US TSYS: Tsys Finishing Near Highs, Curves Reverse Midweek Steepening
Aug-28 19:25
- Off early lows, Treasuries look to finish mostly higher & near the top end of the session range Thursday, following similar bounce in Bunds - curves twisting flatter with the short end resisting the move: 2s10s -5.179 at 56.990, 5s30s -4.728 at 117.528.
- Treasury futures had extend lows after lower than expected continuing jobless claims data, prior down-revised as well, weekly claims decline largely in-line with expectations. Initial jobless claims were essentially as expected at 229k (sa, cons 230k). Continuing claims meanwhile surprised lower at 1954k (cons 1966k) in the week to Aug 16, covering a payrolls reference period.
- Second read of core PCE in-line while GDP annualized figure rises higher than anticipated. Real GDP revised to 3.29% annualized (cons 3.1) from 2.97% in the advance Q2 release, after -0.5% in Q1. Real personal consumption revised to 1.57% annualized (cons 1.6) from 1.44% in the advance Q2 release, after 0.5% in Q1.
- Meanwhile, the National Association of Realtors' index of pending home sales fell to 71.4 in July from 72.0 prior, a 3-month low and a little worse than expected (-0.4% M/M vs -0.2% expected, -0.8% prior).
- Treasuries recovered quickly after the $44B 7Y note auction (91282CNW7) tailed: 3.925% high yield vs. WI of 3.920%; bid-to-cover 2.49x from 2.79x prior.
- Note, WTI crude has rallied in recent trade and is now higher on the day as the market awaits an expected Trump announcement on Russia/Ukraine later.
- Looking ahead to Friday's Data Calendar: Personal Income/Spending, Core PCE, Chi PMI and U of Mich Sentiment/inflation expectations.
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US TSYS/SUPPLY: Refunding Preview: Instant Answers Focus On Guidance (3/3)
Jul-29 19:19
In addition to providing the new auction sizes for the upcoming quarter, we will
answer this question upon release of the Treasury Quarterly Refunding Statement
at 0830ET on Wednesday (with color on changes if any):
- Is the guidance on coupon issuance unchanged? “Treasury anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters.”
Additionally we include the following questions on buybacks:
- Total maximum purchase amount of buybacks in the 20Y-30Y range (B USD)
- Total maximum purchase amount of buybacks in the 10Y-20Y range (B USD)
US STOCKS: Late Equities Roundup: Taking Profits/Position Squaring Pre-FOMC
Jul-29 19:15
- Stocks gave back modest early gains and are holding near session lows late Tuesday as investors took profits ahead of Wednesday's FOMC policy announcement. Less optimistic earnings from United Health and Merck coupled with uncertainty over US trade policy with the world contributed to indexes retreating from Monday's record highs in SPX eminis and Nasdaq.
- Currently, the DJIA trades down 181.77 points (-0.41%) at 44656.01, S&P E-Minis down 9.75 points (-0.15%) at 6412.25, Nasdaq down 35.3 points (-0.2%) at 21142.79.
- Leading decliners in the second half included: Carrier Global -11.04%, Brown & Brown -9.73%, VeriSign -9.49%, United Parcel Service -9.14%, PayPal Holdings -7.88%, Johnson Controls -7.17%, Stanley Black & Decker -7.10%, UnitedHealth Group -5.96%, Moderna -4.66% and Eli Lilly & Co -4.46%.
- On the positive side, IT, estate management and Financials led first half gainers: Corning +12.62%, Incyte +9.41%, Cadence Design Systems +9.02%, Synopsys +6.93%, Globe Life +5.88%, Welltower +4.71%, Advanced Micro Devices +3.47%, Cincinnati Financial +3.11% and Western Digital +2.79%.
- Expected earnings announcements after the close include: Booking Holdings, Mondelez International, Caesars Entertainment, PPG Industries, Visa Inc, Expand Energy, Teladoc Health, Avis Budget Group, Electronic Arts Inc, Starbucks, Seagate Technology and Teradyne Inc.
US TSYS/SUPPLY: Refunding Preview: Buybacks Likely Upped (2/3)
Jul-29 19:14
The quarterly dealer survey usually provides a hint to policy shifts, and the latest questionnaire for this quarter put emphasis on Treasury buyback "enhancements": “what factors should Treasury consider in evaluating changes to maximum purchase amounts? Are there certain buyback sectors where either increases or decreases in purchase maximums are warranted? What changes to the buyback schedule, if any, would help to further Treasury’s liquidity support goals? Are there any other buyback enhancements not listed in the quarterly refunding statement that Treasury should consider?”
- The appearance of this question, along with Treasury’s ongoing widening and deepening of its buyback programs, appears to have raised expectations that there will be a meaningful announcement on this front at the August refunding.
- We think there is a good chance that Treasury will raise the total cap on quarterly liquidity operational purchases from the existing $30B, to $40B or greater. We have seen expectations that the cap could be increased to as much as $60B for the upcoming quarter.
- Outside of these considerations, we have also seen expectations that Treasury could alter buyback schedules (eg to make operations more frequent), broaden counterparty eligibility, or even to forego cash management buyback operations for the upcoming quarter (MNI and probably consensus would be surprised by the latter, given mid-September’s tax deadline).
- Some examples: Goldman sees buybacks upped next quarter to $45B or $60B; UBS to $40B; Citi to $45B; Deutsche $34B (potentially up to $40B).
