US 10YR FUTURE TECHS: (U5) Bear Cycle Remains In Play

The Atlanta Fed's GDPNow estimate for Q2 ticks back up to 3.8% Q/Q SAAR, where it stood last Thursday before the May employment report saw a downtick to 3.7%. 

• This comes after today's wholesale trade data: equipment investment has been revised up slightly (1.7% Q/Q SAAR), with the drag from inventories seen a little less acute (though no doubt seen a drag in the quarter after Q1's tariff front-running buildup).
• The downgrade Friday (no estimate was published at the time) was largely due to slightly weaker personal consumption and investment estimates. See table below.
• Reflecting the relative lack of economic activity data this week, It's a full 8 days until the next published GDPNow update (June 18).

The vast majority of Labor Market and Household Finance categories in the NY Fed's Survey of Consumer Expectations (SCE) improved in May, though many remain weaker compared with late 2024/early 2025 as tariff uncertainty appears to continue in respondents' minds.

• One-year ahead earnings growth expectations rose 0.2pp to 2.7%, not far from the 12-month average of 2.8%, while mean unemployment expectations (re the mean probability the US national unemployment rate will be higher in 1 year's time) fell 3.3pp to 40.8%, though that's still above the 37.7% 12-month average. It should be noted that this hasn't been a particularly effective series in predicting future unemployment rates, but is still useful as a gauge of current consumer sentiment.
• Respondents' mean probability of losing their job in the next 12 months also improved, falling 0.5pp to 14.8%, with the expected 12-month quits rate  up 0.1pp to 18.3% - and the perceived probability of finding another job in 3 months (if respondents left the current job) rose 1.5pp to 50.7% (12m avg 52.2%).
• Against this backdrop, respondents were more optimistic (or at least, less pessimistic) on household finance prospects (current situations compared to a year ago and expectations about year ahead), with median expected household income growth up 0.1pp to 2.7% (albeit below the 12m avg 3.0%), perceived credit access improving, and lower perceived probability of missing a minimum debt payment.
• Expectations of higher equity prices no doubt helped here too after the May stock recovery: the mean perceived probability that stocks would be higher in 12 months rose to 36.3%, though that's below the 12-month average 38.7%.
• Perhaps the weakest aspect of the May report overall was that median nominal household spending growth expectations dipped 0.2pp to 5.0%, though that's above the trailing 12-month average of 4.9% and being a nominal figure it may simply reflect lower 1Y inflation expectations.

• RES 4: 111-30   76.4% retracement of the May 1 - 22 downleg
• RES 3: 111-19+ 1.0% 10-dma envelope
• RES 2: 111-14+ High Jun 5 & 61.8% of the May 1 - 22 downleg
• RES 1: 110-20+ 50-day EMA   
• PRICE:‌‌ 110-05 @ 16:44 BST Jun 9
• SUP 1: 109-26   Low May 29          
• SUP 2: 109-12+ Low May 22 and the bear trigger 
• SUP 3: 109-09+ Low Apr 11 and key support
• SUP 4: 108-25+ 0.764 proj of the Apr 7 - 11 - May 1 price swing

The reversal in Treasury futures from last Thursday’s high, undermines a recent bullish theme. An extension would expose support at 109-26, the May 29 low, where a break would open key support and the bear trigger, at 109-12+, the May 22 low. Key short-term resistance has been defined at 111-14+, a Fibonacci retracement and the Jun 5 high. A break of this hurdle would be bullish.