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Treasury Futures Higher On Lower ADP Jobs Data

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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.
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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.