US TSYS: BACK TO BUSINESS, STRONG 30Y BOND AUCTION/RE-OPEN

US TSY SUMMARY: Generally quiet, sideways trade session for rates, markets

starting to ignore one-off geopol risk related headlines that would have spurred

more frenzied action earlier in week. Quickly retraced: mild risk-off buying

after Iranian military commander headlines cross wires that missile attacks

against US forces in region will continue with the aim to "expel US troops",

Iran state television. Multiple Fed speakers on day failed to move the needle.

Many squared and pared, plying sidelines ahead Friday's headline Dec nonfarm

payrolls (165k est).

- Tsys marched past overnight highs in minutes after strong 30Y auction/re-open,

yld curves bull flattening. US Tsy $16B 30Y bond auction/re-open (912810SK5)

awarded 2.341% (2.307% last month) vs. 2.357% WI; w/ 2.54 bid/cover (2.46

prior). Indirects drew 63.03% vs. 63.43% prior, 17.89% directs vs. 21.10%, and

19.09% for dealers vs. 15.46% prior.

- Another strong day for corporate issuance: $13.9B to price on day; $73.4B/wk.

- The 2-Yr yield is down 1bps at 1.5704%, 5-Yr is down 1.5bps at 1.6481%, 10-Yr

is down 2.3bps at 1.851%, and 30-Yr is down 3.9bps at 2.3232%.

TECHNICALS:

US 10YR FUTURE TECHS: (H0) Bullish Focus Placed On Hold  

*RES 4: 130-28+ High Oct 11

*RES 3: 130-17+ High Nov 1   

*RES 2: 130-06   High Jan 8 and a key resistance 

*RES 1: 129-02+ 50 day EMA

*PRICE: 128-19+ @ 15:47 GMT, Jan 9

*SUP 1: 128-18   Low Jan 7/9

*SUP 2: 127-29+ 200-dma

*SUP 3: 127-29   Low Dec 13 and bear trigger

*SUP 4: 130-28+ High Oct 11 

10yr futures were extremely choppy Wednesday as the market gyrated on the back

of developments in the Middle East. The sell-off places on hold a recent bullish

focus. Price failed to remain and close above resistance at 129-21, Jan 6 high

and the  50-day EMA, an indicator used as a reliable trend signal. Further

weakness would open 128-05, Dec 30 and Jan 2 low where a break would expose

127-29, Dec 13 low and key support. Resistance is 129-02+.

AUSSIE 10-YR TECHS: (H0) Near-term Top In? 

*RES 3: 98.9004 - 100-DMA

*RES 2: 98.8950 - High Dec 10 and 11

*RES 1: 98.8600 - High Jan 8

*PRICE: 98.7350 @ 16:33 GMT, Jan 08

*SUP 1: 98.5700 - Low Jan 2 

*SUP 2: 98.5348 - 1.236 projection of Dec 5 - Dec 13 decline from Dec 18 high

*SUP 3: 98.4976 - 1.382 projection of Dec 5 - Dec 13 decline from Dec 18 high

Markets saw a high print of 98.8600 this week on the back of the Iranian missile

retaliation, but these gains were rapidly pared into the close as tensions

swiftly de-escalated. This suggests the Wednesday high could mark a near-term

top, prompting bears to re-target the 98.5700 YTD low in the medium term should

the 200-dma at 98.7117 give way. This bearish cycle has been in place since Nov

28. The focus is on a move towards 98.5348 and 98.4976 next, both Fibonacci

projection levels.

JGB TECHS: (H0): New Highs Short-lived

*RES 3: 153.55 - High Nov 28 and key resistance

*RES 2: 153.11 - High Dec 4

*RES 1: 152.62 - High Jan 6

*PRICE: 151.95 @ 15:55 GMT, Jan 9

*SUP 1: 151.62 - Contract lows, Dec 20

*SUP 2: 151.11 - 76.4% retracement of August 2018 - September 2019 Rally

*SUP 3: 150.58 - 1.0% lower 10-dma envelope

JGBs pressured the lower end of the 2020 range Wednesday after an opening gap

higher was quickly reversed into the close. This leaves the outlook rather weak,

highlighting support at 151.62. A break of which could open 151.48 and 151.18,

the 0.764 and 1.00 Fibonacci projection levels of the decline between Dec 4 -

Dec 10 from the Dec 11 high. This all comes ahead of the 151.11 Fibonacci

retracement.

TSY FUTURES CLOSE: Running higher after the bell, extending post 30Y auction

highs, yld curves flatter. Update:

* 3M10Y  -2.607, 30.747 (L: 30.396 / H: 36.256)

* 2Y10Y  -0.885, 27.657 (L: 26.946 / H: 29.703)

* 2Y30Y  -2.712, 74.875 (L: 74.26 / H: 77.939)

* 5Y30Y  -2.449, 67.345 (L: 67.002 / H: 69.645)

Current futures levels:

* Mar 2-Yr futures up 0.625/32 at 107-23.625 (L: 107-21.5 / H: 107-23.625)

* Mar 5-Yr futures up 2.25/32 at 118-24.5 (L: 118-17.75 / H: 118-24.75)

* Mar 10-Yr futures up 5/32 at 128-29.5 (L: 128-17.5 / H: 128-30)

* Mar 30-Yr futures up 18/32 at 156-30 (L: 155-29 / H: 157-01)

* Mar Ultra futures up 1-5/32 at 183-10 (L: 181-13 / H: 183-15)

US EURODLR FUTURES CLOSE: Moderately bid after the bell, at/near session highs,

long end of strip outperforming. Current White pack (Mar'20-Dec'20):

* Mar 20 +0.005 at 98.275

* Jun 20 +0.005 at 98.340

* Sep 20 +0.005 at 98.405

* Dec 20 +0.010 at 98.420

* Red Pack (Mar 21-Dec 21) +0.015 to +0.020

* Green Pack (Mar 22-Dec 22) +0.020 to +0.025

* Blue Pack (Mar 23-Dec 23) +0.020 to +0.025

* Gold Pack (Mar 24-Dec 24) +0.030

US DOLLAR LIBOR: Latest settles

* O/N -0.0055 at 1.5270% (-0.0097/week)

* 1 Month +0.0065 to 1.6836% (-0.0306/wk)

* 3 Month +0.0138 to 1.8478% (-0.0260/wk)

* 6 Month +0.0053 to 1.8797% (-0.0131/wk)

* 1 Year +0.0176 to 1.9688% (+0.0046/wk)

US SWAPS: Spds running steady/mixed after the bell, wings modestly wider,

relative quiet for spds again, flow largely deal-tied w/some rate paying in

2s-3s from spe accts. Current levels:

Time (ET)   2Y Swap/Mid    5Y Swap/Mid   10Y Swap/Mid   30Y Swap/Mid

Thu 1500    +0.65/+6.56    -0.50/-0.62   +0.00/-5.75    +0.69/-33.81

1330        +0.29/+6.19    -0.12/-0.25   +0.25/-5.50    +1.25/-33.25

1200        +0.35/+6.25    -0.31/-0.44   +0.06/-5.69    +0.38/-34.12

1030        +0.35/+6.25    -0.25/-0.38   +0.00/-5.75    +0.25/-34.25

Thu Open    +0.22/+6.12    -0.38/-0.50   -0.38/-6.12    -0.38/-34.88

Wed 1500    -0.44/+6.50    -0.06/-0.12   -0.06/-5.56    -0.12/-34.38

Wed Open    +0.25/+7.19    -0.06/-0.12   +0.06/-5.44    -0.25/-34.50

Wednesday recap: Much more sedate session for spds, mildly tighter on narrow

range all day, some modest deal-tied hedging. Specs have squared up after spds

narrowed since beginning of new year, plying sidelines amid underlying geopol

and upcoming data risk.

STIR: Federal Reserve Bank of New York EFFR for prior session:

* Daily Effective Fed Funds Rate: 1.55%, volume: $83B

* Daily Overnight Bank Funding Rate: 1.54%, volume: $186B

US TSYS: REPO REFERENCE RATES: (rate, volume),

* Secured Overnight Financing Rate (SOFR): 1.55%, $1.007T

* Broad General Collateral Rate (BGCR): 1.52%, $376B

* Tri-Party General Collateral Rate (TGCR): 1.52%, $355B

OUTLOOK: *** US Data/speaker calendar (prior, estimate):

10-Jan 0830 Dec nonfarm payrolls (266k, 165k)

10-Jan 0830 Dec private payrolls (254k, 154k)

10-Jan 0830 Dec unemployment rate (3.5%, 3.5%)

10-Jan 0830 Dec average hourly earnings (0.2%, 0.3%)

10-Jan 0830 Dec average workweek, all workers (34.4hrs, 34.4hrs)

10-Jan 1000 Nov wholesale inventories (0.1%, 0.0)

10-Jan 1000 Nov wholesale sales (-0.7%, 0.2%)

10-Jan 1100 Q1 St. Louis Fed Real GDP Nowcast (2.14%, --)

10-Jan 1115 Q1 NY Fed GDP Nowcast (1.32%, --)

PIPELINE: Multiple launches, looks like $13.9B to price today; $73.4B/wk

Date $MM Issuer/Rating/Desc/Maturity/Yld; Priced *; Launch #:

01/09 $3B #Nomura $1.5B each 5Y +100, 10Y +125

01/09 $2.25B #WestPac Banking $750M each 3Y +42, 3Y FRN L+39, 10Y +80

01/09 $2B #Caterpillar $750M 2Y FRN L+20, $750M 3Y +37, $500M 5Y tap +45

01/09 $1.75B #Avalon Holdings $1.1B 5Y +125, $650M 7Y +150

01/09 $1B #National Bank of Canada 3Y +53

01/09 $550M #MassMutual 7Y +62

Priced:

01/09 $3B *IADB 5Y +9

01/09 $350M *PTT Exploration (PTTEP) 10Y +110

01/09 $Benchmark Athene Global Funding 5Y +90

Eurodollar/Tsy options 

Eurodollar options:

* +12,000 Jun 81/82/83 put flys, 6.0

* 10,000 Mar 80/81 put strips, 0.75

* -10,000 Dec 83/86 call spds, 7.5-7.0

* +5,000 Dec 77 puts, 1.0

* -5,000 Feb 83/85 call spds, 0.5

* +10,000 Jun 85 calls, 14.5

* +6,000 short Jun 86/87/88/90 call condors, 1.5

* +5,000 Dec 86/87/88/90 call condors, 1.0

* +13,000 Sep 88 calls, 3.0

* -8,000 Sep 81/83 3x1 put spds, 7.0

* 10,000 short Jun 83 puts, 10.0 vs.

* 10,000 Jun 81/83 put spds, 10.25 legged

* 10,000 Jun 82/83 strangles, 9.0

* 5,000 Jun/short Jun 83 put spds, 1.0

* +10,000 Green Mar 87/90 call spds, 2.0

* 9,000 Jun 82 straddles, 13.0-13.5

* +4,500 short Jan 85 calls, 1.0

* +10,000 short Feb 86/87 call spds, 1.5 vs. 98.475

* 5,000 Jun 81/82 put spds, 1.75 vs. 98.34

Recap overnight trade, Blocks

* +20,000 Mar 85/87/88 call trees, 1.0

* 14,000 Mar 80/81 put spds, 0.75

* Jun 82 put volume >76,000 w/ block sale and Jun 82/83 risk reversal adding

* 5,000 short Feb 86 calls, 3.0

Block, 0805:30ET, mid-market

* 10,000 Jun 82 puts, 2.5 vs. 98.34/0.28%

Block, 0731:53ET

* -10,000 Jun 82/83 2x1 put spds 1.0 over Apr 83 calls vs. 98.335/0.31%

Tsy options:

* +5,000 TYH 130 calls, 15/64

* +3,600 TYH 131 calls, 7/64

* +2,000 TYH 129.5/131/132.5 call flys, 12/64

* Update, over +60,000 TYH 130.5/131.5/132.5 call flys, 4- to 3/64 on screen

scale buyer limited upside 10Y call fly buyer

* Update, over +40,000 TYH 130.5/131.5/132.5 call flys, 4- to 3/64 on screen

* -5,000 TYH 127.5/130 strangles, 31/64

* +15,000 TYH 130.5/131.5/132.5 call flys, 4/64

* +15,000 FVH 118.25/119.25 call over risk reversals, 0.0 earlier

--MNI Chicago Bureau; tel: +1 312-431-0089; email: bill.sokolis@marketnews.com

[TOPICS: MTABLE,M$U$$$,M$$FI$,MN$FI$,MN$FX$]