MNI US MARKETS ANALYSIS - Markets Regain Poise After Website Outage Nerves

US TSYS SUMMARY: Paring Gains After Hitting Post-Payroll Highs

Treasury futures briefly eclipsed Friday's post-payrolls high (137-07+ for TY) in the last hour's trade, with risk appetite evaporating amid a global internet outage. 3-Year Note supply in focus, with data attracting some interest as well.

• The Tsy rally has dissipated, with cloud computing service Fastly (which is apparently at the center of the internet issues) saying a fix is being implemented.
• Tsys still higher Sep 10-Yr futures (TY) up 3.5/32 at 132-07 (L: 132-03 / H: 132-11.5, the latter the best level since May 7). The 2-Yr yield is down 0.2bps at 0.1527%, 5-Yr is down 1.1bps at 0.7821%, 10-Yr is down 1.7bps at 1.5517%, and 30-Yr is down 1.5bps at 2.232%.
• NFIB May small biz optimism was a little weaker than expected. Up at 0830ET is Apr trade balance, while Apr JOLTS will be eyed for further labor market slack signals.
• In supply, we get $40B of 42-day bill auction at 1130ET, with $58B 3-Yr Note auction at 1300ET. NY Fed buys ~$2.025B of 1-7.5Y TIPS.
• Biden and Sen Capito set to discuss infra deal again today (though both sides remain substantially apart and Republicans apparently unwilling to make another counteroffer).

EGB/GILT SUMMARY- Better bid post supplies

EGBs were initially better offered weighted by a decent amount of supplies for the European session.

• Morning session saw Netherlands 2031, German 7yr, Austria 2025 and 2031.
• Bund have since gained some ground with Equities dipping following multiple global websites going offline due to an outage.
• It appears like it's an outage at Fastly that is causing multiple related websites' outages.
• Peripheral spreads are trading wider, with Greece by 2.7bps.
• Gilts have mainly traded in line with EGBs,, with upside initially limited by the UK supply 2026 & 2071.
• Curves are generally trading bull flatter.
• Looking ahead, very little in terms of tier 1 data for today, some focus on US $58bn 3yr note.
• All attention remains of Thursday's ECB and US CPI.
• Bund futures are up 0.13 today at 170.25 with 10y Bund yields down -1.2bp at -0.211% and Schatz yields down -0.2bp at -0.671%
• BTP futures are up 0.02 today at 147.63 with 10y yields up 0.2bp at 0.916% and 2y yields up 0.5bp at -0.355%.
• OAT futures are up 0.18 today at 160.69 with 10y yields down -1.1bp at 0.160% and 2y yields up 0.5bp at -0.641%.
• Gilt futures are unch today at 128.19 with 10y yields down -1.0bp at 0.795% and 2y yields up 0.2bp at 0.083%.

EUROPE ISSUANCE UPDATE: German, Austrian & UK Auctions, Italian Syndication

EGB SYNDICATION: 10y BTP spread set at BTP+6bp
Final spread set @ 0.60% Aug-31 BTPS + 6bps
Original guidance had been 0.60% Aug-31 BTPS + 9bps area, then revised to BTP+7bp (+/-1bp)
Total books are in excess of E60bln (including JLM interest)

Germany allots E3.259bln 0% Nov-28 Bund, Avg yield -0.37% (Prev. -0.41%), Bid-to-cover 1.01x (Prev. 1.14x)

Austria sells:
E600mln 0% Apr-25 RAGB, Avg yield -0.60% (Prev. -0.57%), Bid-to-cover 2.42x
E600mln 0% Feb-31 RAGB, Avg yield 0.00% (Prev. -0.01%), Bid-to-cover 2.20x, (Prev. 2.04x)

UK sells:
GBP3.00bln 0.375% Oct-26 Gilt, Avg yield 0.465% (Prev. 0.457%), Bid-to-cover 2.69x (Prev. 2.57x), Tail 0.2bp (Prev. 0.2bp)
GBP1.25bln 1.625% Oct-71 Gilt, Avg yield 1.153% (Prev. 1.117%), Bid-to-cover 2.26x (Prev. 2.23x), Tail 0.3bp (Prev. 0.8bp)

EUROPE OPTION FLOW SUMMARY

Eurozone:
RXN1 170.50/169.50/168.50/167.50 put condor bought for 10 in 2k

2RU1 100.37/25ps 1x2 bought for 1.25 in 10k
3RU1 100/99.87/99.62p fly 1x1.5x0.5, bought for 0.75 in 5k

FX SUMMARY - USD holds onto gains

• USD remains in the green this morning, albeit still trading within ranges in G10.
• The currency is underpinned despite lower US yield.US 10yr, and likely helped by some corrective move lower in risk.
• The Greenback tested session high, breaking out of the overnight tight ranges against NOK, EUR, GBP, CAD, JPY, CHF, AUD, SGD, CNY. PHP, but moves lacked conviction, and the currency has in turn moved off its best levels.
• CHF and NOK are the only currency still holding onto gains against the USD in G10s.
• Scandis, saw a small dip lower for the SEK, following a miss on MoM Industrial orders as well as MoM GDP indicator.
• Although both set of data saw a decent beat on the YoY print.
• EURSEK is trending at the upper side of the range.
• Better USD buying has also been a factor.
• USDSEK has formed a small base at 8.2458, which was the 26/05 low, the lowest level since 25/02, and failed to break below the latter on the 1st and 7th June.
• USDJPY is up 0.23%, and in a 35 pips ranges, trading at 109.50 at the time of typing, with 1.07bn worth of expiry at that 109.50 strike, which may act as a magnet.
• Looking ahead, very little in terms of tier 1 data left on the calendar.
• Most desk remains on the sideline ahead of key events (ECB), and data (US CPI) on Thursday

FX OPTIONS: Expiries for Jun08 NY cut 1000ET (Source DTCC)

• EUR/USD: E$1.2055-70(E1.6bln-EUR puts), $1.2185-1.2200(E1.1bln), $1.2225-35(E576mln), $1.2265-75(E631mln), $1.2300(E759mln)
• USD/JPY: Y108.45-50($1.3bln), Y109.00($675mln), Y109.50($987mln-USD puts)
• AUD/USD: $0.7745-50(A$891mln)
• NZD/USD: $0.7150(N$601mln), $0.7260(N$1.2bln-NZD puts)

Price Signal Summary - E-Minis Consolidating Ahead Of Key Resistance

• In the equity space, S&P E-minis are unchanged and trading close to the all-time high of 4238.25 May 10 high. This remains a key resistance and the trigger for a resumption of the uptrend. Initial support is at 4165.25, Jun 3 low.
• In the FX space, EURUSD appears vulnerable following last week's price action. The focus is on 1.2102, the 50-day EMA. GBPUSD is consolidating and remains below last week's high of 1.4248 on Jun 1. A deeper pullback would expose 1.4006, May 13 low. Note the 50-day EMA intersects at 1.4019 and also represents a key support level. USDJPY sold off sharply Friday and yesterday support at 109.33, Jun 1 low was probed. A clear break lower would threaten the recent uptrend and expose 108.56, May 25 low.
• On the commodity front, Gold key short-term directional triggers have been defined at; $1916.6, the Jun 1 high and bull trigger and $1856.2, the Jun 4 low. Trend conditions in Oil remain bullish despite the most recent pullback. Recent Brent (Q1) gains have opened $73.00 next, a round number resistance. WTI (N1) yesterday tested the $70.00 psychological level. A break would open $70.22, 2.618 projection of the Mar 23 - 30 - Apr 5 price swing.
• Within FI, Bunds (U1) have tested the 50-day EMA at 172.00 but have not yet confirmed a clear break. While it holds, the outlook is bearish. Support to watch is at 170.99. May 31 low. Gilts (U1) remains below resistance at 127.74/82, highs between Apr 20 and May 26. A bearish risk remains present.

EQUITIES: US Futures Off Overnight Highs

• Asian stocks closed mixed, with Japan's NIKKEI down 55.68 pts or -0.19% at 28963.56 and the TOPIX up 1.8 pts or +0.09% at 1962.65. China's SHANGHAI closed down 19.435 pts or -0.54% at 3580.106 and the HANG SENG ended 5.9 pts lower or -0.02% at 28781.38.
• European markets are slightly higher, with the German Dax up 1.91 pts or +0.01% at 15659.08, FTSE 100 up 8.71 pts or +0.12% at 7091.58, CAC 40 up 6.45 pts or +0.1% at 6557.23 and Euro Stoxx 50 up 4.08 pts or +0.1% at 4099.55.
• U.S. futures are mixed, with the Dow Jones mini down 38 pts or -0.11% at 34578, S&P 500 mini up 1.5 pts or +0.04% at 4227, NASDAQ mini up 22.25 pts or +0.16% at 13827.

COMMODITIES: Oil Continues To Slide

• WTI Crude down $0.62 or -0.9% at $68.73
• Natural Gas up $0.05 or +1.6% at $3.124
• Gold spot down $6.21 or -0.33% at $1893.96
• Copper down $0.95 or -0.21% at $450.75
• Silver down $0.19 or -0.69% at $27.7282
• Platinum down $8.31 or -0.71% at $1168.06