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Treasuries have broadly consolidated yesterday’s energy price-led losses, with surprisingly little spillover from further large energy price increases today (WTI still 3+% higher despite a sizeable pullback off highs). TYA dipped below yesterday’s low before ticking higher again with little apparent appetite to extend losses as it nears pre-CPI levels, with light overnight volumes. Today sees 20Y supply, President Trump deliver remarks at 1500ET and notable earnings including Alphabet and Tesla after the close. 

• Cash yields are 0.1-0.8bp lower on the day with declines led by 2s.
• 2Y yields at 4.253% (-0.8bp) off an earlier high of 4.2659% after yesterday completing a reversal of declines seen since soft CPI and PPI reports last week.
• TYU6 trades at 108-20+ off an earlier low of 108-18 but has generally kept to narrow ranges on particularly light cumulative volumes of 200k.
• It has stopped short of testing support at 108-17 (Jul 14 low) after which lies the bear trigger at 108-08+ (May 19 low). To the upside, resistance is seen at at 109-17 (Jul 17 high).
• Data: Weekly MBA (0700ET)
• Coupon issuance: US Tsy to sell $13bln 20Y bond re-open - 912810UV8 (1300ET)
• Bill issuance: US Tsy to sell $72bln 17w bills (1130ET)
• Politics: Trump attends Dignified Transfer (1100ET), Trump delivers remarks (1500ET)
• Earnings: Alphabet and Tesla report after the close today

• In FX, EURUSD has been in a corrective cycle since Jun 24. The move higher has delivered a print above the 20-day EMA - at 1.1435. A clear break of this EMA would signal scope for a stronger recovery, towards 1.1500, the 50-day EMA. Trend conditions remain bearish. The bear trigger is 1.1325, the June 24 low.
• Tuesday’s sell-off in GBPUSD resulted in a full retracement of the rally on Jul 15. Note too that the pair has traded through both the 20- and 50-day EMAs. This exposes the key short-term support at 1.3342, the Jul 14 low. On the upside, key resistance and the bull trigger has been defined at 1.3558, the Jul 15 high.
• Bullish conditions in USDJPY remain intact and Tuesday’s rally reinforces this theme. The break of 162.84, the Jul 1 high and bull trigger, confirms a resumption of the uptrend and maintains the bullish price sequence of higher highs and higher lows. This opens 164.31, the top of a bull channel drawn from the Feb 12 low. Key support is 161.00, the 50-day EMA.

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