US TSYS: Twist Steeper Ahead Of Payrolls and ISM Manufacturing
Aug-01 10:58
- Treasuries trade twist steeper although with the pivot from 5s onwards as only 2s sits firmer on the day in contained moves ahead of the July nonfarm payrolls report.
- There don’t appear to be fresh catalysts for the steepening over the past hour, in moves that appear more likely flow-driven, with curves still on net flatter since Wednesday’s patient Fed rhetoric.
- President Trump yesterday announced new tariffs, including a 10% global minimum and 15% or higher duties for countries with trade surpluses with the US for smaller countries without specific trade deals. He will also impose a 35% tariff on Canadian non-USMCA goods.
- Cash yields range from 0.5bp lower (2s) to 3bps higher (20s/30s).
- 2s10s at 44.7bp (+2.6bp), further away from yesterday’s low of 40.3bp but still below pre-FOMC levels of ~47bp.
- 5s30s at 95.3bp (+2.2bp), above yesterday’s low of 92.1bp but also below pre-FOMC levels of 96-97bps.
- TYU5 trades at 110-28 (-06) vs an earlier low of 110-26+, extending yesterday’s losses but holding above Tuesday’s low of 110-24. Cumulative volumes are moderate at 295k.
- A patient Powell on Wednesday helpeda sizeable move away from a key resistance at 111-14+ (Jul 22/30 highs), bringing closer to support at 110-19+ (Jul 24 low) after which lies 110-08+ (Jul 14/16 lows).
- Data: Nonfarm payrolls Jul (0830ET), S&P Global US mfg PMI Jul final (0945ET), ISM mfg Jul (1000ET), U.Mich consumer survey Jul final (1000ET), Construction spending Jun (1000ET)
- Fedspeak: Hammack on Bloomberg TV (0910ET), Bostic on CNBC (1030ET) & Bowman/Waller dissent statements at some point – see STIR bullet
- There’s little reaction to Trump’s latest attack on Fed Chair Powell in an early morning Truth Social post but it clearly doesn’t detract from the recent steepening: “Jerome “Too Late” Powell, a stubborn MORON, must substantially lower interest rates, NOW. IF HE CONTINUES TO REFUSE, THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!”
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
PIPELINE: Corporate Bond Roundup: SoftBank Grp, Korea Gas, Bank of Kuwait on Tap
Jul-02 10:54
- Date $MM Issuer (Priced *, Launch #)
- 07/02 $Benchmark Korea Gas 3Y SOFR+100a, 5Y +85a
- 07/02 $Benchmark National Bank of Kuwait PerpNC6 6.875%a
- 07/02 $Benchmark SoftBank Group 3.75Y 6.75%a, 5.5Y 7.125%a, 7 Y 7.500%a, 10Y 7.875%a (in addition to 3 Eur tranches) Note, SoftBank Corp issued $1B over 2 tranches on Monday.
- $1.75M Priced Tuesday, $13.5B/wk
US TSYS: Lower Ahead Of More Labor Data In Payrolls Build-Up
Jul-02 10:48
- Treasuries are lower across the curve, bear steepening as curves partly reverse yesterday’s bear flattening that was extended by a strong JOLTS report.
- Treasuries outperform EGBs but modestly underperform Gilts amidst fiscal concerns.
- Today sees labor market data in early focus with Challenger job cuts and ADP employment, the latter on a clear moderating trend in recent months, as a warm-up for tomorrow’s payrolls report (MNI Preview here).
- Cash yields are 1.2-4.7bp higher across the curve, with increases led by 30s.
- 5s30s has lifted to 95.5bps off a low of 93bps having pulled off last week's fresh ytd high of 103.3bps.
- TYU5 trades at 111-22 (-05+) on moderate cumulative volumes of 345k, having lifted a touch off session lows of 111-20+.
- A bull cycle remains in play although there was a sizeable reversal off yesterday’s high of 112-12+, which now forms initial resistance before 112-15+ (61.8% of Apr 7-11 sell-off). To the downside, firmer support is seen at 111-07+ (20-day EMA).
- Data: MBA mortgage applications (0700ET), Challenger job cuts Jun (0730ET), ADP employment Jun (0815ET)
- Fedspeak: Nothing scheduled
- Bill issuance: US Tsy $65B 17W bill auctions (1130ET)
ECB: Rehn Sees Real Chance for EUR to Become More Important
Jul-02 10:47
ECB'S REHN: RISKS TO INFLATION ARE TWO-SIDED" -bbg
REHN: CAN'T ALLOW INFLATION UNDERSHOOT TO SHIFT EXPECTATIONS
- Speaking on BBG TV - and mentions the EUR currency: "Exchange rate is not a policy target, and EUR appreciation has helped the ECB reach 2% inflation target. EUR has a real chance to become more important"
- Follows increased focus on the EUR rally this year - particularly after de Guindos said this week that EUR/USD at $1.20 is "acceptable", but a rally beyond that point would "complicate" things.
