US TSYS: Tsys Futures Edges Slightly Lower, Trump Tariffs Headlines Trickle Out
Jan-22 04:48
- Tsys futures are trading lower today and holding just off session lows. TU is -00⅛ at 102-23⅛, while TY is -03 at 108-20+.
- The medium-term trend remains bearish and the recovery that started Jan 13, is considered corrective. The contract has traded through the 20-day EMA, at 108-17. This exposes 109-06, the Dec 31 high, and 109-17+, the 50-day EMA. The bear trigger has been defined at 107-06, the Jan 13 low.
- There was a small block buying of FY earlier, however volumes are low and there hasn't been much else in terms of notable flows today.
- Cash tsys yields are trading 1-2bps higher in Asia, the belly is under-performing slightly, giving back some of Tuesday out performance. The 10yr is +1.2bps at 4.589%. The 2s10s curve is holding steady at 30bps, while the 5s30s is -1bps at 40.306.
- Headlines from Trump have been trickling out throughout the session, however there has been nothing we hadn't already expected. There were comments about 10% tariffs on goods imported from China on Feb. 1 because fentanyl is being sent from China to Mexico and Canada. There has also been comments about sanctions on Russia if they don't negotiate with Ukraine.
- The 2025 Fed rate cut expectations fairly static. Projected rate cuts through mid-2025 this morning, current lvls vs. Friday close* as follows: Jan'25 steady at -0.01bp, Mar'25 at -6.6bp (-7.5bp), May'25 -12.4bp (-12.9bp), Jun'25 -22.3bp (-21.8bp), Jul'25 at -26.1bp (-25.6bp).
- The data calendar remains light with MBA mortgage data and the December Leading Index - more focus will be on $13B 20Y Bond reopening auction, as well as a Fox interview with Pres Trump airing after Wednesday's cash close.
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JGBS: Futures Drift A Touch Lower, JGB Yields Unchanged
Dec-23 04:44
JGB futures have had a slightly downside bias since the lunchtime break, but overall moves remain contained. The March contract (JBH5) last 142.42, -.05 versus settlement levels. US Tsy futures have been relatively steady today as market wind down for the holiday period later this week.
- Cash JGB yields are little changed, the 10yr remaining just under 1.07% at this stage. The 10yr swap rate is around 1.015%, also little changed for the session. Aggregate moves are less than 1bps across keys parts of the JGB curve and swap rate space.
- We do have some BoJ and data event risks this week, the mins of the BoJ Oct meeting are out tomorrow, services PPI on Wednesday (Christmas day), along with a Ueda speech. On Friday the Tokyo CPI for Dec prints.
- It remains to be seen if these events shift market sentiment, as the central bank awaits January trends on wages (for 2025), along with early US policy shifts (under the returning Trump administration).
US TSYS: Tsys Futures Steady, 10yr Hovers Near 4.50%
Dec-23 04:39
- Tsys futures are trading little changed today, ranges are narrow while volumes are slightly below average. TU is +00¼ at 102-22¾, while TY is trading +00 + at 108-31+.
- Cash tsys are trading +/- 0.5bps, curve slightly flatter. The 10yr hovers just above the 4.50% level at 4.52%.
- Traders are betting yields will continue to rise, taking at look at TLT (iShares 20+yr Treasury Bond) Etf, investors withdrew a net $1.55b from it in the last session for which data is available, reducing the fund's assets by 2.9% to $51.1b, the lowest level since June 21. This was the biggest one-day decrease in at least a year. The most active option for the Jan 15 expiry is the 85 put, we last trade at 88.31.
- In Treasury options on friday, flows included A large options trade targeting a rise in US 10yr Treasury yields to around 5.4% by January 24 saw 50,000 February 103.00 puts bought for approximately $1.5m. This appears to be new risk, given the low prior open interest of 7,036 contracts at this strike. While in SOFR futures stand out flows included a large block sale in the Dec25 futures over the US morning session
- Later today we have durable goods orders and new home sale
FOREX: Firmer Equities Aids FX Risk Appetite, But Muted Moves
Dec-23 04:34
G10 FX markets have started the holiday impacted week in fairly muted fashion. There has been a slight risk on tone in early trade, but follow through has been very limited for the likes of AUD and NZD. The USD BBDXY index was last little changed near the 1297 level.
- AUD/USD has found resistance near 0.6270, which marked highs from late last week (post softer US data outcomes). On the downside, moves sub 0.6250 have been supported, and we last tracked close to this level. This leaves us little changed for the session. The NZD has followed a similar trajectory, last near 0.5650/55, also little changed for the session.
- USD/JPY has drifted a little higher, last in the 156.50/55 region, not too far from session highs (156.69). Lows for the session were in the first part of trade and at 156.14, above intra-session lows from Friday (just under 156.00).
- We do have some event risks on the calendar for Japan this week, the mins of the BoJ Oct meeting are out tomorrow, services PPI on Wednesday (Christmas day), along with a Ueda speech. On Friday the Tokyo CPI for Dec prints.
- EUR/USD is a touch higher, last near 1.0440/45.
- In the cross asset space, US equity futures are higher, led by the tech side, up nearly 0.60% for the Nasdaq. Regional equity markets are mostly higher, led by the tech side.
- US yields are close to flat at this stage, retreating from recent highs on Friday post the softer core PCE inflation reading. This is likely helping broader risk appetite in the equity space as week.
- Looking ahead, we have UK GDP revisions later, along with US durable good orders and building permits.
