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Treasury Futures Little Changed Early, MNI Chicago PMI Later

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Treasury futures continued to climb off last Thursday's approximate 5-month lows Monday, completely recovering from a sell-off on lower than expected weekly claims and strong PCE data.

  • Jun'24 10Y futures edged higher throughout the Monday session, closing near highs of 107-31+ at 107-29. As trading gets underway on Tuesday, we are trading little changed across curves with the 2Y at 101-14.75 and 10Y at 107-30.
  • The trend outlook in Treasuries is unchanged and the direction is down. The contract traded to a fresh cycle low Thursday Initial resistance is 108-15+ (20-day EMA), while to the downside, initial support is at 107-04 (Apr 24 low).
  • Cash Treasury curve bull-flattened on Monday, yields were 1-5bps lower, with the 2Y yield -1.7bps to 4.977%, 10Y -4.9bps to 4.614%, while the 2y10y -2.861 at -36.524
  • For the FOMC on Wednesday, Powell is expected to tilt more cautious on the inflation outlook than in previous appearances, with potential flashpoints for markets including whether he acknowledges that 3 cuts are less likely to be the base case for the FOMC in 2024, and/or whether June is too early for the first cut.
  • Projected rate cut pricing largely eased slightly: May 2024 -2.1% w/ cumulative -0.5bp at 5.324%; June 2024 at -10.6% w/ cumulative rate cut -3.2bp at 5.297%, July'24 cumulative at -8.1bp, Sep'24 cumulative -18.1bp.
  • Looking ahead: Employment Cost Index, FHFA House Price Index, MNI Chicago PMI & Conf. Board Consumer Confidence later today, while major focus will turn to FOMC on Wednesday
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Treasury futures continued to climb off last Thursday's approximate 5-month lows Monday, completely recovering from a sell-off on lower than expected weekly claims and strong PCE data.

  • Jun'24 10Y futures edged higher throughout the Monday session, closing near highs of 107-31+ at 107-29. As trading gets underway on Tuesday, we are trading little changed across curves with the 2Y at 101-14.75 and 10Y at 107-30.
  • The trend outlook in Treasuries is unchanged and the direction is down. The contract traded to a fresh cycle low Thursday Initial resistance is 108-15+ (20-day EMA), while to the downside, initial support is at 107-04 (Apr 24 low).
  • Cash Treasury curve bull-flattened on Monday, yields were 1-5bps lower, with the 2Y yield -1.7bps to 4.977%, 10Y -4.9bps to 4.614%, while the 2y10y -2.861 at -36.524
  • For the FOMC on Wednesday, Powell is expected to tilt more cautious on the inflation outlook than in previous appearances, with potential flashpoints for markets including whether he acknowledges that 3 cuts are less likely to be the base case for the FOMC in 2024, and/or whether June is too early for the first cut.
  • Projected rate cut pricing largely eased slightly: May 2024 -2.1% w/ cumulative -0.5bp at 5.324%; June 2024 at -10.6% w/ cumulative rate cut -3.2bp at 5.297%, July'24 cumulative at -8.1bp, Sep'24 cumulative -18.1bp.
  • Looking ahead: Employment Cost Index, FHFA House Price Index, MNI Chicago PMI & Conf. Board Consumer Confidence later today, while major focus will turn to FOMC on Wednesday