MNI ASIA OPEN: Ylds Gain in Lead-Up To Fed Blackout

EXECUTIVE SUMMARY

• World Bank Cuts 2022 Global Growth Outlook on Russia Invasion
• Libya Closes Biggest Oil Field and Warns of More Shutdowns, Bbg
• Oil Pares Earlier Gains as China Lockdowns Counter Libya Outage, Bbg

WORLD BANK

• Bloomberg - The World Bank cut its forecast for global economic expansion this year on Russia’s invasion of Ukraine and is planning to mobilize a funding package bigger than the Covid-19 response for nations to deal with various resulting and ongoing crises.
• The Washington-based institution has lowered its estimate for global growth in 2022 to 3.2% from a January prediction of 4.1%, President David Malpass told reporters on a call on Monday. The decline was spurred by a cut in the outlook for Europe and central Asia, which include Russia and Ukraine, he said. The global forecast for this year compares with 5.7% expansion in 2021, he said.

US TSYS: Tsy 2s10s Yield Curve Tops 40.0

Rates trading weaker after the bell, bonds near second half lows, curves inching steeper -- 2s10s tops 40.0 at 40.874 high -- vs. -9.561 inversion two weeks ago - the height of recession concern rhetoric. Light volumes to start the new week (TYM2 less than 770k) with much of Europe out for Easter Monday.

• Following some early price uncertainty, Tsys came under pressure, extended lows (30YY hit 2.9659%) on rate-lock selling before the broader market knew Morgan Stanley was going to issue $7B over 4 tranches, Wells Fargo a close second with $6.75B over 3 tranches.
• No react to in-line NAHB housing Market index for April at 77.
• Resumption of the primary downtrend and an extension of the bearish price sequence of lower lows and lower highs. MA studies also point south and scope is for a move towards 119-04+, Dec 3 2018 low (cont). Key short-term trend resistance is at 123-04, the Mar 31 high.
• Cross asset trade of note, Gold nearly traded over $2000.0 w/ 1997.63 session high, was back near steady at 1978.0 after FI close. BBG US$ index DXY climbed surged .364 to 100.864 high, crude levels reluctantly gained after Libya oilfield closure/force majeure event after political protests, tempered by reduced demand from China on forced covid lockdowns.
• The 2-Yr yield is down 0.2bps at 2.4521%, 5-Yr is down 0.2bps at 2.7856%, 10-Yr is up 2.5bps at 2.8527%, and 30-Yr is up 2.8bps at 2.9424%.

OVERNIGHT DATA

• US NAHB HOUSING MARKET INDEX 77 IN APR
  
• US NAHB APR SINGLE FAMILY SALES INDEX 85; NEXT 6-MO 73

MARKETS SNAPSHOT

• Key late session market levels:
• DJIA up 2.05 points (0.01%) at 34452.97
• S&P E-Mini Future up 1 points (0.02%) at 4388.25
• Nasdaq down 10.4 points (-0.1%) at 13340.86
• US 10-Yr yield is up 2.5 bps at 2.8527%
• US Jun 10Y are down 8/32 at 119-22
• EURUSD down 0.0026 (-0.24%) at 1.0783
• USDJPY up 0.48 (0.38%) at 126.94
• WTI Crude Oil (front-month) up $1.14 (1.07%) at $108.09
• Gold is up $3.19 (0.16%) at $1981.38

US TSY FUTURES CLOSE

• 3M10Y +3.799, 207.312 (L: 203.146 / H: 209.029)
• 2Y10Y +2.705, 39.646 (L: 34.818 / H: 40.874)
• 2Y30Y +2.95, 48.619 (L: 43.716 / H: 50.175)
• 5Y30Y +2.928, 15.51 (L: 10.786 / H: 17.752)
• Current futures levels:
• Jun 2Y down 0.25/32 at 105-23.375 (L: 105-19.25 / H: 105-24.125)
• Jun 5Y down 3/32 at 113-7.25 (L: 112-30.25 / H: 113-11.5)
• Jun 10Y down 7.5/32 at 119-22.5 (L: 119-11.5 / H: 120-00.5)
• Jun 30Y down 24/32 at 140-10 (L: 140-00 / H: 141-03)
• Jun Ultra 30Y down 25/32 at 161-6 (L: 160-19 / H: 162-14)

‌‌‌‌‌‌‌‌US 10Y FUTURES TECH:‌‌ (M2)‌‌ Returning Lower, Cycle Lows in View

• RES 4: 124–21+ 50-day EMA
• RES 3: 124-18 High Mar 21
• RES 2: 123-04 High Mar 31 and a key resistance
• RES 1: 121-07/22-05 High Apr 13 / 20-day EMA
• PRICE: 119-22+ @ 1515ET Apr 18
• SUP 1: 119-10+ Low Apr 12
• SUP 2: 119-04+ Low Dec 3 2018 (cont)
• SUP 3: 118-02+ 0.618 proj of the Mar 7 - 28 - 31 price swing
• SUP 4: 117-22+ Low Nov 8 2018 (cont)

Treasuries traded to a fresh cycle low of 119-10+ Tuesday before undergoing a corrective bounce. This initial strength faded well into the Thursday close, keeping the outlook bearish for now. This week’s cycle lows have confirmed a resumption of the primary downtrend and an extension of the bearish price sequence of lower lows and lower highs. MA studies also point south and scope is for a move towards 119-04+, Dec 3 2018 low (cont). Key short-term trend resistance is at 123-04, the Mar 31 high.

US EURODOLLAR FUTURES CLOSE

• Jun 22 steady at 98.330
• Sep 22 -0.005 at 97.660
• Dec 22 -0.010 at 97.145
• Mar 23 -0.015 at 96.855
• Red Pack (Jun 23-Mar 24) -0.025 to -0.015
• Green Pack (Jun 24-Mar 25) -0.02 to -0.015
• Blue Pack (Jun 25-Mar 26) -0.04 to -0.025
• Gold Pack (Jun 26-Mar 27) -0.055 to -0.045

SHORT TERM RATES

US DOLLAR LIBOR:No new settlements -- below from last Tursday:

• O/N -0.00500 at 0.32229% (-0.00529/wk)
• 1 Month +0.04029 to 0.59433% (+0.08043/wk)
• 3 Month +0.01842 to 1.06271% (+0.05200/wk) ** Record Low 0.11413% on 9/12/21
• 6 Month +0.00514 to 1.55671% (+0.01628/wk)
• 1 Year -0.02986 to 2.22157% (-0.05000/wk)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 0.33% volume: $75B
• Daily Overnight Bank Funding Rate: 0.33% volume: $99B

US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 0.29%, $886B
• Broad General Collateral Rate (BGCR): 0.30%, $336B
• Tri-Party General Collateral Rate (TGCR): 0.30%, $328B
• (rate, volume levels reflect prior session)

FED Reverse Repo Operation

NY Fed reverse repo usage climbs to 1,738.379B w/ 82 counterparties from prior session 1,706.935B. Compares to all-time high of $1,904.582B on Friday, December 31.

PIPELINE: $7B Morgan Stanley 4Pt, $6.75B Wells Fargo 3Pt Launched

Unexpectedly large issuance for the dealer -- rate lock sales certainly weighing on Tsys amid thin post-holiday trade (TYM2 only 583k at moment).

• Date $MM Issuer (Priced *, Launch #)
• 04/18 $7B #Morgan Stanley $2B 3NC2 +118, $500M 3NC2 SOFR+116.5, $2.5B 6NC5 +143, $2B 15NC10+245
• 04/18 $6.75B #Wells Fargo $2.75B 4NC3 +125, $750M 4NC3 SOFR+132, $3.25B 31NC30 +168

FOREX: AUD Nears Key Support on Poor Chinese Data

• China GDP data overnight came in ahead of market expectations, putting the Y/Y growth rate at 4.8% - a pace still below the Politboro target. Rolling lockdowns and a re-flaring of COVID across major industrial cities were cited, as the raft of data showed consumer spending falling at the largest clip since the initial breakout of the virus in 2020.
• Signs of weakness hampered the progress of AUD - the session's poorest performing currency - narrowing the gap in AUD/USD with first key support at the 0.7340 50-dma. The greenback fared better, putting the USD Index within range of new cycle highs amid the general risk-off environment Monday.
• Conflict across Ukraine persisted over the weekend, with Kyiv reporting several missile strikes in the Western city of Lviv - just 70km east of the Polish border. The strikes are said to have resulted in a number of fatalities, and show that no part of the country is exempt from the Russian invasion despite the pullback of Russian forces into eastern territories.
• Focus Tuesday turns to the return of EU and UK traders after the extended weekend as well as the release of US housing starts & building permits data. RBA minutes of their latest meeting cross as well as a speech from Fed's Evans.
• Earnings season enters its second week, with 15% of the S&P 500 by market cap reporting. Notable releases include Bank of America, IBM, Johnson & Johnson, Proctor & Gamble, Tesla and Netflix.

Tuesday Data Calendar

Date	GMT/Local	Impact	Flag	Country	Event
19/04/2022	0430/1330	**		JP	Industrial production
19/04/2022	-			EU	ECB Lagarde & Panetta in IMF/World Bank Meetings
19/04/2022	1215/0815	**		CA	CMHC Housing Starts
19/04/2022	1230/0830	***		US	Housing Starts
19/04/2022	1255/0855	**		US	Redbook Retail Sales Index
19/04/2022	1300/0900	*		CA	CREA Existing Home Sales
19/04/2022	1530/1130	**		US	US Treasury Auction Result for 52 Week Bill
19/04/2022	1605/1205			US	Chicago Fed's Charles Evans