US TSYS: EARLY DERISK SUPPORT EVAPORATES, IMPEACHMENT WED

US TSY SUMMARY: Mild early de-risking lost momentum by midmorning. Support in

rates evaporated after trade comment from Lighthizer: "EXPECTS U.S. AGRICULTURE

SALES TO CHINA TO DOUBLE" (though hard details still absent).

- Otherwise, pre-holiday market malaise continued, Nov housing starts/permits,

industrial production, cap-u did little to spark interest. 

- Familiar refrains from Fed speakers, Rosengren: economy is "quite solid" and

monetary policy is well positioned for 2020 barring an unexpected shock; Kaplan

is comfortable with the current level of the policy rate going into 2020.

- Large 30s/Ultra-bond block: +6,000 USH 157-02, post-time bid vs. -7,000 WNH

184-00, sell through 184-09 post-time bid -- the steepener NOT duration neutral

w/over twice WNH needed for neutral hedge. Positioning flows more than a

concerted risk-related move w/equities hovering around steady. 

- The 2-Yr yield is up 0.4bps at 1.6306%, 5-Yr is up 0.8bps at 1.7098%, 10-Yr is

up 1.4bps at 1.8853%, and 30-Yr is up 2.5bps at 2.3117%.

TECHNICALS

US 10YR FUTURE TECHS: (H0) Bearish Focus Intact

*RES 4: 130-17+ High Nov 1

*RES 3: 130-04+ High Dec 3

*RES 2: 129-14 High Dec 12 and near-term bull trigger

*RES 1: 129-02 High Dec 13

*PRICE: 128-17+ @ 16:40 GMT, Dec 17

*SUP 1: 127-29   Low Dec 13

*SUP 2: 127-18+ 1.618 projection of the Oct 3 to Nov 7 low from Dec 3 high

*SUP 3: 127-00   Round number support

*SUP 4: 126-31+ 1.764 projection of the Oct 3 to Nov 7 low from Dec 3 high

10yr futures are relatively quiet having rallied off the day's low on Friday

followed by a retracement Monday. The recovery Friday is being viewed as a

correction with underlying trend conditions still bearish. On Friday, futures

traded below the key support at 127-30, Nov 7 low. This indicates a resumption

of the downtrend and opens 127-18+, a Fibonacci projection and the 127-00 level.

On the upside, clearance of 129-14, Dec 12 high is needed to reverse the

outlook.

AUSSIE 3-YR TECHS: (H0) Remains Vulnerable

*RES 4: 99.400 - Low Nov 29

*RES 3: 99.360 - High Dec 12

*RES 2: 99.335 - High Dec 13 

*RES 1: 99.300 - High Dec 17

*PRICE: 99.280 @ 16:33 GMT Dec 17

*SUP 1: 99.200 - Low Dec 13

*SUP 2: 99.162 - 1.236 projection of Nov 29 - Dec 3 decline from Dec 10 high

*SUP 3: 99.139 - 1.382 projection of Nov 29 - Dec 3 decline from Dec 10 high

*SUP 4: 99.120 - 1.500 projection of Nov 29 - Dec 3 decline from Oct 25 high

Aussie 3-yr futures edged slightly higher Tuesday, inching above the Monday high

to touch 99.30. Nonetheless, this recovery is still being viewed as a correction

following the sharp sell-off on Dec 13. This move lower resulted in a break of

99.245, Dec 3 low and reinforced the near-term bearish risk. The trigger for

fresh weakness is at 99.200 where a break would open 99.162 and 99.139, both

Fibonacci projection levels. On the upside, resistance is at 99.335, Dec 13

high. 

AUSSIE 10-YR TECHS: (H0) Seen Pressuring Support Near-Term

*RES 3: 98.9500 - High Dec 5

*RES 2: 98.8950 - High Dec 10 and 11

*RES 1: 98.8850 - High Dec 5

*PRICE: 98.8200 @ 16:35 GMT, Dec 17

*SUP 1: 98.7125 - Low Dec 16

*SUP 2: 98.6950 - Low Dec 13 

*SUP 3: 98.6667 - 1.382 projection of Nov 28 - Dec 3 low from Dec 5 high

Aussie 10-yr futures traded higher again Tuesday having erased overnight

weakness, however prices look to be retracing slightly into the NY close. Recent

gains were viewed as a correction following the sharp sell-off on Dec 13. This

move lower resulted in a break of 98.8100, Dec 3 low and reinforced the

near-term bearish risk. The trigger for a fresh round of weakness is at 98.6950

where a breach would open 98.6667 and 98.6452, both Fibonacci projection levels.

On the upside, resistance is at 98.8850, Dec 13 high.

JGB TECHS: (H0): Consolidating

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

*RES 2: 153.11 - High Dec 4

*RES 1: 152.50 - High Dec 9

*PRICE: 152.10 @ 16:38 GMT, Dec 17

*SUP 1: 151.83 - Contract lows, Dec 10

*SUP 2: 151.69/52 - Fibonacci projections of Nov 28 - Dec 3 decline from Dec 4

high.

*SUP 3: 150.87 - 1.0% 10-dma envelope

JGB price action is consolidative for now. A clear downtrend remains in  place

though with a price sequence of lower lows and lower highs evident. The trigger

for a fresh round of weakness is 151.83, Dec 10 contract low. A break here would

confirm a resumption of the downtrend and open 151.69 and 151.52, the 1.236 and

1.382 projections of the decline between Nov 28 - Dec 3 from the Dec 4 high.

Initial resistance is at 152.50. 

TSY FUTURES CLOSE: Mildly higher after the bell, long end still underperforming

but inching off second half lows. Yld curves mildly steeper. Update:

* 3M10Y  +2.210, 31.943 (L: 27.243 / H: 32.817)

* 2Y10Y  +1.208, 25.097 (L: 22.684 / H: 26.001)

* 2Y30Y  +2.279, 67.696 (L: 64.112 / H: 69.066)

* 5Y30Y  +1.455, 59.811 (L: 57.818 / H: 60.944)

Current futures levels:

* Mar 2-Yr futures up 0.5/32 at 107-20.75 (L: 107-20.625 / H: 107-21.75)

* Mar 5-Yr futures up 1.25/32 at 118-14.5 (L: 118-14 / H: 118-18.5)

* Mar 10-Yr futures up 2/32 at 128-15.5 (L: 128-13.5 / H: 128-23)

* Mar 30-Yr futures up 2/32 at 156-29 (L: 156-21 / H: 157-18)

* Mar Ultra futures down 5/32 at 183-25 (L: 183-11 / H: 185-08)

US EURODLR FUTURES CLOSE: Steady/mixed after the bell, near low end narrow

session range. Decent volume in Whites partially driven by >20k EDU0/EDZ0/EDH1

fly buys at +0.045. Current White pack (Mar 20-Dec 20):

* Mar 20 +0.000 at 98.250

* Jun 20 +0.000 at 98.315

* Sep 20 -0.005 at 98.370

* Dec 20 -0.005 at 98.380

* Red Pack (Mar 21-Dec 21) steady

* Green Pack (Mar 22-Dec 22) +0.005

* Blue Pack (Mar 23-Dec 23) +0.005

* Gold Pack (Mar 24-Dec 24) steady to +/-0.005

US DOLLAR LIBOR: Latest settles

* O/N +0.0050 at 1.5356% (+0.0058/week)

* 1 Month +0.0190 to 1.7638% (+0.0264/wk)

* 3 Month +0.0040 to 1.9025% (+0.0029/wk)

* 6 Month +0.0113 to 1.9047% (+0.0218/wk)

* 1 Year +0.0088 to 1.9684% (+0.0046/wk)

US SWAPS: Spds running mostly wider by the bell, spd curve flatter w/short end

little off wides but well off near inverted levels just a week ago.

Light/sporadic swap-tied selling in short to intermediates, dearth of deal-tied

hedging. Latest spd levels:

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

Tue 1500    +0.75/+5.69    +0.44/-0.81   +0.56/-4.94    -0.38/-29.75

1345        +0.56/+5.50    +0.56/-0.69   +0.56/-4.94    -0.31/-29.69

1215        +0.62/+5.56    +0.56/-0.69   +0.50/-5.00    -0.12/-29.50

0945        +1.12/+6.06    +0.62/-0.62   +0.50/-5.00    +0.50/-28.88

Tue Open    +0.62/+5.56    +0.50/-0.75   +0.50/-5.00    +0.25/-29.12

Mon 1500    +0.88/+4.38    +0.81/-1.50   +1.25/-5.50    +1.75/-29.50

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

* Daily Effective Fed Funds Rate: 1.55%, volume: $70B

* Daily Overnight Bank Funding Rate: 1.54%, volume: $161B

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

* Secured Overnight Financing Rate (SOFR): 1.62%, $1.025T

* Broad General Collateral Rate (BGCR): 1.60%, $394B

* Tri-Party General Collateral Rate (TGCR): 1.60%, $373B

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

18-Dec 0515 Fed Board Gov Lael Brainard speaks in Frankfurt

18-Dec 0700 13-Dec MBA Mortgage Applications (3.8%, --)

18-Dec 1030 13-Dec crude oil stocks ex. SPR w/w

18-Dec 1100 Nov Kansas City Fed LMCI

18-Dec 1130 US Tsy $18B 2Y NOTE FRN R/O (912828YN4) auction

18-Dec 1240 Chicago Fed Pres Evans, mon-pol Economic Club of Indiana Luncheon

PIPELINE: Limited high grade issuance expected this week 

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

12/17 Nothing in the pipeline for Tuesday as yet, $0 for week

-

12/16 No new US$ issuance Monday; $21.07B priced on month so far

Canadian issuance

12/16 C$1.5B *Royal Bank of Canada 10NC5 +125

12/16 C$750M *National Bank of Canada +5Y +94

Eurodollar/Tsy options 

Eurodollar options:

* 5,000 Sep 88/90 call spds

* +10,000 Sep 86/87 call spds, 2.0

* +2,500 Apr 82 puts, 2.25

* -2,000 Red Dec'21 72/88 2x1 call over risk reversals, 7.0

* +10,000 Sep 80/81 put spds, 1.25/legged

* -10,000 Mar 81 puts, 0.5 vs. 98.255

* +15,000 Mar 88 calls, 0.5

Conditional curve flattener package:

* +5,000 short Jun 86/Jun 83 call diagonal spds, 3.0-3.5 w/

* +5,000 short Sep 86/Sep 83 call diagonal spds, 0.5, 3.5-4.0 net

Muted overnight volume, recent screen trade

* +9,000 Sep 87/90 1x2 call spds, 0.0

* 1,500 Jun 81/82 put spds vs. Jun 85/87 call spds

Tsy options:

* +12,000 TYG 130.5/131/131.5 call flys, 1/64

* -3,000 TYG 127.5/129.5 strangles, 31/64

* -11,000 USG 153 puts from 17- to 16/64 on screen

* +2,000 TYF 128 puts, 8/64

* +2,000 FVF 118.5 puts, 9/64 vs. 118-17.75/0.48%

* -12,000 TYG 125 puts, 1/64 vs. 128-21

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

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