US 10YR FUTURE TECHS: (U5) Recovery Extends
- RES 4: 111-30 76.4% retracement of the May 1 - 22 downleg
- RES 3: 111-20 1.0% 10-dma envelope
- RES 2: 111-14+ High Jun 5 & 61.8% of the May 1 - 22 downleg
- RES 1: 110-29+ High Jun 6
- PRICE: 110-28+ @ 11:29 BST Jun 12
- 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
Treasury futures are trading higher today, extending the recovery from Wednesday’s low. This cancels - for now - a recent bearish threat. Attention is on key short-term resistance at 111-14+, a Fibonacci retracement and the Jun 5 high. Clearance of this hurdle would be bullish. On the downside, a reversal lower would refocus sights on 109-26, the May 29 low, where a break would open key support and the bear trigger, at 109-12+, May 22 low.
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STIR: Less Than 50/50 Odds Of Next Fed Cut In July Ahead Of CPI
- Fed Funds implied rates sit between 1bp higher (Jul) and 1bp lower (Dec) for 2025 meetings overnight, broadly holding yesterday’s significant hawkish re-pricing on US-China trade de-escalation.
- It only just sees a next Fed cut fully priced for September (three meetings away) ahead of today’s US CPI report for April.
- MNI US CPI Preview here.
- Cumulative cuts from 4.33% effective: 2.5bp Jun, 11bp Jul, 27bp Sep, 41bp Oct and 57bp Dec.
- SOFR implied terminal yields are 4bp lower on the day at 3.39% (SFRZ6) for back to almost exactly at levels prior to initial Apr 2 Liberation Day tariff announcements.
- There is no Fedspeak scheduled for today. Two permanent voters in Waller and Jefferson are scheduled tomorrow before Powell follows just 10 minutes after US PPI and retail sales on Thursday.
LOOK AHEAD: Tuesday Data Calendar: April CPI, Treasury Bills
- US Data/Speaker Calendar (prior, estimate)
- 13-May 0600 NFIB Small Business Optimism: reported 95.8 vs. 95.0 est
- 13-May 0830 CPI MoM (-0.1%, 0.3%), YoY (2.4%, 2.4%)
- 13-May 0830 CPI Ex Food and Energy MoM (0.1%, 0.3%), YoY (2.8%, 2.8%)
- 13-May 0830 CPI Index NSA (319.799, 320.906)
- 13-May 0830 CPI Core Index SA (325.659, 326.629)
- 13-May 0830 Real Avg Hourly Earning YoY (1.4%, --), Weekly (1.1% revised, --)
- 13-May 1130 US Tsy $48B 52W & $70B 6W bill auctions
US: WaPo-White House Looks To Strike Chips & Minerals Deal On Middle East Trip
The Washington Post reports that the Trump White House is set to authorise the sale of advanced AI chips to Middle Eastern firms connected to the Saudi and Emirati gov'ts as part of an effort to bolster AI development in the region as a bulwark against China. The report claims that the deals could be finalised during President Donald Trump's ongoing visit to the region. Speculation of the deal first appeared in NYT.
- The article also claims that the US has "also approved a memorandum of understanding worth $9 billion between a U.S. company and Saudi partners to mine and process critical minerals used in advanced manufacturing, energy and defense,". The docs seen by WaPo claim that a Saudi firm "will prospect for lithium, cobalt and rare earth elements in Saudi Arabia and elsewhere, such as Africa, which can be exported to the United States."
- The provision of high-tech chips to foreign nations marks a stark change from the Biden administration, which severely curtailed the provision of chips and equipment used to manufacture advanced chips, in order to slow China's rapid development of high-tech and AI capabilities.
- Sam Winter-Levy, a fellow at the Carnegie Endowment for International Peace think tank says to WaPo “This is an administration that prides itself on using U.S. leverage to the max and driving a hard bargain, but this deal seems to be shaping up to be a giveaway of a core strategic technology in exchange for pretty short-term and superficial concession,”
