POWER: German DA Settles at Highest Discount to France Since Early January

Treasuries have sold off over the past hour as US desks join, lagging sharp downward pressure in Gilts after long end yields broke to fresh multi-decade high. CNN has more recently reported Trump is weighing an emergency declaration for new tariffs with TY futures mostly sideways since then. 

• Today’s 30Y supply can also weigh, but with the recent large steepening offering strong outright concession (WI yield currently ~40bps above last month’s auction high yield).
• Cash yields are 1-2bp higher, bear steepening with 2s10s setting new recent highs of 40.6bps.
• 10Y yields have recently seen a session high of 4.7014%, with focus on 4.7351%, the 2024 high.
• 30Y yields at 4.936% earlier hit fresh highs since Oct/Nov 2023.
• TYH5 trades at 108-03 (-02+) whilst cumulative volumes of 370k are reasonable but not particularly elevated.
• The earlier low of 108-01+ matched yesterday’s fresh cycle low, and sees attention on the round 108-00 before 107-19+ (both Fibo projections). Moving average studies remain in a bear-mode position highlighting a dominant downtrend.
• Data: Headlined by weekly jobless claims brought forward a day early plus ADP employment.
• Fedspeak: Waller (0800ET), FOMC minutes (1400ET) – see STIR bullet.
• Note/bond issuance: US Tsy $22B 30Y re-open - 912810UE6 (1300ET)
• Bill issuance: US Tsy $64B 17W bill auction (1130ET)

• Date $MM Issuer (Priced *, Launch #)
  • 01/08 $6B *World Bank 7Y +54
  • 01/08 $Benchmark Ontario 5Y SOFR+58
  • 01/08 $Benchmark Kommunalbanken 5Y +48
  • 01/08 $Benchmark Indonesia 5Y 5.65%a, 10Y 5.95%a
  • 01/08 $Benchmark Cncl of Europe Dev Bank 5Y SOFR+42
  • 01/08 $Benchmark Inter-American Development Bank (IADB) 5Y SOFR+42
• $36.95B Priced Tuesday, record $96.5B since Monday