US TSYS: Yields Edge Higher

TYM5 reopens at 111-29, unchanged  from closing levels in today’s Asia-Pac session.

• Overnight US 10-year yields had a range of 4.2005% - 4.2952%, closing at the lows.
• Treasury yields finished lower overnight, down by up to 7bps in the front-end, steepening the yield curve.(2s10s +2.61 at 50.934).
• Month-end flows are also in play for the start of this week, which appeared to add some late support into Treasuries around 3pm New York.(per BBG)
• The U.S. Treasury on Monday increased its estimate for federal borrowing for the current quarter by USD391 billion to USD514 billion, while reiterating its previous assumption for cash balance at the end of June, assuming that Congress eventually raises or suspends the debt limit.(per MNI Policy)

• The 10-year Yield, has put in a lower high around 4.40% and has broken through the recent support around 4.25%. The next support is towards the 4.10 area which should find supply once more as the market will continue to look for higher term premium while uncertainty remains elevated.

   

USD/CNH tracks in the low 7.2800 region in early Tuesday dealings, the pair comfortably off intra-session highs from Monday (near 7.3025). Broader USD sentiment faltered, with the BBDXY and DXY indices down around 0.50%, amid a bull steepening move for US treasuries, while lack of trade deal progress was also cited. CNH only gained a modest 0.05% for the session, so it lagged broader USD index losses. Spot USD/CNY finished up at 7.2874, while the CNY CFETS basket tracker edged up to 96.42 (per BBG). 

• For USD/CNH technicals, current levels are close to where the pair has rebounded from in recent weeks and just under the 50-day EMA. The 100-day EMA is near 7.2750, while the 200-day is near 7.2535 and a likely more important watch point, as we couldn't sustain a move sub this support level through March.
• CNH lagged the safe havens in terms of JPY and CHF as Monday's session unfolded. CNH/JPY is back to around the 19.50/51 region, against recent highs of 19.7550. Monday's session saw more muted US equity price action, although we recovered late in US trade, with SPX close to flat, Nasdaq down slightly.
• Focus will remain on the US-China trade outlook, with US Tsy Bessent stating that there is discussions happening with the China government, but that it is up to China to take the first step to de-escalate (per BBG). This came after late yesterday the China Foreign Ministry denied that the two sides were discussing tariffs.
• The local data calendar is empty today, with focus on tomorrow's PMI prints. The official outcomes are due for April, along with the Caixin manufacturing index. Both manufacturing measures are expected to fall sub 50.0.  

• 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: 96.710 @ 16:34 GMT Apr 28
• 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.