed well. Markets continued to benefit from demand for financing and robust client activity, pushing revenue up 17%.
- The U.S. economy has remained resilient. While labor markets have softened, conditions do not appear to be worsening. Meanwhile, consumers continue to spend, and businesses generally remain healthy.
- These conditions could persist for some time, particularly with ongoing fiscal stimulus, the benefits of deregulation and the Fed’s recent monetary policy. However, as usual, we remain vigilant, and markets seem to underappreciate the potential hazards—including from complex geopolitical conditions, the risk of sticky inflation and elevated asset prices.
OUTLOOK: Price Signal Summary - USDJPY Bull Cycle Extends
- In FX, a short-term bearish theme in EURUSD remains intact. Last week’s move down resulted in a breach of support at 1.1659, the Jan 5 low. The sell-off cancels a recent reversal signal and suggests a bearish theme appears likely to dominate near-term. Sights are on 1.1598, a 61.8% retracement of the Nov 5 - Dec 12 bull leg. Initial resistance is at 1.1702, the 20-day EMA. A clear break of the average would highlight another possible reversal signal.
- The trend theme in GBPUSD remains bullish and the latest pullback appears to have been a correction. Support at the 50-day EMA, at 1.3383, remains intact. A clear break of this EMA would signal scope for a deeper retracement and open 1.3312, the Dec 17 low. For bulls, a reversal higher would refocus attention on key resistance and the bull trigger at 1.3568, the Jan 6 high. Clearance of this level would resume the uptrend that started on Nov 4.
- The latest climb in USDJPY has resulted in a breach of resistance at 157.89, the Nov 20 high and bull trigger. This maintains the bullish price sequence of higher highs and higher lows. Note too that moving average studies are in a bull-mode position, highlighting a dominant medium-term uptrend. Sights are on the 160.00 handle next, a 3.00 projection of the Sep 17 - 26 - Oct 1 price swing. Key support to watch lies at 155.46, the 50-day EMA. Initial support lies at 156.66, the 20-day EMA.
US TSY FUTURES: Short Setting Dominated On Monday
OI data suggests that short setting dominated during Monday's downtick in futures, as questions surrounding the independence of the Fed intensified after the DoJ subpoenaed Fed Chair Powell re: the costly renovation of the central bank's headquarters.
- The theme was only interrupted by modest net long cover in TU futures, with the largest positioning swing coming in the TY contract.
| 12-Jan-26 | 09-Jan-26 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 4,464,951 | 4,478,285 | -13,334 | -509,759 |
FV | 6,711,303 | 6,684,135 | +27,168 | +1,180,721 |
TY | 5,617,371 | 5,565,231 | +52,140 | +3,457,925 |
UXY | 2,582,398 | 2,573,097 | +9,301 | +833,649 |
US | 1,818,051 | 1,811,138 | +6,913 | +956,621 |
WN | 2,102,764 | 2,094,405 | +8,359 | +1,529,948 |
|
| Total | +90,547 | +7,449,105 |
