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JGB TECHS

(Z1) Bearish Trend Condition

AUSSIE 10-YEAR TECHS

(Z1) Bearish Price Sequence

AUSSIE 3-YEAR TECHS

(Z1) Off Recent Highs

US 10YR FUTURE TECHS

(Z1)‌‌ Support Appears Exposed

--US Stocks See Record Closes
By Vicki Schmelzer
     NEW YORK (MNI) - U.S. tax reform hopes and a lessening of other concerns
helped risk sentiment recover further Wednesday, with U.S. Treasury yields and
the dollar marching higher and U.S. stocks closing at record highs. 
     This was in contrast to the fast-paced sell-off in U.S. yields and the
dollar, seen last week when the market faced a wall of worries about North
Korea, the devastation from Hurricane Harvey and Hurricane Irma, and U.S.
geopolitical concerns. 
     Ten-year U.S. Treasury yields were last near 2.192%, after trading in a
2.155% to 2.199% range. Wednesday's U.S. yield high is the highest since August
25, when yields topped out at 2.201%. 
     The Sept. 8 yield low near 2.016% was the lowest since Nov. 10, when yields
saw a wide range of 1.991% to 2.145% two-days after the U.S. election. Nov. 10
was the last time 10-year yields traded below 2.0%. 
     After a larger yield sell-off in June, U.S. yields subsequently recovered,
and 10-year yields rose to 2.396% July 7, the highest since mid-May. U.S. yields
topped out at 2.357% July 14 and more recently, yields peaked near 2.289% on
August 8 and August 4 before retreating.
     As background, U.S. Treasury yields posted highs near 2.421% on May 11,
which was the highest yield since March 31, when the 10-year yield peaked at
2.431%. These levels will be the next larger topside hurdles.
     On March 14, ahead of the Fed decision, 10-year U.S. yields topped out at
2.628%.
     As a reminder, 10-year U.S. yields rallied from lows near 1.720% Nov. 9,
the day after the U.S. election, to highs near 2.639% on Dec. 15, 2016, which
was the highest since the Sept. 19, 2014, peak near 2.655%.
     Ten-year German Bund yields closed near 0.401% Wednesday, after trading in
a 0.383% to 0.413% range. 
     The low of 0.292% seen Sept. 8 was the lowest Bund yield since June 27,
when yields troughed at 0.238%. The June 14 low of 0.225% was the lowest since
April 20, when yields bottomed at 0.192%.
     The July 12 yield high of 0.619% was the highest since Jan. 4, 2016, when
Bund yields peaked at 0.627%, the 2016 high. The next level of resistance would
be 0.651%, the Dec. 30, 2015 high. 
     As background, Bund yields fell to a low near -0.161% Sept. 27, 2016,
versus the life-time low around -0.2059% seen July 6, 2016.
     Ten-year UK Gilt yields closed around 1.145%, after trading in a 1.111% to
1.153% range. The Sept. 8 low of 0.951% was the lowest since June 15, when
yields tested lows near 0.938% and Tuesday's highs the highest since August 8,
when UK yields hit 1.161%.
     The July 7 high Gilt yield of 1.338% was the highest since Feb. 6, when
yields peaked at 1.370%. The June 14 low of 0.923% was the lowest since Oct. 7,
when Gilt yields bottomed near 0.905%.
     On Jan. 26, 2017, 10-year UK yields saw highs near 1.530%, which was the
highest yield since Dec. 15, when yields hit 1.536%, the highest since May 5,
2016, when Gilt yields saw a high near 1.538%.
     Ten-year Japanese government bond yields closed around 0.023%. Last week,
JGB yields flirted with negative territory and tested the lowest yields since
mid November.
     JGB yields hit highs near 0.108% July 7, which prompted the Bank of Japan
to step in buying bonds, offering to buy 10-year JGBs in unlimited amounts at
0.11%. 
     Current low JGB yields compared to the Feb. 3 highs near 0.150%, which were
the highest since the BOJ introduced negative interest rate policy back on Jan.
29, 2016. 
     In currencies, the euro held near $1.1884 in late afternoon action, on the
low side of a $1.1873 to $1.1995 range. 
     The Sept. 8 high of $1.2092 was the highest euro level since Jan. 2, 2015,
when the pair topped out at $1.2108. The 2015 high was $1.2109, seen Jan. 1. A
few weeks earlier, the euro posted a high near $1.2570 on Dec. 16, 2014. 
     Only last month, on August 17, the euro posted a low of $1.1662, which was
the lowest level since July 27, when the pair bottomed near $1.1650. 
     In other pairs, dollar-yen was trading near Y110.55, on the high side of a
Y109.91 to Y110.69 range. 
     The pair topped out August 31 at Y110.67, which will be the next topside
target and subsequently tracked U.S. Treasury yields lower.
     On Sept. 8, as U.S. Treasury yields were testing their lows and risk
aversion was high, dollar-yen bottomed at Y107.32, which was the lowest level
since Nov. 14 2016, when the pair bottomed at Y106.51. 
     In commodities, spot gold held near $1,322.45 per ounce, after trading in a
$1,320.95 to $1,337.18 range. The earlier low is the lowest since Sept. 1, when
gold bottomed around $1,216.52. 
     The $1,357.61 high seen Sept. 8, at the peak of U.S. dollar sales and risk
aversion, was the highest since August 16, 2016, when the precious metal peaked
at $1,358.21. 
     Barring a larger pullback, there is still scope for gains toward the 2016
twin-peak highs of $1,375.28 and $1,375.34, seen July 6 and July 11
respectively. 
     The August 15-16 lows near $1,267-$1,268 will continue to act as larger
support.
     Crude prices rose Wednesday, despite EIA inventory data showing a crude
stock increase of 5.89 million barrels in the latest week. Analysts warned that
data will be skewed for weeks to come. 
     In its Short-Term Energy Outlook, released Tuesday, the EIA stated: "EIA
expects much of the reduction in refinery production of petroleum products to be
offset by a decline in petroleum product net exports."
     The EIA looked for net petroleum product exports to average 1.1 million b/d
in September, which is down from an average of 2.9 million b/d during the first
eight months of 2017. 
     "A reduction in net exports can either come from a decrease in exports or
an increase in imports," the EIA said. 
     "Additionally, the reduction in production of petroleum products could
contribute to larger-than-typical inventory draws for September," the report
said.
     NYMEX October light sweet crude oil futures settled up $1.07 at $49.30 per
barrel, after trading in a $48.12 to $49.40 (after hours) range. 
     The front contract peaked Sept 6 at $49.42 and at the time stalled ahead of
its 200-day moving average, currently at $49.54. 
     Only August 31, WTI posted a low of $45.58, the lowest since July 24, when
the front contract posted a low of $45.40.
     WTI posted a high of $50.22 on August 10. This came after topping out at
$50.43 August 1 and $50.41 July 31, which was also the last time West Texas
Intermediate closed above the $50 mark. 
     As background, WTI topped out at $52.00 May 25, before the announcement of
a nine-month extension of OPEC/non-OPEC production cuts. The extension was
largely priced in and oil fell to $42.05 on June 21. 
     In U.S. stocks, the S&P 500 closed up 0.08% at 2,498.37, after trading in a
2,492.14 to 2,498.37 range. This is a life-time high close and a life-time
intraday high. 
     The August 21 low of 2,417.35 was the lowest since July 11, when the index
bottomed at 2,412.79. 
     At Wednesday's close, the S&P 500 was up 11.6% year-to-date. 
     Market players were also monitoring the Russell 2000 index, which often
leads larger stock swings.
     The Russell 2000 closed up 0.24% at 1,426.89, down from an earlier high of
1,428.745. The index posted a high of 1,452.091 July 25. 
     Only a few weeks ago, the index posted a low of 1,349.35 August 18, which
was the lowest level since April 17, when the Russell 2000 bottomed at
1,345.363.
     The Dow Jones Industrial Average and Nasdaq Composite posted new life-time
high closes of 22,158.18 and 6,460.19 respectively, but failed to revisit the
life-time intraday highs of 22,179.11, seen August 8 and 6,460.841, seen July
27. 
     On risk appetite, the CBOE's volatility index or VIX was last at 10.50, in
the middle of a 10.33 to 10.86 range. 
     The VIX high of 17.28, seen August 11 at the peak of U.S.-North Korea
tensions, was the highest since Nov. 9, the day after the U.S. election, when
the VIX peaked at 21.48. The 2017 high was 23.01, seen Nov. 4 ahead of the
election. 
     In August and now also in September, the VIX has traded both sides of its
200-day moving average, currently at 11.59. 
     The July 26 low of 8.84 was a new life-time intraday VIX low (prior
life-time intraday low was 8.89, seen Dec. 27, 1993). 
     Looking ahead, the market will eye August CPI data, due out Thursday. MNI's
median estimate is 0.3% for headline and 0.2% ex-food and energy. See MNI US
Data Preview for details and check out the latest REALITY CHECK on rental
trends, on MNI Main Wire at 12:15 p.m. ET and 10:48 a.m. ET respectively. 
     The Bank of England monetary policy decision will also be of interest. See
MNI BOE Preview on the Main Wire at 11:32 a.m. ET. 
     --follow MNIEyeonFX on twitter.com --
--MNI New York Bureau; tel: +1 212-669-6438; email: vicki.schmelzer@marketnews.com
[TOPICS: MNUEQ$,M$U$$$,MI$$$$,M$$FI$,MN$FI$,MN$FX$]