UK: Uncertainty Over Streeting's Numbers & Who Might Stand From 'Soft Left'

Treasuries have seen a decent paring of overnight losses although still hold lower from Friday’s close following weekend comments from US President Trump that the US will blockade Iran after talks failed. The blockade is set to start at 1000ET today whilst the WSJ also reports Trump has weighed limited strikes again Iran. Geopolitical headlines should continue to remain in focus with a lighter US docket today headlined by existing home sales. 

• Cash yields are 1.2-2.0bp higher across the curve.
• 10Y yields (currently 4.331%) earlier cleared 4.35% for the first time since the Apr 7 before the two-week ceasefire announcement.
• 30Y yields (currently 4.926%) topped out at 4.949% having last cleared 5.00% in July and since coming close with 4.9967% on Mar 27.
• TYM6 trades at 110-30+ (-04+) on another relatively light overnight for volumes at 300k compared to others seen throughout the US-Israel-Iran conflict.
• It’s off an early low of 110-22+ with support watched at 110-16 (Apr 2 low) before the bear trigger at 109-24 (Mar 27 low).
• Gains appear to have been corrective with trend signals remaining bearish.
• Data: Existing home sales Mar (1000ET)
• Fedspeak: Goolsbee on Fox News (1300ET), Gov Miran moderated conversation (1820ET)
• Bill issuance: US Tsy $89B 13W & $77B26W bill auctions (1130ET)
• Politics: Trump signing time (1400ET), Trump policy meeting (1600ET), Trump greeting/dinner with Netherlands King & Queen (1900ET/1945ET)

The latest CFTC CoT report showed asset managers adding to their overall net long in the week ending April 7. Net long setting across TY, UXY & WN futures comfortably outweighed long cover across TU, FV & US futures. The cohort remains net long across all contracts.

• Meanwhile, leveraged funds left their curve-wide DV01 exposure little changed on the week, with short setting in TY, UXY, US & WN futures effectively offsetting short cover across TU & FV futures. The cohort remains net short across the curve.
• Broader non-commercial accounts added to their overall net short position, with net short setting across TU, TY & US futures outweighing short cover across FV, UXY & WN. The cohort remains net short across the curve.

Source: MNI - Market News/CFTC/Bloomberg Finance L.P.

• RES 4: 112-16   61.8% retracement of the Mar 2 - 27 bear leg 
• RES 3: 112-07   High Mar 18
• RES 2: 111-31   50.0% retracement of the Mar 2 - 27 bear leg 
• RES 1: 111-19+ 50-day EMA & High Apr 08
• PRICE:‌‌ 110-31 @ 11:32 BST Apr 13
• SUP 1: 111-22+ Intraday low
• SUP 2: 110-16/109-24   Low Apr 2 / Low Mar 27 and the bear trigger
• SUP 3: 109-22+ 1.764 proj of the Mar 10 - 13 - 18 price swing
• SUP 4: 109-12   2.000 proj of the Mar 10 - 13 - 18 price swing

Recent gains in Treasuries appear to have been a correction. Trend signals remain bearish - moving average studies in bear-mode position highlighting a dominant downtrend. Support to watch is 110-16, the Apr 2 low. A break would be bearish. For bulls, the next important resistance at 111-19+, the 50-day EMA. A clear break of this average is required to signal scope for a stronger recovery and open 111-31, a Fibonacci retracement.