US TSYS: TYZ5 Fails to Hold Above Key Tech Level (amended)
Bond futures took the overnight lead and rallied strongly in the morning session, but failed to hold above a key technical, falling back in the afternoon. TYZ5 is up +0.04 at 112-29+, after a high of 113-02+ earlier, just above the 20-day EMA of 113-01+ only to retreat in afternoon trade.
Cash has been strong also with yields 1-2bps lower across the curve.
- The 2-Yr fell -1.6bps to 3.561%
- The 5-Yr is down -1.7bps at 3.68%
- The 10-Yr is lower by -1.6bps at 4.072%
- The 30-Yr is down -1bps at 4.657%.
The bond market has been starved of data but will get some non-government led releases tonight in the ADP Employment Change (consensus 30k; prior -32k) S&P Global US Services PMI (forecast 55.2; prior 55.2) and ISM Services Index (forecast 50.8; prior 50.0).
For issuance, the focus tonight remains on bill issuance with a US$95bn 6-week bill auction ahead of the US Treasury Quarterly Funding announcement.
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SCHATZ TECHS: (Z5) Trend Needle Points South
- RES 4: 107.240 High Aug 4
- RES 3: 107.225 High Aug 27 and the bull trigger
- RES 2: 107.145/190 High Sep 11 / High Sep 5 and 8
- RES 1: 107.050 Low Aug 25 and Sep 2 and a recent breakout level
- PRICE: 106.980 @ 06:05 BST Oct 6
- SUP 1: 106.920 Low Sep 25 and the bear trigger
- SUP 2: 106.907 1.618 proj of the the Aug 27 - Sep 2 - 8 price swing
- SUP 3: 106.900 Round number support
- SUP 4: 106.881 1.764 proj of the the Aug 27 - Sep 2 - 8 price swing
The trend structure in Schatz futures is unchanged, it remains bearish and recent gains appear corrective. A fresh cycle low on Sep 25, confirmed a resumption of the downtrend. This maintains the bearish price sequence of lower lows and lower highs. Sights are on 106.907 next, a Fibonacci projection, ahead of the 106.900 handle. On the upside, initial resistance is at 107.050, the Aug 25 and Sep 2 low.
LOOK AHEAD: UK Timeline of Key Events (Times BST)
| Date | Time | Period | Event |
| 06-Oct | 0930 | Sep | S&P Global/CIPS Construction PMI |
| 06-Oct | 1600 | --- | BOE Bailey Speech at Scotland Global Investment Summit |
| 08-Oct | 1600 | --- | BOE Pill Speech at University of Birmingham |
| 09-Oct | 0930 | --- | BOE Mann Keynote at Resolution Foundation Event |
| 10-Oct | 0001 | --- | KPMG / REC Report on Jobs |
| 13-Oct | 1205 | --- | BOE Greene at Society of Professional Economists |
| 13-Oct | 2010 | --- | BOE Mann in MonPol Panel |
| 14-Oct | 0001 | Sep | BRC-KPMG Shop Sales Monitor |
| 14-Oct | 0700 | Aug/Sep | Labour Market Report |
| 14-Oct | 1300 | --- | BOE Taylor Fireside Chat at University of Cambridge |
| 14-Oct | 1800 | --- | BOE Bailey at Institute of International Finance |
| 15-Oct | 0900 | --- | BOE Ramsden Panel at Resolution Mechanism Conference |
| 15-Oct | 1645 | --- | BOE Breeden in Panel on Financial Regulation |
| 15-Oct | 1900 | --- | BOE Breeden in Panel at Fintech Foundation |
GBPUSD TECHS: Trading Below Resistance
- RES 4: 1.3789 High Jul 1 and key resistance
- RES 3: 1.3726 High Sep 17
- RES 2: 1.3661 High Sep 18
- RES 1: 1.3537 High Sep 23 and a pivot level
- PRICE: 1.3445 @ 06:21 BST Oct 6
- SUP 1: 1.3324 Low Sep 25 and the bear trigger
- SUP 2: 1.3282 Low Aug 6
- SUP 3: 1.3254 Low Aug 4
- SUP 4: 1.3144 38.2% retracement of the Jan 13 - Jul 1 bull cycle
A bear cycle in GBPUSD that began Sep 17 is intact, for now. Initial key resistance to watch is unchanged at 1.3537, the Sep 23 high and a near-term pivot level. Clearance of this hurdle would signal a potential reversal. Recent weakness resulted in a break of a trendline drawn from the Aug 1 low. Note too that 1.3333, the Sep 3 low and a key support, has been pierced. A resumption of weakness would open 1.3282 next, the Aug 6 low.
