Free Trial

Rates Reject Soft Data

US TSYS
  • Treasury futures remain weaker - trading in a narrow range after quickly rejecting soft set of data this morning: Construction Spending MoM (0.5% vs 0.6% est); JOLTS Job Openings (9.528M vs. 9.600M est); ISM Mfg (46.4 vs. 46.9 est), Prices Paid (42.6 vs 44.0 est).
  • Employment saw another heavy decline, falling -3.7pts to 44.4 after June’s -3.3pts to 44.4 for its lowest since Jul’20 and pre-pandemic the lowest since 2009 having come very close in 2016. The latest decline mirrors the particularly sharp decline in yesterday’s Chicago PMI.
  • Front month Sep'23 10Y futures bounced to 111-07 from 111-00 pre-data, traded down to a session low of 110-26.5 (above technical support of 110-25.5 (Low Jul 28). Curves on the other hand bear steepened with short end rates outperforming: 3M10Y +6.344 at -140.915, 2s10s +5.335 at -86.861.
  • There were no substantive headline drivers for the post-data reversal in rates, however. Similar to last Friday's sharp rally and reversal, it appears algos reacted too strongly to the data with prop and fast money selling into the move ahead upcoming data.
  • Focus turns to ADP private employ data early Wednesday (+188k est vs. 497k prior), and July employment data on Friday, current estimate of +200k job gains vs. +209k in June.
  • Late unscheduled Fed speak after Tuesday's close: Atlanta Fed Pres Bostic said "THERE IS SOME RISK NOW OF OVERTIGHTENING" while "SUPPORTING FURTHER HIKES 'HARDER ON SOME LEVEL'"; DOESN'T SEE CUTS UNTIL H2 '24 AT EARLIEST"

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.