AMERICAS OIL: US ENERGY – What to Watch: US Payrolls, Rig Counts & COT

Pressure remains, with the latest media speculation surrounding Trump’s tariff preferences supporting the USD and weighing on bonds.

• That limits any recoveries.
• Futures as low as 90.27.
• Yields 6-10bp higher, 10- to 30-Year zone leads the move. 10-Year yields hits the highest level seen since ’08.
• Next level of upside interest in 10s the Oct ’08 monthly high (4.798%), highs of 4.792% seen so far.
• A break above there would expose the June ’08 monthly highs located at 4.862%, which protects the 5.00% level.
• 30s as high as 5.355%. August ’98 monthly high (5.397%) presents the next level of upside interest.

Fig. 1: UK 10-Year Yields

Source: MNI - Market News/Bloomberg

• MBA composite mortgage applications extended their recent slide, albeit with a more modest -3.7% last week after a cumulative -22% in the two weeks prior covering the Christmas holiday period (all figures SA).
• Refis saw some very mild stabilization (+1.5% after a two week decline of -36%) with purchases instead leading the decline in the latest week (-6.6% after -13% over two weeks).
• It comes as 30Y mortgage rates have continued to churn higher, albeit by only 2bps in the latest week to 6.99%. It’s up from 6.67% in early Dec and a recent low of 6.13% in mid-Sep for its highest since July.
• Interestingly considering expectations of looser regulation under incoming President Trump, the regular-jumbo spread at exactly 0bps (from -16bps the previous week) reached its highest since Nov 2023. It is however just a single week and would need to see similar readings in weeks ahead to confirm this trend. 

• With German Bund through 131.59, the Yield is testing 2.55%, and further out would see 2.60% next, this equates to 131.06.
• We noted earlier the 127.82 support in UBH5, which equated to the November high for the 30yr Yield at 2.753%, this is now being tested, printing a 2.758% high, highest since early July.
• French OAT has broken below the 122.00 figured, and the 10yr Yield will now be targeting the 2024 high in Yield.