US TSYS: Tsys Futures Steady, Stopgap Funding Vote Ongoing
Dec-20 02:17
- Tsys futures are trading steady today, TU is unchanged at 102-22⅛ while TY is +03+ at 108-23. A bearish short-term theme in Treasury futures remains intact and Wednesday’s move lower reinforces the current trend condition. The TY contract has traded through key short-term support and the bear trigger at 109-02+, the Nov 15 low. The breach confirms a resumption of the downtrend and opens 108+12+, a Fibonacci projection. On the upside, initial firm resistance is at 110-13, the 20-day EMA.
- Cash tsys are trading flat to 1.5bps lower so far today, with the 5 & 7yr tenors outperforming. The 2yr is trading -0.2bps at 4.314%, while the 10yr is -0.8bps at 4.492%, the 2s10s remains near its steepest levels since June 2022 at +24bps.
- There is an ongoing vote happening for the stopgap funding, however so far lack the votes to pass.
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JGBS: Mixed At Lunch, Subdued Data-Light Session
Nov-20 02:14
At the Tokyo lunch break, JGB futures are stronger, +8 compared to settlement levels, but lower than overnight closing levels.
- Outside of the previously outlined trade balance data, there hasn't been much by way of domestic drivers to flag. Machine Tool Orders and Tokyo Condominiums for Sale data are du later.
- Cash US tsys are flat to 1bp richer, with a slight steepening bias, in today’s Asia-Pac session after yesterday’s modest haven demand-induced gains.
- Cash JGB curve has twist-flattened, with yields 2bps higher to 2bps lower. The benchmark 10-year yield is 0.1bp higher at 1.068% versus the cycle high of 1.108%.
- The swaps curve has bear-steepened, with rates flat to 3bps higher. Swap spreads are mostly wider.
AUSSIE BONDS: Mixed, Data-Light Session, Cash Forecast At 4.10% By End-25
Nov-20 01:47
ACGBs (YM -1.0 & XM +1.0) are slightly mixed , with a flattening bias, in today’s data-light Sydney session.
- The Australian economy will expand 0.4% q/q (+1.2% y/y) in 3Q, according to the latest results of a Bloomberg News survey of 45 economists conducted from Nov. 14 to Nov. 19. The cash rate is forecast to be 4.10% by end of 2025 versus its current level of 4.35%.
- “Australia faces a more challenging fiscal outlook as key trading partner China cools and the local job market loosens, suggesting tax revenue upgrades will be smaller than in previous years, Treasurer Jim Chalmers said.” (per BBG)
- Cash US tsys are ~1bp richer in today’s Asia-Pac session after yesterday’s modest haven demand-induced gains.
- Cash ACGBs are flat to 1bp richer with the AU-US 10-year yield differential at +16bps.
- Swap rates are little changed.
- The bills strip is slightly cheaper across contracts, with pricing flat to -3.
- RBA-dated OIS pricing shows no easing by year-end. A 25bps rate cut is not fully priced until July.
CHINA: Central Bank Continues to Inject Liquidity.
Nov-20 01:37
- PBOC today issued CNY302.1bn of 7-day reverse repo at 1.5%.
- Today’s maturities CNY233bn.
- Net liquidity injection of CNY69.1bn.
- The PBOC controls liquidity in the interbank market through the issuance of revere repo.
Since the volatility around the US election, there has been constant injections of liquidity during each morning’s operations.
