Treasury Futures Back Near Post Jobs Low, Technical Support Holds

Treasury futures gapped lower after higher than expected March employment data showed job surge of 303k vs. 214k est, 275k prior down revised to 270k.

• Jun'24 10Y futures gapped to a post-data low of 109-15. Futures drew short cover/position squaring support that saw TYM4 climb back to 109-30 in late morning trade before settling back near session lows after the Feb Consumer Credit came out lower than expected at $14.1B vs. $15B, prior down-revised to $17.684B from $19.495B. As trading gets underway in Asia, the move lower has continued and we trade just above initial support at 109-11+ (- 09+) from NY closing levels.
• Looking at technical levels: Initial support lays at 109-09+ (Apr 3 Low) while below here the 109-09 (Lower 1.0% 10-dma envelope), round number support then rests at 109-00. While to the upside resistance holds at 110-14 (20-day EMA), above here 110-25+/31+ (50-day EMA / Mar 27 high and key resistance).
• Cash Treasury curve bear-flattened on Thursday, with yields 7-11bps higher. The 2Y yield was +10.3bps at 4.75%, 10Y +9.3bp to 4.402%, while the 2y10y -1.087 at -35.099.
• Balance of data: Private Payrolls (232k vs 170k est); Unemployment Rate (3.8% vs. 3.8% est vs. 3.9% prior), Average Hourly Earnings MoM (0.3% vs. 0.3% est), YoY (4.1% vs. 4.1% est), Labor Force Participation Rate (62.7% vs. 62.6% est).
• The strong jobs data sapped rate cut expectations in the near term: May 2024 at -5.7bp vs -9.8% pre-data w/ cumulative -1.4bp at 5.312%; June 2024 at -52.4% vs -59.6% earlier w/ cumulative rate cut -14.5bp at 5.181%. July'24 cumulative at -24.9bp vs -28.9bp earlier, Sep'24 cumulative -41.3bp vs. -45.1bp earlier.
• Looking Ahead: slow start to the week with focus turning to CPI and March FOMC minutes on Wednesday, PPI on Thursday.