STIR: US Terminal Yields Hover Near Recent Lows On Fed Independence Fears

• Fed Funds implied rates opened a touch firmer but are back to unchanged from Friday’s close for 2025 meetings, with no notable reaction from weekend announcements of a US-EU trade deal with 15% tariffs on EU goods.
• The deal had already been touted in the media, even if White House adviser Navarro had suggested to take those earlier reports with a "grain of salt".
• US-China relations with US Tsy Sec Bessent and China Vice Premier He Lifeng leading discussions in Stockholm through Tuesday this week.
• Cumulative cuts from 4.33% effective: 0.5bp for Wed, 16.5bp Sept, 28bp Oct, 44bp Dec, 52.5bp Jan and 65bp Mar.
• The 44bp of cuts to year-end is off last week’s high of 42bp, a level that was last sustainably higher in February.
• The SOFR implied terminal yield of 3.21% (SFRH7) is 1bp lower on the day, within a 3.1-3.3% range seen through July.
• MNI Fed Preview for Wednesday’s decision (with analyst version to follow later today as always): https://media.marketnews.com/Fed_Prev_Jul_2025_6823c76c5b.pdf

• RES 4: 112-15   61.8% retracement of the Apr 7 - 11 sell-off
• RES 3: 112-12+ High Jul 1 and a bull trigger
• RES 2: 111-28   High Jul 3 
• RES 1: 111-14+ High Jul 22 
• PRICE:‌‌ 111-01+ @ 11:08 BST Jul 28
• SUP 1: 110-19+/08+ Low Jul 24 / Low Jul 14 & 16        
• SUP 2: 110-03   76.4% retracement of the May 22 - Jul 1 bull leg
• SUP 3: 109-28   Low Jun 6 and 11
• SUP 4: 109.25   Low May 27

Treasury futures are for now trading above last week’s low. Recent gains resulted in a break of the 20-day EMA, strengthening the recovery. Note too that resistance at 111-13+, Jul 10 high, has been pierced. A clear break of it would highlight a stronger reversal and open 111-28, the Jul 3 high. Key support to watch is 110-08+, the Jul 14 and 16 low. Clearance of this support would reinstate a bearish theme. First support is at 110-19+, the Jul 24 low.

• In FX, EURUSD is trading lower today. The pair has breached support at the 20-day EMA, at 1.1684. The next key support to watch lies at the 50-day EMA, at 1.1559. A clear break of this average is required to signal a stronger reversal. Note that medium-term trend indicators continue to highlight a dominant uptrend. A resumption of gains would refocus attention on 1.1829, the Jul 1 high and the bull trigger.
• GBPUSD continues to trade below last week’s high and remains softer for now. Attention is on the bear trigger at 1.3365, the Jul 16 low. A break of it would confirm a resumption of the downleg that started Jul 1. This would open 1.3335 initially, the May 20 low. Note that a break of 1.3365 would also confirm a breach of the trendline drawn from the Jan 13 low - cancelling a false break scenario. Key short-term resistance is at 1.3589, the Jul 24 high.
• A bull cycle in USDJPY remains in place. Today’s strong start to the week signals the end of the corrective pullback between Jul 16 - 24. Attention is on key resistance and the bull trigger at 149.18, the Jul 16 high. A break of this hurdle would confirm a resumption of the uptrend. Pivot support to monitor is 146.01, the 50-day EMA. A clear breach of it would instead signal scope for stronger reversal. First support is at 146.76, the 20-day EMA.