US TSYS/SUPPLY: Thursday's 20-30Y Buyback Set At $6B

PENTAGON CHIEF HEGSETH ON IRAN: NOT RULING OUT USING MILITARY FORCE IN STRAIT OF HORMUZ OR ANYWHERE ELSE

The Treasury curve flattened Monday as speculation continued over the form and scope of announced long-end buybacks.

• After a flat start coming out of the weekend, the curve bull flattened in early trade after CNBC cited "senior" officials saying that reported could use cash on hand in the TGA to fund the larger long-end bond buybacks that had been announced last week.
• While this is not a surprise (either existing  cash or new issuance are the means by which buybacks are funded), the apparent effort by Treasury to publicize this approach suggests potential for both lower increases in bill issuance than had been anticipated, and higher system liquidity as the TGA is depleted.
• After some downside pressure around the equity cash open mirroring a rebound in energy prices, Treasury futures regained ground and hit session highs at noon after Fox Business cited "Wall Street" sources in pointing to the possibility Treasury would consider eliminating long-end bonds like the 20Y to keep yields contained and "'put the fear of God' into the bond vigilantes".
• Otherwise, with a dearth of data in the session, most headlines were on the foreign front: President Trump ratcheting up the trade dispute with Canada further by vowing to double tariff rates on Canadian autos to 50%, and Treasury Secretary Bessent announcing plans to implement secondary sanctions aimed at targeting entities financing Iranian operations. These were not particularly impactful for markets however.
• Volumes picked up along with the pace of the Sep/Dec roll ahead of next Monday's first notice data; MNI estimates the roll to be around 35-40% complete, vs closer to 20% at the end of last week.
• On the day, the curve sits lightly twist flatter, with front TY futures remaining within the prior session's ranges. Latest levels: The 2-Yr yield is up 0.2bps at 4.2379%, 5-Yr is down 1.6bps at 4.4082%, 10-Yr is down 3.2bps at 4.7021%, and 30-Yr is down 4bps at 5.2308%. Sep 10-Yr futures (TY) up 5.5/32  at 108-14 (L: 108-8.5 / H: 108-18)
• Tuesday's schedule includes appearances by Richmond Fed President Barkin, weekly ADP private payrolls, Conference Board consumer confidence, Richmond and Philadelphia Fed regional business surveys, and housing market data (prices and new home sales). Focus for the week remains on Wednesday's GDP/PCE data and Friday's speech by Fed Chair Warsh.

• RES 4: 0.7310 1.00 proj of the Mar 30 - May 6 - Jun 30 price swing
• RES 3: 0.7278 High May 6 and key resistance
• RES 2: 0.7201 High May 29
• RES 1: 0.7181 76.4% retracement of the May 6 - Jun 30 bear leg
• PRICE: 0.7152 @ 16:55 BST Aug 24
• SUP 1: 0.7067 20-day EMA 
• SUP 2: 0.7040/0.6922 50-day EMA / Low Jul 29  
• SUP 3: 0.6907 Low Jul 8 
• SUP 4: 0.6865 Low Jun 30 and the bear trigger 

A bull cycle in AUDUSD remains intact for now and Friday’s strong gains reinforces the bull theme. Price is trading above the 50-day EMA, at 0.7040, and last week’s gains delivered a breach of 0.7120, the 61.8% of the May 6 - Jun 30 bear leg. The move higher strengthens the current bull theme and sights are on 0.7181, the 76.4% retracement point. Support to watch is the 50-day EMA at 0.7040.