US TSYS: Stronger Than Expected May Jobs, Rate Hike Projected by Year End
Jun-05 19:14
- Treasuries are broadly weaker late Friday - holding to a relatively narrow range after the initial knee-jerk sell-off on higher than expected job gains for May: +172k vs. +88k est, as well as a large two-month upward revision of 93k.
- May jobs growth may have been supported by the seasonal adjustment and a weather boost, but broader trends are still impressively strong. The unemployment rate in the household survey was as expected meanwhile, continuing its broad stabilization since the summer. A Fed hike has shifted to being priced for December from Mar 2027 beforehand, with Wednesday’s CPI report a next key input.
- TYU6 is currently at 109-01 (-18) vs. 108-31 low with 10Y yield climbing to 4.5522%. Projected rate pricing swings hawkish (first 25bp hike in Dec): latest vs. late Thursday levels (*): Jun'26 at +.8bp (+.4bp), Jul'26 at +3.5bp (+2.6bp), Sep'26 at +11bp (+7.6bp), Oct'26 at +16.5bp (+10.1bp), Dec'26 +27.6bp (+17.3bp).
- A very solid set of US May jobs data has sparked a significant leap higher for the US dollar on Friday. With US yields spiking and risk sentiment heavily dented, this dollar surge extended across the session, with the DXY threatening to close back above the 100 mark, near two-month highs.
- WTI Crude ended lower as the market weighs the prospects of a US-Iran deal, though Iran insists it has halted talks amid continued fighting in southern Lebanon. Trump made some remarks on Air Force One that didn’t illuminate anything about peace talks.
- Look ahead - next week highlights: US CPI on Wednesday followed by PPI Thursday. The Bank of Canada is overwhelmingly expected to maintain its overnight rate for a 5th consecutive decision at 2.25% at the June meeting (announcement on June 10). The ECB is expected to deliver a 25bp rate hike on Thursday, bringing the deposit rate to 2.25%.
- China CPI & PPI next Wednesday: CPI is expected to rise only modestly to +1.3% from +1.2% and present no immediate challenges for policy.
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US LABOR MARKET: MNI US Payrolls Preview: Eyeing A More 'Normal' Month
May-06 19:06
We have published our preview of the upcoming US Payrolls report, found here.
Refer to the publication for:
- MNI analysis of what to watch for this month
- Dispersion of analyst views across nonfarm payrolls growth, the unemployment rate and wage growth
- Pertinent detailed comments from analysts across the spectrum of views
- MNI analysis of a range of alternate labor indicators
- A net hawkish build-up to the release despite Wednesday's relief rally on hopes of a US-Iran peace deal
US TSYS: Late SOFR/Treasury Options Roundup: Optimism Tempered
May-06 19:01
SOFR & Treasury options trade outlined below. Mixed trade on net: early flow leaned bullish with put sales and call buyers; second half saw the opposite, note large short Dec call spd sale. Underlying futures well bid but off highs as optimism over US/Iran de-escaltion cooled as the day wore on. Projected rate pricing vs. late Tuesday lvls (*): Jun'26 at -1.5bp, Jul'26 at -3.1bp (-3.1bp), Sep'26 at -4.3bp (-2.0bp), Oct'26 at -2.1bp (+1.9bp), Dec'26 +.1bp (+6.7bp).
- SOFR Options:
- -10,000 SFRN6 96.87/97.12 call spds, 0.5 ref 96.35
- -50,000 0QZ6 97.50/98.00 call spds around 2.75, reportedly an exit
- -4,000 0QK6 96.00/96.12 put spds, 1.5 ref 96.27
- +10,000 0QV6 95.87/96.18 put spds, 8.5 ref 96.39
- -5,000 SFRN6 96.12 puts, 10.5 ref 96.34
- -2,000 SFRH7 97.00/98.00 1x2 call spds, 2.0 ref 96.25
- 5,350 SFRM6 96.31/96.43/96.56 call flys, 3.25 ref 96.37
- 6,000 SFRM6 96.25/96.31 put spds, .25 ref 96.37
- -2,000 SFRU6 96.18/96.31 put spds, 2.5 ref 96.36
- -2,000 0QM6 95.62/95.75/96.00 broken put flys, 2.0 ref 96.29
- Block, 2,500 SFRZ6 95.87/96.12 put spds, 6.0
- +4,500 SFRN6 95.93/96.06/96.18/96.31 put condors, 2.0 ref 96.355
- +2,000 SFRU6 96.12/96.25/96.37/96.50 put condors, 7.5 vs. 96.265/0.04%
- Treasury Options:
- +20,000 TYM6 110 puts, 11 ref 110-26.5, total volume over 105k
- +34,000 wk5 TY 111.75 calls, 9 vs. 110-18/0.15%, appr +41k on day
- +20,000 wk2 TY 110.25/110.5 put spds, 4
- 2,600 FVM6 107.75 puts, 17.5 ref 107-27.75
- 3,600 FVM6 107.25 puts, 7.5 ref 107-27.5
- +30,000 TYM6 110 puts, 12 vs. 110-25.5/0.10%
- +2,600 TYN6 110 puts, 36
- 1,800 FVM6 107/108.25 put spds ref 108-00.75
- 2,000 FVM6 107.5/107.75 put spds, 6 ref 107-28.75
- -1,500 FVN6 108.5/109.5 call spds, 2 ref 107-27
- -2,000 TYQ6 108 puts, 23 ref 110-14.5
- -4,300 wk2 TY 109.75/110.25 put spds, 4
- over -10,000 TYM6 109/110 put spds, 11 ref 110-18.5 to -17.5
- +3,000 TYN6 114.5 calls, 3 ref 110-08.5
- +5,000 TYM6 111.5/112.25 call spds, 5 ref 110-15
- -1,250 TYN6 110 straddles, 147
- +4,300 wk2 TY 109.75/110.25 put spds, 11 ref 110-09
EURJPY TECHS: Bear Threat Remains Present
May-06 19:00
- RES 4: 187.95 High Apr 17 and the bull trigger
- RES 3: 187.56 High Apr 30
- RES 2: 185.59 20-day EMA
- RES 1: 184.96 50-day EMA
- PRICE: 183.80 @ 16:47 BST May 6
- SUP 1: 182.05 Low May 06
- SUP 2: 181.87 Low Mar 16 and a key support
- SUP 3: 181.42 Low Feb 18
- SUP 4: 180.81 Low Feb 12 and a key M/T support
Bearish short-term conditions in EURJPY remain intact and price continues to trade below the 20- and 50-day EMAs. A continuation lower would signal scope for an extension towards 181.87 next, the Mar 16 low. The next major support lies at 180.81, the Feb 12 low. Initial resistance to watch is 184.96, the 50-day EMA. The 20-day EMA is at 185.59. A clear break of both averages would be a bullish development.
