US TSYS: Thursday Rally Consolidated In Tight Ranges
May-30 10:58
- Treasuries are mildly lower on the day in what have been tight ranges, with the largest moves at the very long end but not troubling recent steeps for 5s30s.
- A federal appeals court yesterday temporarily reinstated the most sweeping tariffs whilst the WSJ reports that the Trump administration is looking at finding a new legal authority to impose tariffs.
- Today sees a press conference between President Trump and Musk at 0830ET. Trump yesterday: “I am having a Press Conference tomorrow at 1:30 P.M. EST, with Elon Musk, at the Oval Office. This will be his last day, but not really, because he will, always, be with us, helping all the way. Elon is terrific!”
- There are also notable data releases including April PCE, MNI Chicago PMI for May and the final U.Mich consumer survey for May, the latter after a tentative improvement was indicated in the preliminary survey that closed shortly after the US-China trade de-escalation on May 12.
- With month-end at play, we can't rule out a late bid in Tsys, they should more broadly have a limited impact. Bloomberg Bonds for Tsys +0.11yr (decent), MS Bonds to Tsys +0.08yr (average).
- Cash yields are 0-1.5bp higher, led by 30s.
- TYU5 sits at 110-22 (unch) in narrow ranges (110-18 to 110-25) on modest cumulative volumes of 290k.
- Whilst a broad consolidation of yesterday’s intraday risk-off and dovish data-driven rally, the earlier high has seen a probe of a key resistance at 110-23 (May 16 high). A clear break would undermine the broader bearish theme and could open 111-05+ (May 9 high).
- Data: PCE Apr (0830ET), Advance goods trade Apr (0830ET), Wholesale/retail inventories Apr/Apr prelim (0830ET), MNI Chicago PMI (0945ET), U.Mich May final (1000ET)
- Fedspeak: Daly panel (1645ET), Goolsbee on radio podcast (time unknown)
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EUROZONE DATA: Q1 GDP Flattered By Rounding, Irish Exports
Apr-30 10:56
As we suspected, the Eurozone flash Q1 GDP release was flattered by rounding, coming in at 0.352% unrounded. That’s still well above the 0.2% projected by consensus and the ECB, but the data was nonetheless skewed by tariff-front loading, particularly in Ireland. Sentiment data points to weak growth momentum in Q2, as US tariffs start to kick in and associated uncertainty continues to weigh.
- Irish GDP rose 3.2% Q/Q, with the stats office noting that “this was driven by an increase in the multinational dominated sectors in Q1 2025 with a more modest increase in the domestic sectors”. Irish February goods trade data showed a 211% Y/Y increase in exports to the US, which largely comprised of medical and pharmaceutical products - an obvious indication of front-loading amongst major US Pharma companies based in Ireland.
- Ireland contributed 0.11p to the Eurozone-wide quarterly reading, despite only making up 4% of total GDP.
- Across the four major economies, detailed information on the Q1 data is lacking. However, we note that domestic demand appears to have been a positive contributor in Germany, Spain and Italy, while net trade was a negative contributor to France and Italy. Net trade was not mentioned in the German press release, suggesting a flat/negative contribution there too.
- Summarising the main quarterly GDP prints released yesterday/this morning:
- Eurozone: 0.4% Q/Q vs 0.2% cons, 0.2% prior.
- Germany: 0.2% Q/Q vs 0.2% cons, -0.2% prior.
- France: 0.1% Q/Q vs 0.1% cons, -0.1% prior.
- Italy: 0.3% Q/Q vs 0.2% cons, 0.2% prior.
- Spain: 0.6% Q/Q vs 0.7% cons, 0.7% prior.
US TSYS: Modestly Twist Flatter On Low Volumes Ahead Of An Important Docket
Apr-30 10:53
- Treasuries trade twist flatter as the front end modestly pares latest gains whilst the long end consolidates and in the case of 2-s and 30s builds upon prior gains.
- Weaker than expected Caterpillar results have weighed on equities but with little sign of spillover into Treasuries.
- Futures volumes have been subdued overnight ahead of a particularly heavy docket before further risk events after the equity cash close with results from Meta and Microsoft.
- Today sees the Treasury QRA at 0830ET (MNI preview) along with multiple data releases that include Q1 GDP (mini preview here) and March PCE (here).
- Cash yields are 1bp higher (2s and 3s) to 2bp lower (20s and 30s).
- 10Y yields at 4.162% eye 4.15% for the first time since early Apr 8, i.e. comfortably pre-tariff pause levels.
- TYM5 trades at 112-06 (+01) in a narrow range, consolidating yesterday’s rally with an overnight high of 112-09.
- Prior clearance of 111-25 (50% retrace of Apr 7-11 bear leg) has undermined a prior bearish theme and the contract has again stepped closer to latest resistance at 112-12 (61.8% retrace of the same bear leg). To the downside, support at 111-07+ (20-day EMA).
- Data: Weekly MBA data (0700ET), ADP employment Apr (0815ET), GDP Q1 advance (0830ET), Employment Cost Index Q1 (0830ET), MNI Chicago PMI Apr (0945ET), PCE report Mar (1000ET), Pending home sales Mar (1000ET)
- Bill issuance: US Tsy $60B 17W bill auction (1130ET)
- Full Treasury Quarterly Refunding Announcement (0830ET). Recent market volatility has reduced the possibility that Treasury will adjust its guidance that it will keep nominal coupon auction sizes unchanged for "at least the next several quarters", as changing this would signal an intention to increase bond supply in the near future. That view was further boosted by details in Monday's borrowing estimates.
OPTIONS: Larger FX Option Pipeline
Apr-30 10:53
- EUR/USD: May01 $1.1270(E1.1bln), $1.1500(E1.0bln); May05 $1.1073(E2.4bln), $1.1100($1.5bln), $1.1190-00(E1.4bln), $1.1285-00(E2.3bln)
- USD/JPY: May01 Y143.00($1.3bln), Y145.75($1.6bln); May02 Y147.50($1.2bln)
- AUD/USD: May05 $0.6550-60(A$1.0bln), $0.6635-45(A$1.1bln)
- USD/CAD: May05 C$1.3865-70($2.5bln)
