Market Roundup: Philly Fed Moves Mkt, SF Fed Daly Tempers Tone

Tsy futures scaling off session highs again, near mid-range in late morning trade. Decent volumes, TYU2 >800k, after data and Fed-driven vol.

• Tsy futures scaled pared early gains after latest Philly Fed Mfg index topped estimate: +6.2 vs. -5.0 est (-12.3 prior read), while weekly claims come out at 250k vs. 264k est. Trading desks noted fast$, prop acct selling across the curve as Tsy futures receded to pre-open levels, 30YY slipped to 3.1029% low before rebounding to 3.1480% first half high.
  
• Yields nearly tested lows soon after following mixed comments from SF Fed Daly oin CNBC: 50 or 75bp hike reasonable vs comments from Aug 11 (i.e. post US CPI miss) that 50bp was base case but open-minded on whether 75bp is needed should data evolve differently. Daly mirrored July minutes she didn't want to "overdo policy and find we've tightened the economy" more than needed.
  
• Limited reaction to slightly weaker than expected Existing Home Sales (4.81M vs 4.86M est, MoM much weaker than expected at - 5.9% vs. - 5.1%, while U.S. Leading Index stronger than expected at -0.4% vs -0.5% est, -0.8% prior.
• Technicals for TYU2 currently trading 118-19 (-25.5), despite the bounce, a bear cycle remains in play. A continuation lower would pave the way for weakness towards 118-05, a Fibonacci retracement level. A break of this level would signal scope for weakness towards 117-14+, the Jul 21 low. Price has recently cleared a trendline support drawn from the Jun 14 low and this reinforces the bearish theme. Initial firm resistance is at 119-31, the Aug 15 high.
• Currently, 2-Yr yield is down 6.2bps at 3.2225%, 5-Yr is down 4.6bps at 3.0047%, 10-Yr is down 4.6bps at 2.8513%, and 30-Yr is down 3.9bps at 3.1119%.