US TSYS: Tsys Futures Trade At Session's Best, Curve Flattens Slightly
It has been a volatile session, following the Inauguration of Trump he has been busy signing executive orders, however the market has really only reacted to comments surrounding Canada & Mexico tariffs. Asian equities are trading higher with Hong Kong stocks the top performer following positive TikTok comments from Trump. Tsys futures volumes have surged, while the cash tsys curve has flattened slightly.
- Tsys futures are holding near session's best levels now, brushing off earlier weakness following headlines around 25% tariffs on Canada & Mexico. TU is +02¾ at 102-26¼ while TY is trading +16 at 109-01+, Resistance is seen at 109-06 (Dec 31 high) but gains are deemed corrective from a technical perspective, against a medium-term bear trend with support at 108-00 (Jan 16 low).
- Cash tsys curve has twist flattened, with the belly out-performing, the 7yr leads the way trading -9.5bps to 4.436% just off the ytd lows of 4.413%, while the 10yr is -9.1bps at 4.536%
- Long-end bonds have outperformed recently, flattening yield curves as markets downplayed Donald Trump's tariff threats against Canada and Mexico. The 2s10s spread fell to 31bps, its tightest level since January 3, with technical resistance and charting suggesting a double top may have formed at 42bps, which could limit further steepening for now.
- Fed Funds futures have seen cut expectations build during the Asian session to 43bp for 2025 vs 38bp at the US crossover on Monday and 32bp prior to last week’s CPI report. A next 25bp cut from the FOMC is seen around June/July.
- It is another quiet data session today with just Philadelphia Fed Non-Manufacturing Activity expected out.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
TRUDEAU SAYS `WE HAVE A LOT OF WORK TO DO'
- TRUDEAU SAYS `WE HAVE A LOT OF WORK TO DO'
- TRUDEAU WANTS GOVT TO PREPARE FOR NEW US ADMINISTRATION
- TRUDEAU DOESN'T ADDRESS QUESTIONS ABOUT HIS LEADERSHIP
USDCAD TECHS: A Pullback Would Be Considered Corrective
- RES 4: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 3: 1.4537 2.0% 10-dma envelope
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4356 @ 16:56 GMT Dec 20
- SUP 1: 1.4301 Low Dec 18
- SUP 2: 1.4174/4014 20- and 50-day EMA values
- SUP 3: 1.3928 Low Nov 25 and a key support
- SUP 4: 1.3822 Low Nov 6
USDCAD bulls remain in the driver’s seat. While price faded into the Thursday close, the recent breach of 1.4178, the Nov 26 high, confirmed a resumption of the uptrend and this maintains the price sequence of higher highs and higher lows. The latest rally opens 1.4508 next, a Fibonacci projection level. Initial firm support to watch lies at 1.4174, the 20-day EMA. A pullback would be considered corrective.
AUDUSD TECHS: Bearish Trend Structure
- RES 4: 0.6550 High Nov 25
- RES 3: 0.6501 50-day EMA
- RES 2: 0.6429 High Dec 12
- RES 1: 0.6337/6396 Low Dec 11 / 20-day EMA
- PRICE: 0.6263 @ 16:55 GMT Dec 20
- SUP 1: 0.6199 Low Dec 19
- SUP 3: 0.6158 1.236 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 3: 0.6100 Round number support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
The trend needle in AUDUSD continues to point south and this week’s fresh cycle lows and Wednesday’s sell-off, reinforce a bear theme. The move down maintains the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend. The break lower opens 0.6158 next, a Fibonacci projection. Initial firm resistance to watch is 0.6396, the 20-day EMA.
