US TSYS: Treasuries Follow EGB Lower, Williams and QCEW Update Ahead
Dec-19 11:54
Treasuries have bear steepened overnight, being dragged lower by EGBs with the ECB and Germany’s 2026 issuance plans now in the rear view. Today’s local focus should be on potentially important comments from NY Fed’s Williams at 0830ET along with 1000ET data including the delayed QCEW update. President Trump also makes an announcement at 1300ET, with the topic unknown but it following the Trump-Kennedy Center renaming vote.
- Cash yields are 1.5-3.3bp higher on the day, led by the long end, with 2s10s at 67.6bps having more than reversed the ~2.5bp flattening seen on CPI yesterday.
- TYH6 trades at session lows of 112-16+ (-07+) on modest cumulative volumes of 240k.
- A bull cycle is intact for now, with resistance seen at 113-00+ (61.8% retrace of Nov 25-Dec 10 bear leg) having fleetingly hit 112-31 on yesterday’s CPI release. Support is seen at 112-06 (Dec 16 low) before 111-29 (Dec 10 low and bear trigger).
- Data: Existing home sales Nov (1000ET), U.Mich consumer survey Dec final (1000ET), QCEW Q2 (1000ET), Kansas City Fed services Dec (1100ET).
- Note that QCEW update can help guide expectations for the size of the potential payrolls benchmark revision due with the January payrolls report. The preliminary benchmark estimate, based off Q1 QCEW data, showed a tentative -911k that is likely to not be as negative come the full benchmark revision. Powell last week said he sees monthly payrolls growth being overstated by 60k (Waller has since suggested 50-60k) compared to the ~75k that is tentatively implied by the preliminary estimate.
- Fedspeak: Williams on CNBC (0830ET) – see STIR bullet
- Politics: Trump makes an announcement (1300ET), Trump participates in Christmas reception (1745ET)
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US TSYS: TY Resistance Remains Intact, Awaiting Nvidia and NFP Risk Events
Nov-19 11:52
- Treasuries are mildly lower overnight, with broader risk focus on Nvidia earnings after the close before tomorrow’s delayed September NFP report (MNI Preview).
- Today’s actual docket meanwhile is headlined by the FOMC Minutes (MNI Preview) and 20Y supply, after last week’s disappointing 30Y offering but with last month’s 20Y trading through by 1.1bps.
- Cash yields are 0-0.8bp lower on the day, consolidating yesterday’s steepening with 5s30s at 105bp (highs since mid-Oct and before that September).
- TYZ5 trades at 112-25 (unch) on lighter cumulative volumes of 265k after some heavier overnight sessions recently.
- Yesterday saw a short-lived high of 113-02 as it came close to testing latest resistance at 113-04+ (Nov 14 high). A clearer breach of 113-02, an area of congestion since Nov 5, would be a bullish signal and suggest scope for a climb towards 113-18+ (Oct 28 high).
- Data: MBA mortgage applications (0700ET), Trade balance Aug (0830ET, post-shutdown catch-up)
- Fedspeak: Miran on bank regulation (1000ET), Barkin repeats speech (1245ET), Williams welcome remarks (1400ET)
- Coupon issuance: US Tsy $16B 20Y Bond auction - 912810UQ9 (1300ET)
- Bill issuance: US Tsy $69B 17W bill auction (1130ET)
- Politics: Trump remarks at Saudi Investment Forum (1200ET)
OUTLOOK: Price Signal Summary - Support In Gold Remains Intact For Now
Nov-19 11:52
- On the commodity front, the downleg in Gold between Oct 20 and 28 appears to have been a correction and has allowed an overbought condition to unwind. Recent gains suggest that correction is over. With the metal having retraced off last week’s high, the key support to watch lies at the 50-day EMA, at $3937.4. Clearance of this EMA would signal scope for a deeper retracement. The short-term bull trigger has been defined at $4245.23, the Nov 13 high.
- WTI futures are trading in a range. A sell-off on Nov 12 strengthens a bearish theme. A continuation lower would pave the way for a move towards key support and the bear trigger at $55.99, the Oct 20 low. Clearance of this level would resume the downtrend. Note that it is still possible a bullish corrective cycle remains in play. Resistance to watch is $61.84, the Oct 24 high. Clearance of this hurdle would signal scope for a stronger correction.
FOREX: USDJPY Accelerates Above 156.00 Following Katayama/Ueda Meeting
Nov-19 11:43
- USDJPY quickly accelerated through yesterday's highs to hit a new cycle high on Wednesday, extending as high as 156.30 following a meeting between Finance Minister Katayama and BOJ Governor Ueda. Katayama stated the two "did not specifically talk about FX", possibly suggesting JPY weakness is not the highest priority and greenlighting the market to put further pressure on the struggling yen.
- Price action takes the pair above 155.89, the Feb 3 high, while more meaningful resistance is seen at 156.75, the Jan 23 high. For EURJPY, targets rely on technical projections, with 181.01 and 181.70 the next levels of note based on the Jul 31 - Sep 29 - Oct 2 price swing.
- The likes of AUD (-0.32%) and NZD (-0.55%) are underperforming on the session, amid the ongoing concerns for risk and major equity indices consolidating near recent lows. Recent weakness in AUDUSD reinforces a short-term bearish signal on Nov 13 - a shooting star (inverted hammer) candle formation. NZDUSD has been grinding towards cycle lows, which are located at 0.5606.
- UK CPI printed roughly in line with expectations, which may lower the bar for a December cut a touch, however, overall the print should not have much of an impact for policy over the medium term. While the BoE will get the next round of CPI data under embargo on the Monday before the next meeting, the main risk event for BoE policy ahead continues to be next week's budget.
- Moving average studies in GBPUSD remain in a bear-mode condition and continue to highlight a dominant downtrend. The bear trigger remains at 1.3010, the Nov 4 and 5 low, while key short-term resistance stands at the 1.3198 20-day EMA.
- Nvidia earnings incl. guidance have the potential for an impact on FX, especially given recent caution around AI valuations. Fed's Logan, Miran, Barkin, and Williams are on the calendar, alongside the October FOMC minutes. US September Payrolls will headline Thursday.
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