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Market Roundup: Weak NY Empire Mfg, NAHB Housing Data Supports Rates


Moderate late morning volumes so far (TYU2>650k), yield curves mixed but off late overnight lows after Tsys extended early highs after the NY Fed Empire State index gapped -31.5 vs. 5.0 estimate - "with sharp declines in orders and shipments" for the second largest monthly decline since May 2020.

  • Tsy futures continued to march higher into midmorning, 30YY falling to low of 3.0503%, before scaling back in the lead-up to the August read of NAHB Housing Market Index is 49 vs. 54 est.
  • Technicals for TYU2 currently trading 119-25.5 (+17) -- erasing last Thu's weak close. Nonetheless, the contract has breached through trendline support at 119-16. The trendline is drawn from the Jun 16 low.
  • The recent move lower is still considered corrective, however, the trendline break suggests a deeper retracement is likely near-term. This has opened 118-05, a Fibonacci retracement. Initial resistance to watch is 120-22, the Aug 10 high. A break would signal a possible bullish reversal.
  • Meanwhile, futures holding narrow range/off highs ahead midday, partial check from incoming supply: Tsys bill sales include $54B 13W and $42B 26W up shortly, high-grade corporate issuance resumes, bank lead: $3B KFW 2Y SOFR, details on ADB and Rabobank forthcoming.
  • Starting to see the start of Sep/Dec Tsy futures rolling ahead Aug 31 first notice when Dec takes lead quarterly position, roll volumes still muted.

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