US TSYS: Tsys Futures Open Mixed Post Tariff Headlines
Feb-02 23:19
- Friday's session was dominated but tariffs headlines, tsys futures closed lower across all contracts, however we are opening mixed in Asia as trading gets underway with long end outperforming. TU closed -0-02⅝ at 102-26, and is another -0-01⅝ this morning at 102-24⅜, while TY dropped 12+ on Friday to 108-27, and is another -01+ this morning at 108-25+.
- Focus will be all on any further Tariffs headlines, Canada have announced they will retaliate with 25% tariffs, while Mexico have said they will impose something on the US however no further details yet.
- Cash tsys curves steepened on Friday, with yields closing -1bps to +3bps. The 2yr closed -0.9bps at 4.197%, while the 10yr closed +2.3bps at 4.539%. The 2s10s jumped 3bps to 33.749, while the 2s20s saw the largest steepening rising 4bps to 64.088.
- Hedge funds aggressively increased net short positions in SOFR and 10yr note futures in the week ending Jan. 28, with a net duration short increase of approximately 250k 10yr futures equivalents, the largest since November. They extended their net short in 10y futures by $13.3m/DV01 and in SOFR futures by $5.3m/DV01, while covering $3.9m/DV01 in Ultra 10yr note futures. Meanwhile, asset managers added to net long positions, extending their duration long by 146,000 10yr futures. They were most bullish on 5yr note futures, increasing their net long by $8.7m/DV01, while also extending net longs in 10yr note futures by $4.1m/DV01.
- Later today, we have S&P Global US Manufacturing PMI, ISM Manufacturing while later in the week focus will turn to corporate earnings, key CPI, PPI inflation measures and headline employment data for January.
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USDCAD TECHS: Bull Flag Highlights A Clear Uptrend
Jan-03 21:00
- RES 4: 1.4669 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4392 @ 15:50 GMT Jan 3
- SUP 1: 1.4336 Low Dec 20
- SUP 2: 1.4307/4232 20-day EMA / Low Dec 17
- SUP 3: 1.4136 50-day EMA
- SUP 4: 1.4011 Low Dec 5
USDCAD is unchanged and bulls remain in the driver’s seat. The latest pause appears to be a flag formation - a bullish continuation signal. Note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4508 next, a Fibonacci projection level. Initial firm support to watch lies at 1.4307, the 20-day EMA. A pullback would be considered corrective.
AUDUSD TECHS: Southbound
Jan-03 20:30
- RES 4: 0.6471 High Dec 9
- RES 3: 0.6408 50-day EMA
- RES 2: 0.6341 High Dec 18
- RES 1: 0.6247/6282 High Dec 30 / 20-day EMA
- PRICE: 0.6204 @ 15:21 GMT Jan 3
- SUP 1: 0.6179 Low Dec 31
- SUP 3: 0.6158 1.236 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 3: 0.6100 Round number support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
A bearish trend condition in AUDUSD remains intact and the pair continues to trade closer to latest lows. Recent weakness maintains the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend. Scope is seen for an extension towards 0.6158 next, a Fibonacci projection. Initial firm resistance to monitor is 0.6282, the 20-day EMA.
US TSYS: Near Late Friday Lows
Jan-03 20:29
- Treasury futures looked to finish near late session lows Friday, early support evaporating after the December manufacturing ISM survey beat expectations, but still pointed to soft if improving sectoral dynamics. The headline reading of 49.3 was an improvement from 48.4 prior and a 9-month high, besting the survey expectation of 48.4.
- Tsy curves bear steepened briefly before retreating mildly flatter in the second half. In turn, projected rate cuts through mid-2025 look steady to lower vs. this morning's levels (*) as follows: Jan'25 steady at -2.8bp, Mar'25 -13.2bp (-14.4bp), May'25 -17.8bp (-19.5bp), Jun'25 -26.5bp (-28.2bp).
- Focus on next week: economic data and Treasury supply has been moved forward to accommodate next Thursday's "day of mourning" to honor President Carter. The Federal holiday sees most markets closed, the exception so far is CME rates that will operate on a shortened session.
- Next Thursday's weekly jobless and continuing claims will be released on Wednesday according to the Dept of Labor site LINK
