US TSYS: Tsys & Stocks Break Resistance, Month End Partially Cited
- Treasuries broke through narrow session range late Wednesday, look to finish mostly higher, curves moderately steeper with bonds underperforming all day.
- Early data driven volatility, Tsys tested major resistance after softer than expected April ADP at 62k (sa, cons 115k) after a downward revised 147k (initial 155k) in March.
- Rates and equities reverse course - extended lows after higher than expected GDP Price index, Personal Consumption and Core PCE data. Stocks rebounded after solid PCE income growth reflected in the PCE data partially offset by tariff impacts.
- Jun'25 10Y currently +7.5 at 112-12.5 vs. -16 high (10Y yld currently 4.1562%), resistance at 112-16 (1.0% 10-dma envelope) followed by 113-04 (76.4% retracement of the Apr 7 - 11 bear leg).
- Trade negotiation related headlines continued to deliver real vol to markets, but it appeared late bounce in rates and stocks was at least partially month end related.
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USDCAD TECHS: Trend Signal Affirmed as Bullish
- RES 4: 1.4700 Round number resistance
- RES 3: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
- RES 2: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- RES 1: 1.4402 High Mar 20
- PRICE: 1.4325 @ 14:42 BST Mar 31
- SUP 1: 1.4235 Low Mar 26 and a key near-term support
- SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
- SUP 3: 1.4011 Low Dec 5 ‘24
- SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
USDCAD continues to trade through last week’s high. Moving average studies continue to highlight a dominant uptrend. A reversal higher would refocus attention on the bull trigger at 1.4543, the Mar 4 high. First resistance to watch is 1.4402, the Mar 20 high. A return lower and clearance of 1.4235, the Mar 26 low, would undermine the bull theme and instead highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger.
US TSYS/SUPPLY: March Auction Review: 7Y Unusually Weak; 20s Strongest (2/2)
Although the 7-year tail of 0.6bps was modest, it was the largest since last August. Primary dealer take-up rose to 12.7% from 8.8% in February. That drove a notable weakening in MNI’s RSI (which compares the latest auction’s results to the last five trade-through/tails and the last 10 dealer take-up percentages) to -2.64, its lowest since our records began in March 2021.
- The largest outright tail was seen in the 30-year line (1.1bps), but this compared to a 1.3bp tail in February. The 30-year RSI was essentially unchanged on the month at -1.08.
- The strongest auction in March was the 20-year, which saw a 1.4bp tail and a low 8.8% dealer take-up. This drove an RSI score of 1.69, which though, was still below January’s 1.78.
US TSYS/SUPPLY: March Auction Review: More Tails Than Trade-Throughs (1/2)
March's Treasury auctions brought the following results. Of the 7 nominal coupon auctions, three traded through and four tailed, with the 7-year sale standing out on the weak side according to MNI’s Relative Strength Indicator (RSI).
- 2Y Note trade-through: 3.984% vs. 3.985% WI.
- 2Y FRN: 0.105% high margin vs. 0.090% prior.
- 3Y Note tail: 3.908% vs. 3.902% WI.
- 5Y Note tail: 4.100% vs 4.095% WI.
- 7Y Note tail: 4.233% vs. 4.227% WI.
- 10Y Note trade-through: 4.310% vs. 4.314% WI.
- 10Y TIPS: 1.935% high yield vs 2.243% prior
- 20Y Bond trade-through: 4.632% vs 4.646% WI.
- 30Y Bond tail: 4.623% vs. 4.612 % WI.
