MNI ASIA OPEN: US Flash PMIs At Odds With Soft EGB PMIs

US TSYS Off Post-Flash PMI Lows, Triple Witching Ahead

• Treasuries are mildly weaker - back near early overnight levels following mixed global PMI levels. Treasuries extended support after soft French, German and Eurozone composite flash PMIs during early London hours -- but gapped lower after slightly higher than expected US flash PMIs in Mfg (51.7 vs. 51.0 est), Services (55.1 vs. 54.0) and Composite (54.6 vs. 53.5 est).
• Little reaction to a dip in May Existing Home Sales to 4.11m (cons 4.10m) after an unrevised 4.14m.
• Session lows were marked at midmorning (Sep'24 10Y at 110-11.5) and spent the rest of the session see-sawing off lows to 110-16.5 (-1), 10Y yield -.0098 at 4.2496%.
• Projected rate cut pricing remains steady to mildly lower vs. this morning's levels (*): July'24 at -10% w/ cumulative at -2.5bp at 5.302%, Sep'24 cumulative -17.6bp (-18.4bp), Nov'24 cumulative -26.6bp (-27.8bp), Dec'24 -46.7bp (-47.2bp).
• Cross asset focus on equity market triple witching expiration of quarterly stock options, index futures and index options and Nvidia swapping ETF weighting with Apple late Friday.

NEWS

FRANCE (MNI): Leftist NFP Set Out Econ Plans, Still No Agreement On PM Candidate:
The left-wing New Popular Front (NFP) alliance is setting out its plans for the economy, including how much said plans will cost and how revenue will be raised, at a presser in Paris. Speaking to the centre-right Le Figaro on 20 June, Jean-Luc Melenchon from the left-wing La France Insoumise (LFI), which sits in the NFP, claimed that "According to our party's calculations, within five years, there will be a total of 200 billion euros in public spending and 230 billion in revenue for the State. How ? By a boost to [economic] activity."

EUROPEAN PARLIAMENT (MNI): Czech ANO Leaves RE, ECR Cemented As Third-Largest Group:
The Czech populist ANO (Action of Dissatisfied Citizens) party of former PM Andrej Babis has formally withdrawn from the liberal Renew Europe (RE) political grouping within the European Parliament, and its associated ALDE European party. ANO won seven seats in the EP in the recent elections, making it the single largest representation from Czechia in Brussels.

SLOVAKIA (MNI): Gov't Risks EU & Public Backlash w/State Broadcaster Overhaul:
The Slovakian National Council passed legislation on the evening of 20 June approving plans to scrap the current state broadcaster RTVS and replace it with a new organisation, STVR. The gov't argues that the current broadcaster is politically biased and "in conflict with the Slovak government." However, critics have argued that the measures amount to the censorship of free media and an attempt by the gov't to seize control of the country's previously-independent institutions.

RUSSIA (MNI): Putin-Russia To Continue Developing Nuclear Arsenal:
Reuters reporting comments from Ptesident Vladimir Putin stating that "We plan to further develop the nuclear triad as a guarantee of strategic deterrence and to preserve the balance of power in the world," The 'nuclear triad' refers to Russia's ability to launch nuclear missiles from land, sea and air.

ISRAEL (MNI): Netanyahu Coalition Well Short Of Maj In Latest Poll:
The latest opinion polling from outlet Lazar shows PM Benjamin Netanyahu's governing coalition well short of a majority if its findings were reflected in a general election. The poll has the combined parties of gov't on 48 seats, under the 61 seat threshold required for a majority.

OVERNIGHT DATA 

US DATA (MNI): Flash PMIs Surprise Stronger But With Softer Price Details
US flash PMIs were stronger than expected in June, with manufacturing rising to 51.7 (cons 51.0) from 51.3 and services rising to 55.1 (cons 54.0) from 54.8.

• It saw the composite nudge a tenth higher to 54.6 (cons 53.5) in contrast to a sweep of softer flash PMIs across the main Eurozone readings and the UK.
• However, whilst the headline readings improved, price components offered a partly offsetting dovish takeaway in contrast to the spike seen in yesterday's Philly Fed price components.

MNI US DATA (MNI): Existing Home Sales In Line, Price Growth Accelerates Despite Higher Supply
Existing home sales were as close to expected as you can get in May, dipping to 4.11m (cons 4.10m) after an unrevised 4.14m.

• It meant sales were -0.7% M/M (cons -1.0%), a third consecutive monthly decline for a 6.2% drop since jumping 9.5% back in February.
• Unusually, sales were flat in three of the main four regions, with only the south (largest region) falling another -1.6% M/M.
• Months of supply meanwhile continued their recent trend of pushing higher in the post-pandemic period. The 3.7mths compares with 3.1 in May’23 and 2.6 in May’22, nearer but still below the 4.2 averaged in May of 2017-19.
• M.edian price growth continued to accelerate in Y/Y terms despite this increase in relative supply, and at 5.8% Y/Y marked its fastest since Oct’22.

MARKETS SNAPSHOT

• Key market levels of markets in late NY trade:
• DJIA up 14.84 points (0.04%) at 39149.06
• S&P E-Mini Future down 9.75 points (-0.18%) at 5534.75
• Nasdaq down 15.1 points (-0.1%) at 17705.63
• US 10-Yr yield is down 0.6 bps at 4.2535%
• US Sep 10-Yr futures are down 1.5/32 at 110-16
• EURUSD down 0.001 (-0.09%) at 1.0692
• USDJPY up 0.64 (0.4%) at 159.56
• Gold is down $37.27 (-1.58%) at $2322.78
• European bourses closing levels:
• EuroStoxx 50 down 40.43 points (-0.82%) at 4907.3
• FTSE 100 down 34.74 points (-0.42%) at 8237.72
• German DAX down 90.66 points (-0.5%) at 18163.52
• French CAC 40 down 42.77 points (-0.56%) at 7628.57

US TREASURY FUTURES CLOSE

• 3M10Y +0.686, -111.441 (L: -118.575 / H: -108.85)
• 2Y10Y +0.547, -47.655 (L: -49.167 / H: -46.779)
• 2Y30Y +0.952, -33.475 (L: -35.889 / H: -32.387)
• 5Y30Y +0.381, 12.46 (L: 11.368 / H: 13.956)
• Current futures levels:
• Sep 2-Yr futures down 0.25/32 at 102-6.125 (L: 102-05 / H: 102-08.25)
• Sep 5-Yr futures down 0.75/32 at 106-27 (L: 106-24.25 / H: 107-01)
• Sep 10-Yr futures down 1/32 at 110-16.5 (L: 110-11.5 / H: 110-25.5)
• Sep 30-Yr futures down 1/32 at 119-25 (L: 119-15 / H: 120-11)

US 10Y FUTURE TECHS: (U4) Bull Flag

• RES 4: 111-31 1.382 proj of the Apr 25 - May 16 - 29 price swing
• RES 3: 111-17+ 1.236 proj of the Apr 25 - May 16 - 29 price swing
• RES 2: 111-09 High Apr 1
• RES 1: 111-01 High Jun 14
• PRICE: 110-22 @ 11:19 BST Jun 21
• SUP 1: 109-22+/109-00+ 50-day EMA / Low Jun 10 and key support
• SUP 2: 108-27+ Low Jun 3
• SUP 3: 108-12 Trendline drawn from the Apr low
• SUP 4: 107-31 Low May 29 and a key support

A bull cycle in Treasuries remains in play. The recent consolidation appears to be a flag formation that reinforces the bullish theme. Furthermore, the breach of resistance at 110-21, the Jun 7 high, confirmed a resumption of the bull leg that started Apr 25, and has paved the way for an extension towards 111-17+, a Fibonacci projection. Key support to watch lies at 109-00+, the Jun 10 low. Clearance of this level is required to reinstate a bearish theme.

SOFR FUTURES CLOSE

• Jun 24 steady at 94.643
• Sep 24 +0.005 at 94.850
• Dec 24 steady00 at 95.160
• Mar 25 steady00 at 95.465
• Red Pack (Jun 25-Mar 26) steady to +0.005
• Green Pack (Jun 26-Mar 27) steady to +0.005
• Blue Pack (Jun 27-Mar 28) -0.005 to steady
• Gold Pack (Jun 28-Mar 29) -0.01 to -0.005

SOFR FIXES AND PRIOR SESSION REFERENCE RATES

SOFR Benchmark Settlements:

• 1M +0.00159 to 5.34523 (+0.01331/wk)
• 3M -0.00291 to 5.34455 (+0.00052/wk)
• 6M -0.00214 to 5.27558 (-0.00044/wk)
• 12M +0.00490 to 5.05165 (+0.00193/wk)

• Secured Overnight Financing Rate (SOFR): 5.32% (-0.01), volume: $2.052T
• Broad General Collateral Rate (BGCR): 5.31% (-0.01), volume: $767B
• Tri-Party General Collateral Rate (TGCR): 5.31% (-0.01), volume: $749B
• (rate, volume levels reflect prior session)

• Daily Effective Fed Funds Rate: 5.33% (+0.00), volume: $85B
• Daily Overnight Bank Funding Rate: 5.32% (+0.00), volume: $259B

FED Reverse Repo Operation

• RRP usage climbs back over $400B to $421.040B Friday from $388.841B yesterday; number of counterparties holds at 74. Today's usage compares to $327.066B on Monday, April 15 -- the lowest level since mid-May 2021.

EGBs-GILTS CASH CLOSE: Bunds Outperform Gilts As Euro PMIs Disappoint

Core EGBs and Gilts rallied Friday, after surprisingly poor European PMIs cast doubt on whether economic growth momentum could be sustained.

• French and German Services and Manufacturing PMIs unexpectedly decelerated in the June flash readings, which saw Bund yields test the week's lowest levels.
• UK PMIs were more mixed, with Manufacturing slightly stronger than expected but Services disappointing. Earlier, UK retail sales data were solid, but were seen to have only limited implications for BoE policy.
• Yields rebounded in afternoon trade as US PMI data was unexpectedly strong, including the best Services reading in 2 years, though inflation softness noted in the report helped take the hawkish edge off.
• Bunds outperformed Gilts, with the German curve twist steepening with a short-end rally, and the UK's bear steepening. EGB periphery spreads widened modestly.
• Apart from German IFO Monday, scheduled events and data are relatively light early next week (multiple ECB speakers including Schnabel and Villeroy), but pick up later including France/Spain/Italy June inflation data on Friday.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 3.9bps at 2.789%, 5-Yr is down 3.2bps at 2.415%, 10-Yr is down 1.9bps at 2.412%, and 30-Yr is up 0.6bps at 2.6%.
• UK: The 2-Yr yield is up 1.4bps at 4.17%, 5-Yr is up 2.8bps at 3.932%, 10-Yr is up 2.6bps at 4.083%, and 30-Yr is up 2.4bps at 4.589%.
• Italian BTP spread up 1.2bps at 152.9bps / Spanish up 0.9bps at 87.5bps

FOREX: Stronger US PMI Data Assists USDJPY Firmly Back Above 159.00

• Stronger than expected US PMI data boosted the greenback on Friday, most notably for USDJPY which was able to establish itself firmly back above the 159.00 handle, continuing to post new post intervention highs. In terms of resistance, next upside targets are at 159.63 1.236 projection of the May 3 - 14 - 16 price swing, followed by 160.17 High Apr 29 and the bull trigger.
• This post-PMI USD strength kept the pressure on GBPUSD to touch a new pullback low, extending the move seen following the dovish tilt to the Bank of England meeting on Thursday. The 50-dma offered intraday support, containing the selloff at 1.2624.
• Despite weak European PMI releases early Friday and the late greenback strength, EURUSD trades very resiliently into the close, down just 0.1% on the session. Stability for equities may be helping here, alongside an unwillingness to chase the single currency lower into the weekend, and political headlines expected to still drive volatility.
• In emerging markets, the Mexican peso outperforms as markets mull some moderate cabinet picks from President-Elect Sheinbaum and the dust settles on a post-election impulsive period for local assets. USDMXN trades down 1% around 18.19 as we approach the close.
• Next week, German IFO kicks off the data calendar on Monday, with potential comments from Fed’s Waller and BOC Governor Macklem also scheduled.

MONDAY DATA CALENDAR

Date	GMT/Local	Impact	Flag	Country	Event
24/06/2024	0700/0300			US	Fed Governor Christopher Waller
24/06/2024	0800/1000	***		DE	IFO Business Climate Index
24/06/2024	1000/1100	**		UK	CBI Industrial Trends
24/06/2024	1300/1500	**		BE	BNB Business Sentiment
24/06/2024	1430/1030	**		US	Dallas Fed manufacturing survey
24/06/2024	1530/1730			EU	ECB's Schnabel in panel on 'Investing in Sovereignty"
24/06/2024	1530/1130	*		US	US Treasury Auction Result for 26 Week Bill
24/06/2024	1530/1130	*		US	US Treasury Auction Result for 13 Week Bill
24/06/2024	1730/1330			CA	BOC Governor Macklem speech in Winnipeg.
24/06/2024	1800/1400			US	San Francisco Fed's Mary Daly