US TSYS: Yields Back Off Overnight
TYM5 reopens at 109-31+, up 0-05 from closing levels in today’s Asia-Pac session.
- Overnight US 10-year yields had a range of 4.5247% - 4.6247%, closing around 4.53%.
- Treasury yields ended broadly lower overnight, the long end led the move taking the yield curve higher (2s10s -4.26 at 53.444, 5s30s +3.56 at 92.992 ).
- MNI US DATA: Flash PMIs Surprise Stronger For Both Mfg And Services In May - The S&P Global US flash PMIs for May were comfortably stronger than expected for both manufacturing and services, as they better reflected the de-escalation in US-China trade policies on May 12 compared to other surveys already seen for May.
- MNI US DATA: Very Mild Trend Rise In Jobless Claims Continues - Weekly jobless claims data show some trend softening in labor market conditions but it’s at a slow pace and for now continues to point to a low firing, low hiring environment.
- MNI US DATA: Existing Home Sales Disappoint, Highest Relative Supply Since 2016
- The 10-year found buyers eventually above 4.60%, this demand helped yields back off in the US session. Support seen back towards 4.45/50%, dips look likely to see supply in the short-term. Should yields hold this break higher we will then target the 4.75% area.
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CROSS ASSET: USD/JPY Bid Post Trump Remarks On No Intention To Fire Powell
FX markets are reacting early to Trump remarks made in the oval office a short while ago.
- USD/JPY is up around 0.60%, last near 142.40/45, while EUR/USD is down around 0.40%, last close to 1.1375. AUD/USD is the only G10 currency marginally higher versus the USD, up 0.10% to 0.6370/75. The ETF for the S&P500 is up 2% in post market trade (per BBG).
- These moves come after US President Trump stated that he had no intention of firing Fed Chair Powell (which has been a cause of concern recently and around the outlook for Fed Independence). Such fears were a further weight on broader US asset related sentiment.
- Trump also stated that the final tariff number for China wouldn't be near the current 145%. He also expressed optimism around trade deals with lots of countries and spoke of the large investment agreements reached for flows into the US.
- USD/CNH is lower, off around 0.15% to the low 7.3000 region.
OIL: US Reports Crude & Product Stock Drawdowns
Bloomberg reported that there was a significant US crude stock drawdown of 4.57mn barrels with 354k at Cushing last week, according to people familiar with the API data. Products continued their decline with gasoline down 2.18mn and distillate 1.64mn. The official EIA data is out later today.
AUSSIE 3-YEAR TECHS: (M5) Within Range of Highs
- RES 3: 97.190 - High May 5 2023
- RES 2: 96.932 - 76.4% of Mar-Nov ‘23 bear leg
- RES 1: 96.860 - High Apr 07
- PRICE: 96.760 @ 16:06 GMT Apr 22
- SUP 1: 95.900 - Low Jan 14
- SUP 2: 95.760 - Low 14 Nov ‘24
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
Aussie 3-yr futures continue to circle just below recent contract highs, having cleared resistance on the continuation contract. The rally has taken out resistance at 96.730, the Sep 17 ‘24 high. On the downside, any reversal lower from current levels would signal a resumption of a downtrend. A deeper sell-off would refocus attention on 95.760, the 14 Nov ‘24 low.
