Market Roundup: Renewed FI Support, Strong US$

FI futures trading firmer, off recent highs on heavier volumes (TYM2>810k); yield curves steeper (2s10s +1.758 at 20.533) amid robust buying in 2s (2YY -.0898 at 2.5359).

• Futures were trimming gains in lead-up to latest (mixed) data, moving higher:
  • Consumer Confidence weaker than exp at 107.3 vs. 108.2 est
  • Richmond Fed Index stronger than exp at + 14 vs. +9 est
  • New Home Sales weaker than exp at 763k vs. 768k est.
• Underlying FI support: inflationary pressure from further supply side disruptions on widespread Covid lockdowns prospects in China. Geopol risk contributing factor: Russia's state-run RIA reporting comments attributed to the Russian Ministry of Defence stating that 'London's direct provocation of Kyiv to strike targets on Russian territory will lead to a proportional response'.
• Meanwhile, one desk points to "rampaging strength in the US dollar (from the strong April tax receipts which means a declining Federal budget deficit) rather than a reflection of slowing growth".
• Technicals: Despite the bounce - trend direction remains the same as gains are considered corrective and primary downtrend remains intact. Fresh cycle lows last week confirmed a resumption of the primary bear cycle and an extension of the price sequence of lower lows and lower highs.
• Moving average studies continue to point south. TYM2 Initial support at 118-08 (Low Apr 22), followed by 118-02+ 0.618 proj of the Mar 7 - 28 - 31 price swing
• Cross-assets: Gold bounces after Mon's rout: +$7.12 (0.38%) at $1905.25; Crude firmer as well, WTI +$1.55 (1.57%) at $100.10.