US TSYS: Tsys Weaker/Off Lows, Challenger Job Cut Surge, USMCA Tariff Deferral
Mar-06 20:41
- Treasuries look to finish moderately lower for the most part, off lows, curves broadly steeper with short end rates outperforming (2s10s +4.720 at 31.684, off early high of 35.666).
- Busy session as rates see-sawed off early highs, heavy volumes (TYM5 near 3M after the bell) as rates rallied after Challenger job cut announcements surged in February to 172k, a 103% YoY increase largely tied to government layoffs.
- Rates pared gains after weekly jobless claims: Initial claims were lower than expected at 221k (sa, cons 233k) in the week to March 1, after an unrevised 242k.
- Treasury futures see-sawed lower after Commerce Sec Lutnick floated that the USMCA tariff will "likely" be delayed to April 2", but rebounded after President Trump confirmed the deferral, stocks falling to mid-September lows.
- Speaking at a WSJ event after the bell, Fed Gov Waller said wasn't thinking of a rate cut at the March 19 meeting - but "sees no problem with forecast of 2 rate cuts this year".
- Focus squarely on Friday morning's February employment report release at 0830ET, while Fed Chair Powell will discuss his economic outlook (text, Q&A) at Chicago Booth's Monetary Policy Forum at 1230ET.
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FED: SF's Daly: "We Can Take Our Time" On Cuts
Feb-04 20:38
SF Fed Pres Daly conveys a very patient stance on future rate cuts, saying in a panel discussion Tuesday that the FOMC "doesn't need to be preemptive" in adjusting policy, and can "take our time" to see what happens in the economy and with economic policy. She's another centrist/dove who doesn't sound eager to cut in theh early part of 2025.
- On the economy: "The economy is in a very good place...Growth is solid. The labor market is solid, and inflation is coming down, albeit gradually.... I see continued momentum in the economy."
- On her outlook for easing policy: "We're heading toward our 2% target and that called for us to recalibrate policy... policy is in a good position I'm approaching 2025, as a monetary policymaker, as we can take our time to look at what's coming in both the economy and any policy changes and make decisions. We don't need to be preemptive. We have plenty of power in our tools to take time to judge. So that's where I'm looking in 2025, and I look forward to seeing what happens."
- On whether the Fed will cut this year: "We are actually in a good position to wait and see. But I can guarantee that if we have inflation that's printing above our target, that is our number one focus. It is extraordinarily consequential...we will dedicate ourselves to getting inflation down. And if it takes more than the rest of this year, we'll continue our work."
US TSYS: Yields Decline Ahead Midweek ADP, China Tariff Talk Ongoing
Feb-04 20:34
- Treasuries see-sawed off early session highs to finish near the top end of the session range Tuesday, concerns moderating over the Trump administration's trade policy, China tariff tit-for-tat notwithstanding.
- Treasury support surged after JOLTS data, job openings were lower than expected in Dec at 7.6m (cons 8.00m) after an upward revised 8.156m (initial 8.098m) in Nov.
- Focus turns to Wednesday morning's ADP private employment data ahead of Friday's headline NFP data for January, not to mention US Tsy quarterly refunding announcement, S&P Global US Services PMI and ISM Services data.
- After the bell, March'25 10Y futures trade 109-05.5 (+7) vs. 109-07.5 high, just off initial technical resistance at 109-10/15.5 (50-day EMA / High Feb 3). 10Y yield -.0404 at 4.5146%. Curves mildly mixed: 2s10s -.525 at 29.877, 5s30s +.327 at 43.155.
- Currency market volatility was relatively subdued on Tuesday, in contrast with the sharp swings seen throughout Monday’s session. However, the USD index spent the majority of the session on the backfoot, consistently edging lower and extending session declines from the overnight highs to around 1%.
AUDUSD TECHS: Gains Considered Corrective
Feb-04 20:30
- RES 4: 0.6429 High Dec 12
- RES 3: 0.6384 High Dec 13
- RES 2: 0.6307/31 50-day EMA / High Jan 24
- RES 1: 0.6263 High Jan 31
- PRICE: 0.6258 @ 16:46 GMT Feb 4
- SUP 1: 0.6088 Low Feb 3
- SUP 3: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 3: 0.6000 Round number support
- SUP 4: 0.5931 1.764 proj of the Sep 30 - Nov 6 - 7 price swing
The trend condition in AUDUSD remains bearish despite an extension of the recent recovery off the cycle low printed Monday. The week’s early weakness, however, confirms a resumption of the downtrend and maintains the price sequence of lower lows and lower highs. A continuation would open 0.6045, a Fibonacci projection. Moving average studies are in a bear-mode position and this highlights a dominant downtrend. Key resistance is at 0.6307, the 50-day EMA. Gains are - for now - considered corrective.
