US 10YR FUTURE TECHS: (U6) Bearish Outlook
- RES 4: 111-02+ High Apr 24
- RES 3: 110-28+ High May 7
- RES 2: 110-07 50-day EMA
- RES 1: 110-00+ High May 29
- PRICE: 109-03+ @ 14:28 BST Jun 5
- SUP 1: 108-28+ Low May 22
- SUP 2: 108-08+ Low May 19 and the bear trigger
- SUP 3: 108-04 1.382 proj of Apr 17 - May 4 - 7 swing
- SUP 4: 107-29 1.618 proj of the Apr 17 - May 4 - 7 price swing
Treasuries are trading lower today. This reinforces a M/T bearish theme and also potentially provides an early signal that the corrective cycle that started May 19, is over. Note that recent gains have allowed an oversold trend condition to unwind. Resistance to watch is 110-07, the 50-day EMA. The bear trigger lies at 108-08+, the May 19 low. Clearance of this level would confirm a resumption of the downtrend.
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US TSY OPTIONS: Large Jun'26 10Y Put Buyer
- +30,000 TYM6 110 puts, 12 ref 110-25.5/0.10%
US TSYS/SUPPLY: TBAC Debated Treasury Investing Excess Liquidity In Repo Markets
One interesting section of TBAC’s report was on discussions around Treasury being able to invest excess liquidity in the overnight repo market. Relevant excerpts reproduced below, with the full report here
- “By virtue of its cash management policy, Treasury holds a level of cash generally sufficient to cover one week of outflows in the TGA. Volatility in Treasury’s cash needs generates intramonth excess in the TGA, and the Committee welcomed the opportunity to explore the potential benefits of investing that excess liquidity in the overnight repo market”
- “The presenting member found there was scope for Treasury to invest excess cash in repo markets to the extent that positive net returns can be generated without creating market disruption. However, ultimately the return generated for Treasury was not expected to be positive in all environments, and was likely to be only modestly positive when positive at all. The presenting member found that lending out excess cash would be likely to have a small positive return (0-2bps) in an ample reserve regime, a 5-10bp return in a scarce reserve regime, and likely no positive economic value in an abundant reserve regime.”
- “Ultimately, while the Committee felt that there would likely be a marginal benefit to Treasury to engage in overnight repo trading with excess cash from the TGA, the scale of the economic benefit was not overly compelling relative to the perceived challenges of roll out. That said, further study, especially of possible program design, could help to inform a more refined recommendation, including a gradual and measured roll out, should there be one.”
EQUITIES: E-Minis Signal Positive Cash Open On Wall St.
E-minis pointing to a positive start for Wall St. cash equity trade, although the recent pushback from Iran re: the U.S. proposals outlined in the Axios sources story has knocked e-minis away from highs (coupled with President Trump’s threats if Iran does not comply).
- S&P 500 e-minis +0.64%
- NASDA 100 e-minis +0.95%
- DJIA e-minis +0.84%
- Bulls remain in control in the S&P 500 e-mini with Fibonacci projection resistance located at 7,385.27.
- Meanwhile, bears need to break the April 29 low (7,199.50) to increase the threat to bulls.
