Free Trial

Risk Aversion Heats Up, Tsys Surge as Equitys Falter

US TSYS SUMMARY
Risk-off tone surged Monday: Tsy futures surged on heavy volumes (TYU1 >2M ) by the close while equities sold off sharply (S&Ps -2.08% in late trade).
  • Of the various drivers for bid -- global spd of covid delta variant, spike in case counts spurring safe haven buying in EGBs, GBP, Tsys. Note: CDC raised covid related warning to level 4 (highest) to those traveling to the UK even as UK drops virus restrictions. Economic data remains light on wk, Fed in blackout.
  • TYU hit high of 134-25.5 well through bull-channel top of 134-03 and 200% fibonacci projection (134-24.5). 10YY fell to 1.739% low, well through 200DMA on move back to mid-Feb levels. Yield curves bull flattened vs. intermediates while longer curves outperformed (5s30s 112.098 late vs 110.188L).
  • Early on, sources report prop, real$ and foreign bank buying in 5s-30s, fast$ selling bonds and taking stab at entering steepeners vs. intermediates. Mid- to late morning Flow included ongoing real$, foreign and domestic bank buying in 5s-30s, stops triggered on latest move. Fast$ unwinding tactical shorts.
  • The 2-Yr yield is down 1.6bps at 0.2055%, 5-Yr is down 8.7bps at 0.6867%, 10-Yr is down 11.5bps at 1.1756%, and 30-Yr is down 11.1bps at 1.8083%.

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.