BTP TECHS: (U5) Monitoring Support
- RES 4: 122.71 2.764proj of the May 14 - 20 - 21 price swing
- RES 3: 122.35 2.500 proj of the May 14 - 20 - 21 price swing
- RES 2: 122.00 Round number resistance
- RES 1: 121.73 High Jun 13 and the bull trigger
- PRICE: 120.07 @ 11:44 BST Jul 11
- SUP 1: 119.92 Intraday low
- SUP 2: 119.48 Low May 26
- SUP 3: 118.87 Low May 21
- SUP 4: 118.51 Low May 14 and key support
The trend condition in BTP futures is unchanged, it remains bullish and the latest pullback appears corrective - for now. However, note that the contract has pierced support at 120.09, the Ju 23 low. A clear break of this level would signal scope for a deeper retracement, potentially towards 118.87, the May 21 low. On the upside, key resistance and the bull trigger has been defined at 121.73, the Jun 13 high. Clearance of this hurdle would resume the uptrend.
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MNI: US MBA: MARKET COMPOSITE +12.5% SA THRU JUN 06 WK
- MNI: US MBA: MARKET COMPOSITE +12.5% SA THRU JUN 06 WK
US TSYS: Bear Steeper In Another Lighter Start Before CPI and 10Y Supply
- Treasuries are bear steeper as they extend yesterday’s post-1000ET sell-off, with CPI in focus (MNI Preview) before 10Y supply. For the latter, long-end pressures are less acute than has been the case in previous months but it will nevertheless mark an important test of duration demand.
- A federal appeals court yesterday extended a short-term reprieve for the Trump Administration as it challenges last month’s trade court ruling that blocked tariffs. Trump has just now described this as a “great and important win for the US”.
- Today’s China statement after a conclusion of US-China talks offered nothing concrete. It urged dispute resolution via dialog, vowed to reduce the misunderstanding and promoted the long-term development of China-US ties.
- Cash yields are 1-4bp higher, with increases led by 20s and 30s.
- The modest steepening sees curves lift a little further off what had been flats for recent weeks, including 2s10s at 47.5bp (+1.9bp) and 5s30s at 86.5bp (+2bp).
- TYU5 has recently touched a session low of 110-00+ (- 06) on another overnight session with light volumes, currently at 240k.
- It extends a pullback off yesterday’s high of 110-14 having stopped short of testing 110-19+ (50-day EMA). A bearish threat is still present, with support at 109-26 (May 29 low) before a bear trigger at 109-12+ (May 22 low).
- Data: CPI May (0830ET), Real av earnings May (0830ET), Federal budget balance May (1400ET)
- Coupon issuance: US Tsy $39B 10Y Note re-open - 91282CNC1 (1300ET). Last month’s 10Y saw a strong 1.3bp stop through but with weaker details than the previous auction.
- Bill issuance: US Tsy $60B 17W bill auction (1130ET)
- Bloomberg reports that HK pensions plan to sell down their Treasury holdings within three months if the US loses its last AAA rating (by Japan’s Rating & Investment Information Inc.)
US 10YR FUTURE TECHS: (U5) Bearish Threat Still Present
- 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: 110-19+ 50-day EMA
- PRICE: 111-02+ @ 11:24 BST Jun 11
- 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 recent reversal in Treasury futures undermines a bullish theme and a bear threat remains present. An extension down 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. Clearance of this hurdle would be bullish. First resistance is 110-19+, the 50-day EMA.
