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Broad Rally With TY Resistance Watched Ahead Of Retail Sales and Import Prices

US TSYS
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  • Intraday gains have levelled off over the past 90 minutes but long end Treasuries have pared yesterday’s losses that at the time were in part attributed to former President Trump’s higher odds of re-election.
  • Some suggest today’s rally could lie in Trump's VP pick (J.D. Vance) being a staunch opposer of aid for Ukraine will be having an impact, given potential feedthrough into U.S. borrowing needs.
  • Weakness in European equities and lower crude oil prices are no doubt factoring as well.
  • Cash yields sit between 4-5.5bp lower on the day. 2Y yields have pushed to new recent lows as Fed Funds pricing ticks closer to pricing three cuts for what’s left of 2024 vs the single cut penciled in back at the June SEP. 10Y yields are back to post-CPI recent lows.
  • It sees various curve metrics come a little further off yesterday’s multi-month steeps, including 2s30s which dips back into inversion again.
  • TYU4 sits at 111-09 (+ 09+) after another heavy overnight session with more than 400k already traded. An earlier high of 111-10+ matched initial resistance at the Jul 8 high, with attention on 111-13 (Mar 25 high) as the trend structure remains bullish.
  • Retail sales and import prices (for some minor feedthrough to core PCE estimates) are watched at 0830ET, along with potential for spillover from Canadian CPI at the same time after last month's hawkish surprise.
  • Data: Retail sales Jun (0830ET), Import/export prices Jun (0830ET), NY Fed services Jul (0830ET), Business inventories May (1000ET), NAHB housing market index Jul (1000ET).
  • Fedspeak: Kugler at NABE conference (1445ET, text + Q&A)
  • Bill issuance: US Tsy $70B 42D CMB bill auction (1130ET)
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  • Intraday gains have levelled off over the past 90 minutes but long end Treasuries have pared yesterday’s losses that at the time were in part attributed to former President Trump’s higher odds of re-election.
  • Some suggest today’s rally could lie in Trump's VP pick (J.D. Vance) being a staunch opposer of aid for Ukraine will be having an impact, given potential feedthrough into U.S. borrowing needs.
  • Weakness in European equities and lower crude oil prices are no doubt factoring as well.
  • Cash yields sit between 4-5.5bp lower on the day. 2Y yields have pushed to new recent lows as Fed Funds pricing ticks closer to pricing three cuts for what’s left of 2024 vs the single cut penciled in back at the June SEP. 10Y yields are back to post-CPI recent lows.
  • It sees various curve metrics come a little further off yesterday’s multi-month steeps, including 2s30s which dips back into inversion again.
  • TYU4 sits at 111-09 (+ 09+) after another heavy overnight session with more than 400k already traded. An earlier high of 111-10+ matched initial resistance at the Jul 8 high, with attention on 111-13 (Mar 25 high) as the trend structure remains bullish.
  • Retail sales and import prices (for some minor feedthrough to core PCE estimates) are watched at 0830ET, along with potential for spillover from Canadian CPI at the same time after last month's hawkish surprise.
  • Data: Retail sales Jun (0830ET), Import/export prices Jun (0830ET), NY Fed services Jul (0830ET), Business inventories May (1000ET), NAHB housing market index Jul (1000ET).
  • Fedspeak: Kugler at NABE conference (1445ET, text + Q&A)
  • Bill issuance: US Tsy $70B 42D CMB bill auction (1130ET)