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Market Roundup: 5s30s Yield Curve at June 2007 Lows

US TSYS
Tsy futures weaker into the US Open, near middle overnight range on modest volumes (TYM2 just under 300k). Yield curves slipping to flattest levels in years. Recession concern -- or measure of confidence in Fed managing a soft landing?
  • Tsy 5s/30s slipped below 11.0 to 10.755 -- lowest since early June 2007 (had spent early 2006 inverted, -12.432 low on Feb 2, 2006), bounces to 11.922 (-1.968). Meanwhile, 5s10s extends inversion to -4.560 low, currently -3.465 (-.625).
  • Also evident as longer Eurodollar futures continue to outperform. First price inversion holding at Red Jun'23 (97.020) vs. Red Sep'23 (97.035). Inversion flattens out in Blue Mar'26 through Golds (EDM6-EDH7) trading around 97.535.
  • Markets have another round of Fed speakers today while Tsy Sec Yellen interview on CNBC recently says she "doesn't see" weakness in US economy, while job gains are strong.
  • Current cross asset: West Texas Crude (WTI) weaker: -$3.00 at $109.34; Gold -$3.62 at $195.07.
  • Technicals for TYM2: Treasuries are consolidating. The trend condition remains bearish and attention is on Wednesday’s 122-12 low where a break would confirm a resumption of the downtrend.
  • This would also maintain the bearish price sequence of lower lows and low highs that clearly highlights current sentiment and open 122-00. Firm resistance is seen at 125-00+, the 20-day EMA. Initial resistance is seen at 123-25+, the Mar 16 low.
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