US TSYS: CHINA TO LOSE FX MANIPULATOR TAG AHEAD PHASE 1 DEAL

US TSY SUMMARY: Quiet start to the week, no significant data, no react to Boston

Fed pres Rosengren and Atl Fed pres Bostic earlier. Muted volume (TYH<960k after

the bell, owing to Japan out for one day holiday). 

- Equity bid leant to modest risk-on tone/sale in rates; stocks close to making

new all-time highs in late trade (eminis still off Fri's high (3286.25) at

3283.75 (+19.0) in late trade -- sources cited drop in China Renminbi (6.8805,

-.0344 in late trade). Phase 1 signing ceremony in DC Wed, China said to have FX

manipulator tag dropped to break stalemate.

- Swap spds holding mildly wider across the curve/narrow range amid better

payers in 1s-4s early migrating to intermediates, deal-tied selling in 3s, 5s

and 7s. 

- Corp issuance: over $6B launched. Supply should continue to increase after

financial shares annc earnings starting Tuesday: Jan 14: JPM, Wells, Citi; Jan

15: CS, USB, BoA, GS; Jan 16: BoNYM, MS; Supra-sovs ramp up issuance as well

amid continued angst over geopolitical risk.

- The 2-Yr yield is up 1.6bps at 1.5863%, 5-Yr is up 1.8bps at 1.6495%, 10-Yr is

up 2.6bps at 1.8459%, and 30-Yr is up 2.6bps at 2.3044%.

TECHNICALS: 

US 10YR FUTURE TECHS: (H0) Likely To Remain On The Defensive  

*RES 4: 130-17+  High Nov 1

*RES 3: 130-06   High Jan 8 and a key resistance 

*RES 2: 129-18   61.8% retracement of the Jan 8 - Jan 9 decline

*RES 1: 129-05+  Post Payrolls High

*PRICE: 128-28+  @ 16:06 GMT, Jan 13

*SUP 1: 128-17+  Low Jan 97

*SUP 2: 128-05   Low Jan 2

*SUP 3: 128-00   Low Dec 24

*SUP 4: 127-29   Low Dec 13 and key support 

10yr futures traded softer Monday. The sell-off last week on Jan 8 placed on

hold the 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. Furthermore, the recovery Thursday and Friday appears corrective in

nature. The focus is on 128-05, Dec 30 and Jan 2 low where a break would expose

127-29, Dec 13 low and key support. Resistance is 129-05+. 

     AUSSIE 3-YR TECHS: (H0) Going Nowhere

*RES 4: 99.305 - 61.8% October - December decline 

*RES 3: 99.300 - High Dec 17

*RES 2: 99.285 - High Jan 8

*RES 1: 99.262 - 100-dma

*PRICE: 99.195 @ 16:00 GMT Jan 13

*SUP 1: 99.055 - Low Dec 31

*SUP 2: 99.041 - 1.500 projection of Dec 10 - Dec 13 decline from Dec 17 high 

*SUP 3: 99.018 - 1.764 projection of Dec 10 - Dec 13 decline from Dec 17 high

*SUP 4: 99.000 - Round number Support

The stable end to last week fed through into the Monday session, after pulling

back from the lurch above the 100-dma at the middle of last week. This supports

the argument that Wednesday's break above the 100-dma was a false break, keeping

the near-term outlook modestly weak. To counter this, bulls need to rise and

close through the 100-dma initially. To the downside, bears could easily

recapture the balance of power on a move through 99.041 and 99.018, both

Fibonacci projection levels.

     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: 98.7500 @ 16:03 GMT, Jan 13

*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 last 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): Plays the Range

*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: 152.05 @ 16:05 GMT, Jan 13

*SUP 1: 151.62 - Contract lows, Dec 20

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

*SUP 3: 150.54 - 1.0% lower 10-dma envelope

JGBs pressured the lower end of the 2020 range last week 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: Weaker by the bell, see-sawing around middle session range,

moderate volume (TYH<950k), yld curves steeper but off midday levels. Update:

* 3M10Y  +0.922, 29.313 (L: 28.334 / H: 31.053)

* 2Y10Y  +1.040, 25.78 (L: 24.812 / H: 27.413)

* 2Y30Y  +1.243, 71.81 (L: 70.622 / H: 73.948)

* 5Y30Y  +1.021, 65.489 (L: 64.277 / H: 66.564); Current futures levels:

* Mar 2-Yr futures down 1/32 at 107-22.625 (L: 107-22.125 / H: 107-24)

* Mar 5-Yr futures down 2/32 at 118-24 (L: 118-21.75 / H: 118-27.25)

* Mar 10-Yr futures down 5.5/32 at 128-29 (L: 128-26 / H: 129-03.5)

* Mar 30-Yr futures down 11/32 at 157-9 (L: 156-28 / H: 157-23)

* Mar Ultra futures down 20/32 at 184-1 (L: 183-12 / H: 184-28)

US EURODLR FUTURES CLOSE: Mildly weaker across the strip by the bell, Whites

underperforming, Greens-Golds off session lows. Current White pack

(Mar'20-Dec'20):

* Mar 20 -0.015 at 98.260

* Jun 20 -0.010 at 98.325

* Sep 20 -0.010 at 98.395

* Dec 20 -0.015 at 98.405

* Red Pack (Mar 21-Dec 21) -0.015

* Green Pack (Mar 22-Dec 22) -0.015 to -0.01

* Blue Pack (Mar 23-Dec 23) -0.02 to -0.015

* Gold Pack (Mar 24-Dec 24) -0.025 to -0.02

US DOLLAR LIBOR: Latest settles

* O/N +0.0020 at 1.5351% (-0.0036 last week)

* 1 Month -0.0004 to 1.6764% (-0.0376 last wk)

* 3 Month -0.0065 to 1.8312% (-0.0361 last wk)

* 6 Month +0.0004 to 1.8725% (-0.0206 last wk)

* 1 Year -0.0046 to 1.9620% (+0.0025 last wk)

US SWAPS: Spds holding mildly wider across the curve/narrow range amid better

payers in 1s-4s early migrating to intermediates, deal-tied selling in 3s, 5s

and 7s. Current levels:

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

1415        +0.12/+6.00    +0.12/-0.38   +0.31/-5.06    +0.31/-32.06

1300        +0.25/+6.12    +0.25/-0.25   +0.38/-5.00    +0.38/-32.00

1100        +0.12/+6.00    -0.12/-0.62   +0.12/-5.25    +0.12/-32.25

0915        -0.06/+5.81    -0.12/-0.62   +0.06/-5.31    -0.12/-32.50

Mon Open    +0.38/+6.25    +0.00/-0.50   +0.12/-5.25    +0.00/-32.38

Mon 0730    +0.25/+6.12    +0.00/-0.50   +0.06/-5.31    +0.00/-32.38

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

* Daily Effective Fed Funds Rate: 1.54%, volume: $83B

* Daily Overnight Bank Funding Rate: 1.54%, volume: $192B

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

* Secured Overnight Financing Rate (SOFR): 1.55%, $1.013T

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

* Tri-Party General Collateral Rate (TGCR): 1.52%, $367B

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

14-Jan 0600 Dec NFIB Small Business Index (104.7, 104.9)

14-Jan 0830 Dec CPI (0.3% 0.3%); CPI Ex Food & Energy (0.2% 0.2%)

14-Jan 0855 11-Jan Redbook retail sales m/m

14-Jan 0900 NY Fed Williams, behavioral sci London event, Q&A

14-Jan 1300 KC Fed George, eco outlook, mon-pol, Q&A

PIPELINE: Just over $6B launched. Supply should continue to increase after

financial shares annc earnings starting Tuesday: Jan 14: JPM, Wells, Citi; Jan

15: CS, USB, BoA, GS; Jan 16: BoNYM, MS; Supra-sovs ramp up issuance as well

amid continued angst over geopolitical risk. 

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

01/13 $1.85B #Royal Bank of Canada $1B 3Y +38, $850M 3Y FRN L+36

01/13 $1.5B *Femsa 30Y +130

01/13 $1.25B #Deutsche Telecom 30Y +137.5

01/13 $940M *Posco $500M 3Y +82.5, $440M 5Y +97.5

01/13 $700m *Reliance Standard Life $350M each 3Y +58, 7Y +103

01/14 $Benchmark KFW 3Y +7a

01/14 $Benchmark Govt of Canada 5Y +8a

01/?? $Benchmark Bank Leumi Le-Israel 11NC6 roadshow

01/?? $Benchmark Credit Bank of Moscow 5Y roadshow

Eurodollar/Tsy options 

Eurodollar options:

* +20,000 Sep 85/87 call spds 5.5 over Jun 82/83 put spds

* +10,000 Sep 93 calls, 0.5

* -4,000 short Apr 83/86 strangles, 11.5

* +2,500 Mar 81/83 strangles, 1.75

* +3,000 Green Feb 82 puts, 1.5

* +3,000 Apr 81/82 2x1 put spds, 0.5

+2,500 short Feb 86 calls, 2.5 vs. 98.47/0.22%

* +15,000 Red Dec'21 97/100 1x2 call spds, 0.0

* +3,000 Apr/Jun 83 call spds 2.25

* +5,000 Green Mar 80/81/87/88 call condors, 11.0 vs. 98.42/0.10%

* +15,000 Jun 82/85 call spds, 7.0 vs. 48.33/0.45%

* +10,000 Jun 85/87/90 call flys, 1.5 -- adds to +20k on screen

Early screen trade,

* +20,000 Jun 85/87/90 call flys, 1.5

Tsy options:

First Block of the day, 1239:35ET,

* 10,000 wk3 10Y/TYG 129 call spds, 9/64 vs. 128-22/0.05%

vol sellers into midday

* -2,700 TYH 127/131 strangles, 11/64 after 30Y strangle seller

* -1,700 USH 154/160 strangles, 57-56

* >7,000 (pit/screen) USH 159/163 call spds vs. USH 154 puts, 13-15

* 1,000 USG 157/158 2x1 put spds, 8/64

* +2,000 TYH 130 calls, 17/64

* +2,000 wk3 TY 128.5 puts, 5/64 vs. 128-30/0.20%

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

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