Treasury Futures Higher On Lower ADP Jobs Data

Treasury futures were higher again on Wednesday, and finished near session's best, they initially gapped higher after lower than expected ADP jobs gain of +152k vs. +175k est (192k prior down-revised to +188k). TU finished the session +0-03 at 102-06 vs 106-06+ highs, while TY finished +0-09 at 110-09+ vs 110-12+ highs

• Treasuries maintain a firmer short-term tone following the recovery from last week’s 107-31 low (May 29). Looking at technical levels, initial support is at 109-03+ (20-day EMA), with the 107-31 (May 29 low) the next target, while to the upside initial resistance is at 110-12+ (June 5 high), a break here would see a test of 110-17 (April 4 highs)
• Cash treasury curve moved tighter again on Wednesday with yields 4-5.5bps lower, the 2Y -4.8bps to 4.722%, the 10Y -5.1bps at 4.275% while the 2y10y was -0.431 at -44.887.
• On the Data front: MBA Mortgage Applications -5.2% vs -5.7% prior, ADP Employment Change152k vs 175k est, S&P Global US Services PMI 54.8 vs 54.8, Composite PMI 54.2 vs 54.2 & ISM Services Index was 53.8 vs 51.0.
• Late year rate cut projections have gradually gained vs. late Tuesday levels (*): June 2024 at -1.3% w/ cumulative rate cut -.3bp at 5.328%, July'24 at -18% w/ cumulative at -4.8bp (-4.3bp) at 5.283%, Sep'24 cumulative -19.8bp (-19.3bp), Nov'24 cumulative -28.9bp (-27.8bp), Dec'24 -47bp (-44.3bp).
• Looking ahead; Weekly Claims & Trade Balance as well as ECB policy announcement.