US TSYS: Fed Vs Trump On Negative Rates, Powell Wednesday

US TSY SUMMARY: Choppy day on better volumes (TYM>1.1M) as rate futures

see-sawed higher/extending session highs later in second half after headlines

that GOP senators looking to introduce  "sanction legislation" against China

(specific reason why varies, but includes retaliation for virus spread, sources

say). 

- Earlier: Not a big react to April CPI data, moderate two-way flow keeping

futures near midrange after release, seeing some real$ buying followed by

leveraged and prop acct selling, deal-tied hedging in the mix while equities

trimmed gains.

- By late morning: multiple Fed speakers at odds w/ Trump espousing negative

rates (via tweet) had Tsy futures gap higher, eventually blowing past overnight

highs. Markets await Fed Char Powell on eco-outlook Wednesday 0900ET. 

- Stopped through, US Tsy $32B 10Y note auction (912828ZQ6) awarded 0.700% rate

(0.782% last month) vs. 0.712% WI; 2.69 bid/cover (2.43 previous). 

- The 2-Yr yield is down 0.4bps at 0.1708%, 5-Yr is down 1.8bps at 0.3337%,

10-Yr is down 3.5bps at 0.6747%, and 30-Yr is down 3.9bps at 1.3774%.

TECHNICALS:

US 10YR FUTURE TECHS: (M0) Range Bound 

*RES 4: 141-26   0.764 projection of Feb 6 - Mar 9 rally from Mar 19 low

*RES 3: 140-24   High Mar 9 and key contract high

*RES 2: 140-00   Round number resistance

*RES 1: 139-16/22  High May 8 / High Apr 22 

*PRICE: 138-25 @ 15:44 BST, May 12

*SUP 1: 138-08+/06 Low May 06 / Low Apr 15

*SUP 2: 137-16   Low Apr 7 and key near-term support 

*SUP 3: 137-12   50-day EMA

*SUP 4: 136-29+ Low Mar 24

10yr futures continue to trade well below Friday's 139-16 high. The failure last

week to tackle key resistance at 139-22, Apr 21 high leaves price trading within

the range that has developed over the past few weeks. The underlying theme

remains bullish, however futures need to clear 139-22 to confirm a resumption of

the uptrend and target 140-00 and beyond. On the downside, clearance of 138-08+

would be a bearish development and expose 137-16.

AUSSIE 10-YR TECHS: (M0) Inside Session, Needs to Top 99.20

*RES 3: 99.5598 - 1.236 projection of the Jan 2 -Feb 4 rally from Feb 13 low 

*RES 2: 99.4850 - High Mar 10 and bull trigger 

*RES 1: 99.3600 - High Apr 01

*PRICE: 99.0550 @ 15:47 BST, May 12

*SUP 1: 98.6300 - Low Mar 18

*SUP 2: 98.5700 - Low Jan 2

*SUP 3: 98.1828 - 1.0% 10-dma envelope

Markets started the week on the backfoot, erasing recent progress higher and

that remains the case Tuesday. Bears now eye a slip through 99.02 to mark down

the outlook, opening further losses down to the late March lows of 98.63, but

that seems a way away at present. Any recovery eyes initially a break of

resistance at 99.3600, Mar 12 high. A break above here opens the 99.4850 bull

trigger, Mar 10 high.

JGB TECHS: (M0): Testing Support

*RES 3: 156.02 - High Mar 10 and key resistance 

*RES 2: 154.56 - High Mar 13

*RES 1: 153.50 - High Mar 16

*PRICE: 152.26 @ 16:50 BST, May 12

*SUP 1: 152.15 - Low May 12

*SUP 2: 150.61 - Low Mar 19

*SUP 3: 150.00 - Psychological round number 

Any residual strength continues to fade, returning JGB futures toward the bottom

of the recent range. Downside impetus picked up on a return back below the

152.44 mark, which opens 151.52/150.61 as well as the psychological 150.00

handle further out. The first upside target rests at 153.50 initially ahead of

154.56.

US TSYS/SUPPLY: Balance of this week's Tsy bill/note/bond auction schedule:

DATE     TIME   AMOUNT   SECURITY    (CUSIP)/ANNC

-------------------------------------------------

13 May  1130ET   $35B   105D Bill     9127963R8

13 May  1130ET   $40B   154D Bill     9127964J5

13 May  1300ET   $22B    30Y Bond     912810SN9

14 May  1130ET   $80B    4W Bill      9127962V0

14 May  1130ET   $70B    8W Bill      9127963D9

TSY FUTURES CLOSE: Choppy day on better volumes (TYM>1.1M) as rate futures

see-sawed higher/extending session highs later in second half after headlines

that GOP senators looking to introduce  "sanction legislation" against China

(specific reason why varies, but includes retaliation for virus spread, sources

say). Yld curves currently flatter. Update: 

* 3M10Y  -4.384, 54.661 (L: 52.816 / H: 59.031)

* 2Y10Y  -2.777, 50.345 (L: 49.909 / H: 54.332)

* 2Y30Y  -3.270, 120.461 (L: 118.999 / H: 124.955)

* 5Y30Y  -2.272, 104.055 (L: 102.471 / H: 106.704); Current futures levels:

* Jun 2-Yr futures up 0.375/32 at 110-7.375 (L: 110-06.25 / H: 110-07.875)

* Jun 5-Yr futures up 3.75/32 at 125-18.25 (L: 125-12 / H: 125-19.25)

* Jun 10-Yr futures up 10.5/32 at 138-30.5 (L: 138-18.5 / H: 139-00.5)

* Jun 30-Yr futures up 1-11/32 at 179-27 (L: 178-19 / H: 180-09)

* Jun Ultra futures up 2-27/32 at 220-12 (L: 217-31 / H: 221-08)

US TSY FUTURES: Late session roll update, 5Y leads volume. Jun futures expire in

mid-late June (10s, 30s and Ultras on 6/19; 2s & 5s 6/30). Nevertheless,

starting to see pick-up in Jun/Sep futures rolling, first notice on May 29.

Session volume and % complete update:

* TUM/TUU appr 8,200 from -4.75 to -4.38, -4.62 last; <4% complete

* FVM/FVU appr 50,100 from 4.25 to 4.75, 4.5 last; <5% complete

* TYM/TYU appr 7,000 from 7.75 to 8.25, 8.0 last; <4% complete

* UXYM/UXYU <1,000 from -11.5 to -10.5, -11.0 last; <2% complete

* USM/USU <1,000 from 1-16.5 to 1-16.75, 1-16.5 last; <2% complete

* WNM/WNU 4,400 from 1-17.75 to 1-18, 1-18 last; <4% complete

US EURODLR FUTURES CLOSE: Mostly higher after the bell, short end weaker --

extending lows in late trade. Current White pack levels:

* Jun 20 -0.015 at 99.640

* Sep 20 -0.025 at 99.690

* Dec 20 -0.020 at 99.690

* Mar 21 -0.010 at 99.780

* Red Pack (Jun 21-Mar 22) steady to +0.015

* Green Pack (Jun 22-Mar 23) +0.015 to +0.020

* Blue Pack (Jun 23-Mar 24) +0.010 to +0.015

* Gold Pack (Jun 24-Mar 25) +0.015 to +0.025

US DOLLAR LIBOR: Latest settles

* O/N -0.0010 at 0.0606% (-0.0004/wk)

* 1 Month -0.0070 to 0.1839% (-0.0141/wk)

* 3 Month -0.0095 to 0.4240% (-0.0106/wk)

* 6 Month -0.0002 to 0.6586% (-0.0293/wk)

* 1 Year +0.0031 to 0.7687% (-0.0141/wk)

US SWAPS: Spds gapped wider in last few minutes, extending well past midmorning

levels as bid in Tsys returns w/equities selling off. Current spd levels:

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

Tue 1600  +1.62/+9.75    +1.38/+2.12    +1.50/-3.75    +1.81/-49.44

1315      +0.38/+8.50    +0.12/+1.00    +0.50/-4.75    +1.25/-50.00

1100      +0.88/+9.00    +0.12/+1.00    +0.50/-4.75    +1.25/-50.00

0930      +0.69/+8.81    -0.12/+0.75    +0.25/-5.00    +1.00/-50.25

Tue Open  +0.25/+8.50    +0.12/+1.00    +0.56/-4.69    +1.00/-50.25

Tue 0730  +0.50/+8.62    +0.12/+1.00    +0.56/-4.69    +1.00/-50.25

Mon 1600  -1.50/+8.12    -1.12/+0.75    -1.25/-5.25    -1.50/-51.25

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

* Daily Effective Fed Funds Rate: 0.05%, volume: $84B

* Daily Overnight Bank Funding Rate: 0.04%, volume: $217B

US TSYS: REPO REFERENCE RATES (rate, volume levels reflect prior session):

* Secured Overnight Financing Rate (SOFR): 0.06%, $1.123T

* Broad General Collateral Rate (BGCR): 0.05%, $475B

* Tri-Party General Collateral Rate (TGCR): 0.05%, $451B

FED: NY Fed operational purchase for Tuesday

* Tsy 0-2.25Y, $11.000B accepted, $32.788B submitted

NY Fed operational purchases schedule for Wednesday ($5.75B)

* 1010-1030ET: Tsy 7Y-20Y, appr $4B

* 1100-1120ET: TIPS 7.5Y-30Y, appr $1.75B

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

13-May 0700 08-May MBA Mortgage Applications (0.1%, --)

13-May 0830 Apr Final Demand PPI (-0.2%, -0.5%)

13-May 0830 Apr PPI ex. food and energy (0.2%, -0.1%)

13-May 0830 Apr PPI ex. food, energy, trade (-0.2%, -0.1%)

13-May 0900 Fed Chair Powell on current economic issues 

13-May 1030 08-May crude oil stocks ex. SPR w/w

13-May 1300 US Tsy $22B 30Y Bond auction (912810SN9)

PIPELINE: $14.95B to price Tuesday

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

05/12 $3B *CADES 3Y +24

05/12 $2.25B *Province of Alberta 5Y +65

05/12 $2B #Caterpillar $1.1B 2Y +82, $300M 2Y FRN +73.5, $600M 5Y +115

(Note, Caterpillar issued issued $2B total 2Y, 3Y and 5Y on Jan 9)

05/12 $1.75B *EBRD (European Bank for Reconstruction/Develop) 5Y +19

05/12 $1B *EIB (European Inv Bank) WNG 10Y +31

05/12 $1B *Williams Cos 10Y +287.5

05/12 $1B #Aon Corp 10Y +212.5

05/12 $750M #Xilinx 10Y +170

05/12 $900M #Exelon Generation 5Y +295

05/12 $500M #Amerisourcebergen WNG 10Y +215

05/12 $500M #Appalachian Power 30Y +235

05/12 $300M *Moody's WNG 30Y +195

Eurodollar/Tsy options

Eurodollar options

Block, 1338:26ET +26,250 Sep 91 puts, 0.5 adds to +25k same lvl

Block, 1259:58ET 10,000 Dec 95/96 2x1 put spds, 0.5, adds to over 15k earlier

* 6,800 Dec 95/96 2x1 put spds

* Update, total -30,000 Jun 96 straddles, 9.0-8.0

Block, 1237:45ET 16,718 Jun 93/96 call over risk reversals, 6.0 vs. 99.655/0.64%

* 5,000 Red Jun'21 91 puts

* 6,000 short Dec 92/97 call spds

* Update, total -27,000 Dec 92/95/97 call flys, 7.0

* -20,000 Dec 92/95/97 call flys, 7.0

* +10,000 Red Jun'21 100.25 calls, 4.5 after 10k 100.37 calls bought at 3.5

* +10,000 Red Jun'21 100.37 calls, 3.5

* 4,000 Dec 95/96 2x1 put spds

* +4,000 Dec 90 puts, 0.5

* Blue Jun 100 calls traded 1.0

Tsy options:

* -5,400 FVN 125.25 puts, 24/64, July ATM vol went offered

* -2,100 FVM 126.5 calls, 2- to 1.5/64

* Update, -8,000 TYM 138.5 puts, from 23- down to 18/64

* -1,500 TUM 110.25 calls, 2/64

* 2,800 TYM/TYN 139.5 call spds, 19/64

* +1,000 TYU 140/142 call spds, 22/64

* -2,500 wk3 TY 138/138.5/139 put flys, 9/64

* +2,500 TYM 138.5/139 strangles, 38/64

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

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