US TSYS: Tsys Near Steady on Week Heading Into Fed Backout
- Treasuries look to finish firmer - near steady for the week as rates bounce off the week's 4W lows Friday, light volumes (TYU5 under 920k) ahead of the weekend and the start of the Fed's media Blackout on policy (through July 31).
- Early data driven volatility: Treasuries pared support slightly after higher than expected Housing Starts & Build Permit data: starts came in at 1,321k (1,300k expected, 1,263k prior upwardly rev by 7k), with permits up 3k to 1,397k. Building permits remained below the 1,400k mark for a 2nd consecutive month.
- Treasuries extended highs briefly then pared move to pre-UofM release levels as UofM sentiment came out slightly higher while inflation expectations look lower. Inflation expectations surprise lower in the preliminary July survey, with the 1Y at 4.4% (cons 5.0 after 5.0 in June) and 5-10Y at 3.6% (cons 3.9 after 4.0 in June). The 1Y is the lowest since January and the 5-10Y is the lowest since February.
- Pres Trump signed landmark crypto bill into law Friday: GENUIS Act, a bill to create a regulatory framework for stablecoins.
- Sep'25 10Y contract trades +10 at 110-26.5 vs. -29 high. Initial resistance is at 110-30+, the 20-day EMA, followed by 111-13.5/111-28 (High Jul 10 / High Jul 3). Curves mildly steeper: 2s10s +0.761 at 55.030, 5s30s +2.221 at 103.902.
- Cross asset: Bbg US$ index well off lows: BBDXY -1.19 at 1206.39 (1202.46 Low); stocks mildly lower (SPX eminis -10 at 6330.75); gold up 9.7 at 3348.67.
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US: Latest Trump Comments On Iran - Hasn't Made Decision Yet
Bloomberg headlines from Trump's Oval Office remarks on Iran:
"*TRUMP: I HAVEN'T MADE A DECISION WITH RESPECT TO IRAN
*TRUMP: HAVEN'T CLOSED DOOR TO CONVERSATIONS WITH IRAN
*TRUMP: POSSIBLE THAT FIGHTING NECESSARY TO BLOCK IRAN NUCLEAR
*TRUMP: JUST BECAUSE US CAN DESTROY FORDOW DOESN'T MEAN WE WILL
*TRUMP: I THINK IRAN WAS FEW WEEKS AWAY FROM A NUCLEAR WEAPON
*TRUMP: WE'RE LOOKING FOR TOTAL VICTORY, NO NUCLEAR WEAPON
*TRUMP: ENDING MIDEAST CONFLICT AS SOON AS POSSIBLE IS GOAL
*TRUMP, ASKED ABOUT LATEST ON ISRAEL: HAVING A MEETING IN HOUR" - bbg
AUDUSD TECHS: Bulls Remain In The Driver’s Seat
- RES 4: 0.6700 76.4% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6688 High Nov 7 ‘24
- RES 2: 0.6603 High Nov 11 ‘24
- RES 1: 0.6552 High June 16
- PRICE: 0.6519 @ 15:54 BST Jun 18
- SUP 1: 0.6457/6429 Low Jun 13 / 50-day EMA
- SUP 2: 0.6357 Low May 12
- SUP 3: 0.6275 Low Apr 14
- SUP 4: 0.6181 Low Apr 11
The trend set-up in AUDUSD remains bullish and the pair is holding on to the bulk of its latest gains. Key support at 0.6429, the 50-day EMA, is intact. A clear break of this EMA is required to highlight a potential short-term reversal. The pair has recently cleared a key resistance at 0.6515, the May 7 high, confirming a resumption of the uptrend. Sights are on 0.6550, a Fibonacci retracement.
FED: Question from MNI's Jean Yung
- MNI's Jean Yung asks Powell about why there are no forecasts for rates to rise or stay steady through next year:
- Powell says "people are writing down their most likely path. They're not saying there's 0 possibility of other things...people write down their rate paths and they do not have a really high conviction that this is exactly what's going to happen over the next two years. No one feels that way. They feel like, what am I going to write down? What would you write down? It's not easy to do that with confidence."
- "We don't rule things in or out. Certainly a hike is not the base case at all."
