US TSYS: Short-End Tsys Outperform As Curve Steepens Following FOMC Minutes
Feb-19 23:17
- Tsys futures closed mixed, they initially started on the back foot in a continuation of the bearish price action following last Friday's post-retail sales peak, with developments in Europe weighing, moves were largely erased over the session with the short-end outperforming after receiving a late boost from the FOMC minutes. According to the minutes, “various participants noted that it may be appropriate to consider pausing or slowing balance sheet runoff until the resolution of this event,” referring to the US debt limit needing to be raised or suspended, as per bbg.
- Treasury futures flows around FOMC minutes included block trades involving 10yr and Ultra Bond contracts consistent with a curve-steepening trade. TU closed +01+ at 102-23⅝, while TY closed +03+ at 109-30+
- Cash tsys curves steepened, with yields closing flat to 4.5bps higher, the 3yr outperforming. The 2yr closed -3.8bps at 4.268%, while the 10yr closed -1.8bps at 4.533%. The 2s10s closed +2bps at 26bps.
- The 20Y Bond auction tailed by 1bp, a return to weak form after a strong prior sale in January
- The Fed's Jefferson highlighted that a robust economy and solid labor market allow policymakers to delay further interest rate cuts, maintaining a restrictive monetary policy stance despite a 100 basis point reduction last year. He noted that while most households benefit from increased wealth, some are financially strained with higher credit card use and lower savings, potentially vulnerable to economic shocks as inflation's decline remains uneven.
- Thursday's schedule includes the Philly Fed manufacturing survey alongside weekly jobless claims, while the highlight of the Fedspeak schedule is St Louis's Musalem.
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AUSSIE 10-YEAR TECHS: (H5) Resistance Remains Intact
Jan-20 23:15
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.615/851 - High Dec 31 / High Dec 11
- PRICE: 95.490 @ 16:37 GMT Jan 20
- SUP 1: 95.275 - Low Nov 14 (cont) and a key support
- SUP 2: 94.477 - 1.000 proj of the Dec 11 - 23 - 31 price swing
- SUP 3: 94.495 - 1.0% 10-dma envelope
The Aussie 10-yr futures contract continues to trade below the Dec 11 high of 95.851, and has traded through the Dec low. A stronger bearish theme would expose 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish theme. For bulls, a confirmed reversal and a breach of 95.851, the Dec 11 high, would instead reinstate a bull cycle and refocus attention on resistance at 96.207, a Fibonacci retracement point.
NEW ZEALAND: Rate Cuts Helping Consumption
Jan-20 23:04
Seasonally-adjusted card spending in NZ rose 1.5% m/m in December to be up 1.2% y/y, the highest since February. Retail transactions were even stronger on the month rising 2% m/m, the fifth consecutive increase, but are only 0.6% y/y higher. 125bp of monetary easing and lower inflation appear to be encouraging consumers to spend again.
- Q4 total card spending values rose 1.0% q/q after a flat Q3. Also, December ANZ consumer confidence returned to the breakeven 100 level and its highest in over three years. Real private consumption fell 0.3% q/q in Q3 but the outlook appears to be improving and Q4 is unlikely to be so weak.
- Core retail expenditure rose 1.8% m/m in December. Major categories saw growth including durables (+3.7%), consumables (+1.4%), hospitality (+1%) and apparel (+3.1%). Motor vehicle spending fell 1.3% m/m though.
- Non-retail transactions rose 1.0% m/m, while services increased 2.0% m/m.
NZ retail sales y/y%
Source: MNI - Market News/Refinitiv
GOLD: Gold Rises on Hopes of Tariff Refrain.
Jan-20 22:55
- Gold prices rose during the course of Monday following a Wall Street Journal Report that incoming President Trump may not implement tariffs immediately.
- The report’s release drove the USD weaker thus supporting gold.
- Gold had faded to a low yesterday of US$2,689.47 before rebounding to $2,713.81 before closing at $2,708.21.
- Gold’s upward trending bias remains intact as it trades above all major technical levels.
- Key technical levels are 20-day EMA $2,668.88, 50-day EMA $2,653.34, 100-day EMA $2,614.11 and 200-day EMA $2.
- Pakistan’s deal with Saudi Arabia to buy a stake in the gold mining project owned by Barrick Gold Corp remains unresolved as Pakistan officials hope to secure some refining activities within the country rather than the raw product leaving for elsewhere.
- The mining sector could be in for a massive year of M&A as BBG reports on rumours that two of the largest global mining companies, Rio Tinto and Glencore are in early stages of merger talks.
