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Flash PMIs Gains Weigh on Short Rates

US TSYS
  • Tsy futures holding mildly mixed after the bell, curves extending lows (2Y10Y -7.253 at -27.614) as Bonds inched higher early in the second half. Still off overnight highs, 30Y futures are +6 at 110-05, 10Y futures briefly trade -3 at 106-12.5 -- still well within technical levels: resistance: 107-05+ 20-day EMA, support: 105-10+ Low Oct 19.
  • Futures traded soft after early China headlines of raising Yuan sovereign bond issuance an extra 1T, while raising fiscal deficit ratio to appr 3.8% from 3.0%. Tsy futures extend session lows after S&P Global US PMIs come out higher than expected:
    • S&P Global US Manufacturing PMI (50.0 vs. 49.5 est, 49.8 prior)
    • S&P Global US Services PMI (50.9 vs. 49.9 est, 50.1 prior)
    • S&P Global US Composite PMI (51.0 vs. 50.0 est, 50.2 prior)
  • Little reaction from Tsy futures after the $51B 2Y note auction (91282CJE2) trades on the screws: 5.055% high yield vs. 5.055% WI; 2.64x bid-to-cover vs. 2.73x prior.
  • Stocks gained after early deluge of positive Q4 earnings announcements from PacWest Bancorp, Dow, GE, GM, Verizon and Xerox to name a few, S&P Eminis currently +34.0 at 4275.75. After market announcements include: Alphabet, Microsoft, Visa and Waste Management.

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