US TSYS: Yields Mixed In a Quiet Session
Sep-04 04:11
The TYZ5 range has been 112-16 to 112-19 during the Asia-Pacific session. It last changed hands at 112-18, down 0-01+ from the previous close.
- The US 2-year yield has edged lower trading around 3.61%, down 0.01 from its close.
- The US 10-year yield has is trading around 4.215%.
- 10-Year Yields rejected the 4.30% area on a softer JOLTS report and has moved very quickly back to the 4.20% area. NFP will now take on big significance, a break of the 4.18% support would turn the focus back to 4.10%.
- Bloomberg - “Fed Governor Christopher Waller said the US central bank should begin lowering interest rates this month and make multiple cuts in the coming months, adding that officials could debate the precise pace of reductions.”
- zerohedge on X: "Labor Market Crosses Critical Threshold: For First Time Since 2021 There Are More Unemployed Than Job Openings. Why does this matter? Because the US has never entered a recession when it was labor supply constrained. As of this moment it is no longer supply constrained."
- Robin Brook on X: “Two things are driving the rise in long-term bond yields: (i) much of the G10 has big deficits and debt near 100%; (ii) long-term yields have been kept artificially low by central banks. Best example of the latter is Japan, where 30-year yield is same as Germany. That's bonkers.”
- Data/Events: Challenger Job Cuts, ADP, Initial Jobless Claims, Trade Balance, S&P PMI’s, ISM Services
Fig 1: 10-Year US Yield 2H Chart
Source: MNI - Market News/Bloomberg Finance L.P
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US TSYS: Asia Wrap - Yields End A Little Higher, Led By The Front-End
Aug-05 04:00
The TYU5 range has been 112-10 to 112-15+ during the Asia-Pacific session. It last changed hands at 112-11, down 0-01 from the previous close.
- The US 2-year yield has edged higher trading around 3.696%, up 0.02 from its close.
- The US 10-year yield has moved higher trading around 4.20%, up 0.01 from its close.
- US TSY FLOWS BLOCK: 4000 of FVU5 traded at 109-03+. The contract is currently trading at 109-03, -0-01+ from closing levels.
- The 10-year yield had a powerful move lower in reaction to the NFP data, breaking below its 4.30% pivot within the wider range 4.10% - 4.65%. This now turns momentum lower in yields and you could expect buyers of treasuries on bounces back towards 4.30/35% now looking to initially test the 4.10% area.
- Bloomberg - “The Fed may need more than two rate cuts this year, Mary Daly told Reuters. “I was willing to wait another cycle, but I can’t wait forever,” she said.”
- “The rally in US government debt was muted, as investors braced for heavy supply this week of $125 billion in new three-, 10- and 30-year bonds. ” - BBG
- David Rosenberg on X: “The virtual stalling-out in payroll growth in the past three months has been a recession predictor with 100% accuracy over the past six decades. Score a win for Bowman and Waller, whose crystal balls are clearer than the rest of the FOMC pack.”
- Data/Events: Trade Balance, S&P Global PMI’s, ISM Services
Fig 1: 10-Year US Yield 120min Chart
Source: MNI - Market News/Bloomberg Finance L.P
JGBS AUCTION: Poor Demand Metrics For 10Y Auction
Aug-05 03:46
The 10-year JGB auction delivered weak results, with the low price failing to meet expectations at 100.21, according to the Bloomberg dealer poll. Moreover, the cover ratio decreased to 3.0592x from 3.5070x, and the tail lengthened to 0.14 from 0.03.
- This performance came with an outright yield 5bps higher than last month but approximately 15bps below the recent cyclical high of 1.616%.
- The recent improvement in investor sentiment toward longer-dated global bonds failed to support the bid tone.
- However, in early afternoon Tokyo trading, the cash 10-year JGB is little changed from pre-auction levels after reversing an initial weakening. JGB have had a similar response.
CHINA: Bond Futures Up in Morning Trading
Aug-05 03:45
- China's bond futures are up in the morning session, following on from yesterday's gains of +0.04.
- The 10-year is up +0.06 at 108.55, nearing the 20-day EMA of 108.57.
- The 2-year future is up +0.01 at 102.36 after finishing out Monday flat for the day. The 2-year is nearing the 20-day EMA of 102.38 which it last traded through in early July.
- Bonds are stable with the CGB 10yr 1.70%
