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Tsys Well Bid Post Minutes, Focus Turns to Friday's NFP

US TSYS
  • Treasuries held near session highs into the early pre-4th of July holiday close, little reaction to the FOMC June minutes release -- nothing new that hasn't been relayed by Fed speakers the last couple weeks:
  • “Participants affirmed that additional favorable data were required to give them greater confidence that inflation was moving sustainably back to 2%,” the minutes said. “A number of participants remarked that monetary policy should stand ready to respond to unexpected economic weakness.” Most FOMC members – but not all -- believe monetary policy is restrictive and helping to gradually cool the economy and lower inflation.
  • Wednesday saw a deluge of data, initial support after ADP employment modestly lower than expected in June at 150k (cons 165k) after a slightly upward revised 157k (initial 152k) in May.
  • Initial jobless claims were slightly higher than expected at 238k (sa, cons 235k) in the week to Jun 29 after a marginally upward revised 234k (initial 233k).
  • Main mover: Treasuries gapped higher after ISM Services index data came out lower than expected (48.8 vs. 52.6). Still well off last week's levels, Tsys are back near late Friday's prices: TYU4 tapped 110-04 high - through initial technical resistance of 109-30 (20-day EMA), trades109-29 last (+14), next resistance at 110-16 (Jun 28 high), before settling back to 109-30.5 after the bell.
  • Focus turns to the next headline employment data release on Friday morning.
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