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Market Roundup: Weaker Post-ADP, Tsy Refunding Reduction

US TSYS

Brief two-way trade after April ADP private employ data +247k vs. +385k est, FI trading weaker into the NY open -- bounces after quarterly US Tsy refunding annc.

  • Tsy plans to continue reducing auction sizes of coupons during the May-July quarter, but by smaller increments than in previous quarters, and left open the door for additional cuts in future quarters if needed.
  • Curves flatter (2s10s -3.010 at 15.462) with short end underperforming, modest overall volumes w/Japan and China out on holiday.
  • Carry-over weakness in short end as markets pricing in potential for more aggressive rate hikes from the Fed (already at five 50bp hikes) by year end.
  • US 10Y technicals: TYM2 currently at 118-12.5 (-4) after probing key support at 118-08 yesterday (Apr 22 low and a bear trigger).
  • This signals a resumption of the downtrend and maintains the bearish price sequence of lower lows and lower highs. MA studies remain in a bear mode. Potential is seen for weakness towards 118-02+ next, a Fibonacci projection and 117-22+, the Nov 8 2018 low (cont). On the upside, key short-term resistance is at 120-18+.
  • Stocks holding modest gains, ESM2 at 4183.25 vs. 4168.75 lows. Await more earnings announcements after the bell.
  • Cross-assets: WTI Crude Oil (front-month) bouncing +$3.62 at $106.04; Gold weaker -2.22 at $1865.59.
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