US TSYS: TYA Hovers Close To Support, Fedspeak Ahead incl NY Fed's Perli
May-09 10:59
- Treasuries are little changed overnight, broadly consolidating yesterday’s losses on trade optimism driven risk-on, although having pared some those losses in the front end late yesterday after getting close to 65bp of Fed cuts for 2025.
- Cash yields are 0.5bp lower (2s and 5s) to 1.5bp higher (30s).
- Some long-end weakness follows yesterday’s 30Y tailing by 0.9bps along with the lowest indirect take since 2019 in a proxy for weak foreign demand.
- It helped see a bottoming in 5s30s at ~83bps, currently at 87bps.
- TYM5 trades unchanged at 110-25+ on modest volumes of 270k although that’s still a touch higher than some particularly thin overnight sessions this week.
- It’s close to yesterday’s low of 110-22, initial support before 110-16+ (Apr 22 low). Yesterday’s decline marked an extension of the bear cycle that started at the beginning of May. For bulls, it needs to trade above a key short-term resistance at 112-20+ (May 1 high) to reinstate a bullish theme.
- Data: No notable releases scheduled
- Fedspeak: See STIR bullet for timings of 9 FOMC members. However, for balance sheet considerations, note that NY Fed’s SOMA Manager Roberto Perli is also speaking at 0835ET.
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Historical bullets
US TSYS: Latest Aggressive Steepening Pared, 10Y Auction Watched
Apr-09 10:58
- Treasuries trade bear steeper overnight as US assets have come under pressure following the pushing ahead with higher “reciprocal” tariffs for those countries with trade surpluses with the US and yesterday’s acknowledgement of 104% tariffs on China.
- Recent lurches higher in the VIX and MOVE indices will likely have prompted deleveraging, while a potential continued unwind of basis trade positions remains in focus for the bond market.
- A weak 3-year auction added pressure yesterday afternoon with its 2.4bp tail. Although indirect take-up for the 3-year supply was broadly in line with recent auctions at 66.94%, it still raises questions around broader Tsy demand. Today's 10-year and tomorrow's 30-year auctions will come under even greater scrutiny as a result.
- Cash yields are 6-10.5bp higher, with 7s leading the increase and 2s lagging.
- Highlighting the wide ranges that continue to be seen, 30Y yields are at 4.86% (+9.5bp) but earlier briefly topped 5%, broadly meeting the Jan 14, 2025 high at a level last seen in Oct 2023. The Oct 2023 high of 5.1764% was its highest since 2007.
- 2s10s sits at 61bp (+4bp) having topped out at 73.8bp overnight for steeps since early 2022.
- TYM5 trades at 110-23+ (-24) following another overnight session with huge volumes, currently at 1.4mln.
- It saw an overnight low of 110-01, continuing a breach of both 20- and 50-day EMAs to focus attention on trendline support at 109-29 (drawn from Jan 13 low). To the upside, resistance at 112-08 (Apr 7 high).
- Data: Weekly MBA mortgage data (0700ET), Wholesale inventories/trade sales Feb F/Feb (1000ET)
- Fedspeak: Barkin (1100ET), FOMC minutes (1400ET) – see STIR bullet.
- Coupon issuance: US Tsy $39B 10Y note re-open - 91282CMM0 (1300ET)
- Bill issuance: US Tsy $60B 17W bill auction (1130ET)
SCHATZ: Swap related trade
Apr-09 10:57
Schatz Swap related trade, suggest Payer:
- DUM5 ~5.25k at 107.56.
OUTLOOK: Price Signal Summary - Bear Cycle Extension In Oil
Apr-09 10:54
- On the commodity front, the trend condition in Gold remains bullish and the latest pull back appears corrective. Moving average studies are unchanged, they remain in a bull-mode position highlighting a dominant uptrend. Price has traded through support at the 20-day EMA. The next key support to watch lies at 2946.9, the 50-day EMA. A resumption of gains would refocus attention on $3196.2, a 3.236 projection of the Nov 14 - Dec 12 - 19 price swing. The bull trigger is 3167.8, the Apr 3 high.
- In the oil space, a bearish theme in WTI futures remains intact following the recent impulsive sell-off and the contract has again traded to a fresh cycle low, today. Recent weakness has resulted in the breach of a number of important support levels, reinforcing a bearish threat and sights are on $56.16 next, a 2.000 projection of the Feb 11 - Mar 5 - Apr 2 price swing. The 2.236 projection is at $54.26. Initial firm resistance is seen at $64.85, the Mar 5 low and a recent breakout level.
