US TSYS: Gilts Pressure Weighs, Trump Tariff Deliberation Adds To Noise
Jan-08 11:58
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)
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US TSYS: PBOC Stimulus Sees Bear Steepening But On Low Volumes
Dec-09 11:53
- Treasuries are mostly lower on the day after selling impetus following a dovish monetary policy tweak from the PBOC, although volumes have been light as US CPI on Wednesday and approaching year-end seems to weigh on activity.
- Cash yields are unchanged (2s) to 2bp higher (30s).
- 2s10s has steepened to 6.3bps (+1.2bp) but remains within last week’s range.
- TYH5 trades at 111-13 (- 01+) off session highs of 111-18+ but has remained within Friday’s range throughout the overnight session, all on very low cumulative volumes of 235k.
- Friday’s post-payrolls high of 111-20+ cleared the 50-day EMA and strengthens a bull cycle. It’s now an initial resistance level after which lies 111-23 (38.2% retrace of Sep 11 – Nov 15 bear leg). To the downside, support at 110-18 (Dec 4 low).
- Data: Wholesale inventories, trade sales Oct F/Oct (1000ET), NY Fed 1-Yr Inflation Nov (1100ET)
- Fedspeak: FOMC media blackout
- Bill issuance: US Tsy $81B 13W & $72B 26W bill auctions (1130ET)
OUTLOOK: Price Signal Summary - Bear Threat In Oil Futures Remains Present
Dec-09 11:50
- On the commodity front, Gold is unchanged and continues to trade inside a tight range, for now. The long-term trend condition remains bullish and the Oct 31 - Nov 14 bear leg appears to have been a correction. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. Resistance to watch is $2721.4, the Nov 25 high. Clearance of this level would highlight a bullish short-term development. Key support to monitor is $2536.9, the Nov 14 low.
- In the oil space, a bearish threat in WTI futures remains present and recent weakness reinforces this theme. A continuation down would open $65.74, the Oct 1 low, and $63.90, the Sep 10 low and key support. For bulls, a stronger reversal to the upside would instead refocus attention on the key short-term resistance at $77.04, the Oct 8 high. Initial firm resistance to watch is unchanged at $72.41, the Nov 7 high.
EQUITIES: S&P 500 & NASDAQ 100 E-minis Tick Lower As China Probes Nvidia
Dec-09 11:47
Fresh session lows for S&P 500 & NASDAQ 100 e-minis following news that Nvidia is being probed by the Chinese authorities on anti-monopoly grounds.
- The tech giant is now indicated 2.1% lower pre-market.
- E-mini moves are relatively limited at this stage.
- Contracts had already traded away from session highs as optimism surrounding the dovish tweak in the Chinese monetary policy stance proved short-lived.
- Marginal outperformance in the DJIA e-mini since the headlines, given relative sensitivity to tech.
