US TSYS: Treasuries Well Bid, Curves Bull Flatten Ahead Friday's Employ Data
- Treasuries look to finish near late session highs Wednesday, lower than expected ISM Services data spurring heavy buying across the board - ISM Services missed expectations at 52.8 (54.0 expected, 54.0 prior), with pullbacks prevalent in some key categories.
- ADP employment was stronger than expected in January at 183k (cons 150k) along with a solidly upward revised 176k (initial 122k) in Dec. Meanwhile, December's goods and services trade deficit was slightly wider than thought at $98.4B.
- No change to Treasury guidance on future issuance in the February Refunding policy statement, a modest dovish surprise vs many expectations that it would be watered down.
- The Mar'25 10Y contract has nearly made it back to pre-Dec 18 FOMC levels, topping at 109-29 high before slipping back to 109-24 (+17.5) after the bell. Curves bull flattened, 2s10s -6.344 to 23.336, 5s30s -2.856 at 39.718; 10Y yield slipped to session low of 4.4001%.
- The Greenback traded weaker on the data (BBDXY off lows at 1297.89 -2.69), Yen outperformance remained the key feature of the day in G10 currency markets, underpinned by the stronger-than-expected Japanese wage data.
- Additional cross asset moves, Gold hit new all-time high of 2882.29, Crude turned lower (WTI -1.49 at 71.21), Stocks reversed early weakness (SPX Eminis +12.0 at 60.75 vs. 6020.25 overnight low.
- Focus remains on Friday's headline employment data for January.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
USDCAD TECHS: Uptrend Remains Intact
- RES 4: 1.4678 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4332 @ 20:46 GMT Jan 6
- SUP 1: 1.4320/4280 20-day EMA / Low Jan 6
- SUP 2: 1.4232 Low Dec 17
- SUP 3: 1.4136 50-day EMA
- SUP 4: 1.4011 Low Dec 5
USDCAD traded lower Monday. The trend set-up remains bullish and a move down appears corrective. The latest pause in the uptrend appears to be a flag formation - a bullish continuation signal. Note too that MA studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4508 next, a Fibonacci projection level. 1.4320, the 20-day EMA, has been pierced. A clear break of the EMA would open 1.4136, the 50-day EMA.
US TSYS: Early Market Swings on Universal Tariff Story Denied by Trump
- Treasuries look to finish mostly lower, curves steeper (2s10s climbing to new 3Y high of 37.004) with the short end outperforming.
- Early market swings tied to a Washington Post article reporting the Trump admin was "exploring plans" to apply tariffs to every country “but only cover critical imports”. The report suggests that Trump’s initial tariff plan may track relatively closely with the Biden administration’s targeted tariffs.
- Both rates and equities surged higher on the article - until Trump denied the watered down approach - with Treasuries reversing course and extending lows by midmorning. Stocks walked back support more gradually, near lows in lat etrade.
- Record corporate debt issuance for a single session climbed over $50B, rate lock hedging added additional pressure to rates.
- Tuesday Data Calendar includes JOLTS, ISM Services and Tsy 10Y Re-Open.
JGB TECHS: (H5) Bearish Outlook
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 143.39/144.48 - High Dec 9 High Nov 11
- PRICE: 141.56 @ 20:21 GMT Jan 06
- SUP 1: 141.45 - Low Jan 6
- SUP 2: 141.05 - 2.000 proj of the Aug 6 - Sep 3 - 9 price swing
- SUP 3: 140.54 - 2.236 proj of the Aug 6 - Sep 3 - 9 price swing
A clear downtrend in JGB futures remains intact and recent fresh cycle lows, reinforce this condition. Note too that moving average studies on the continuation chart are in a bear-mode setup, highlighting a clear downtrend. The move down exposes 141.05, a Fibonacci projection point on the continuation chart. For bulls, a reversal would open 143.39 and 144.48, the Dec 9 and Nov 11 high respectively.
