Free Trial

Market Roundup: Occam's Razor?

US TSYS

Skittish rates still trading weaker on inside range. Morning swings unlikely related to session data: Trade Deficit slightly wider than expected (-$85.5B vs. -$84.7B exp), weekly claims slightly higher than expected at 235k vs. 230k, continuing claims +1.375M vs. 1.328M. But could be associated to positioning ahead Friday's June employment report (268k est vs. 390k prior).

  • Further curve inversion after the minutes keeps recession talk in the foreground while the FOMC admits inflation is job 1 and tightening will weaken the economy. Markets price in 75bp hike at the end of the month, but struggle with forward guidance: looking at rate cuts one year hence.
  • Or simply thin summer participation and muted balance sheet tolerance to risk. Overall volumes rather decent for early summer trade, however, TYU2 currently 745k.
  • Technicals for TYU2: Treasuries have retreated from Wednesday’s 120-16+ high. The trend condition remains bullish and short-term weakness is considered corrective. Current trend conditions remain bullish following recent gains and the breach of the 50-day EMA. This signals scope for a continuation higher towards 120-19+, the May 26 high. Key short-term support has been defined at 116-11, Jun 28 low. A break is required to signal a possible reversal.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.