US TSYS: FOMC STEADY THE COURSE (THROUGH 2020?)

US TSY SUMMARY: Fed on hold -- nod toward remaining on hold through 2020 as FOMC

drops "uncertainty" but will continue to monitor global risks. US$, Vol offered

as were short end Eurodollar futures. Short end yld curves under pressure, while

desks noted 5s and 10s bought vs. 30s.

- There were a couple knee-jerk sales across the board post Fed annc, but fast

rebounds. -- rates surged to new highs as Fed chair presser got underway. Lower

for longer message spurred better buying in Tsys.

- Overall volumes were rather muted for final FOMC of 2019, many plying

sidelines in lead-up to year end. No deal-tied hedging while some selling in

long end noted ahead Thu's 30Y bond auction re-open.

- Swap spds running wider with long end off earlier highs, fast$/prop acct payer

unwinds as rates surged on Fed Chair Powell inflation questions.

- The 2-Yr yield is down 3.8bps at 1.6133%, 5-Yr is down 4.8bps at 1.6381%,

10-Yr is down 4.9bps at 1.7931%, and 30-Yr is down 3.6bps at 2.2284%.

TECHNICALS

US 10YR FUTURE TECHS: (H0) Fed Net Positive

*RES 4: 130-17+ High Nov 1 

*RES 3: 130-16   61.8% of the Oct 7 - Nov 7 decline

*RES 2: 130-04+ High Dec 3 and bull trigger

*RES 1: 129-14+ High Dec 6

*PRICE: 129-09 @ 20:40 GMT, Dec 11

*SUP 1: 128-21   Low Dec 6

*SUP 2: 128-14+ 76.4% retracement of the Nov 7 to Dec 3 rally

*SUP 3: 128-11+ Low Nov 13

*SUP 4: 128-03+ Low Nov 12

10yr futures found some support following the generally dovish Fed decision.

Nonetheless, the rally fell short of spilling above the 129-14+ resistance. As

such, a bearish focus remains in place following the sell-off that unfolded off

the Dec 4 high last week. This resulted in a low print of 128-21 on Dec 6 and

marked a breach of former support at 128-23+, Dec 2 low essentially negating the

bullish implications of the bounce between Dec 2 and Dec 3. This break lower has

exposed 128-14+ next, 76.4% retracement of the Nov 7 to Dec 3 rally.

AUSSIE 3-YR TECHS: (Z9) Retains the Range

*RES 4: 99.472 - 123.6% Projection

*RES 3: 99.460 - Alltime High Oct 7 

*RES 2: 99.403 - 3.0% Upper Bollinger Band

*RES 1: 99.395 - High Nov 27

*PRICE: 99.280 @ 20:41 GMT Dec 11

*SUP 1: 99.165 - Low Nov 13

*SUP 2: 99.130 - Low Nov 12

*SUP 3: 99.070 - Low Nov 8 and key support

*SUP 4: 99.055 - 1.00 projection of Oct 8 - Oct 22 decline from Oct 25 high

The Fed rate decision gave markets little reason to press prices in either

direction Thursday, keeping Aussie 3-year bonds within the recent range and

providing few fresh technical signals. Focus remains on the recent lows as the

recent run-up to 99.395 now looks to be over. Prices continue to trade either

side of the 99.30 level at present, which has dented the outlook materially.

99.165 seen as the next key support.

AUSSIE 10-YR TECHS: (Z9) Range Contracts

*RES 3: 99.0358 - 76.4% retracement of the Oct 8 - Nov 11 decline

*RES 2: 99.0150/98.9984 - High Nov 28 / 2.0% Upper Bollinger Band

*RES 1: 98.9700 - High Dec 5

*PRICE: 98.8550 @ 20:41 GMT, Dec 11

*SUP 1: 98.7679 - Former channel resistance 

*SUP 2: 98.6850 - Low Nov 13

*SUP 3: 98.6500 - Low Nov 8 and primary support

Ranges remain defined by the levels seen in early December, with daily ranges

contracting since then as the roll continues from Dec-19 to Mar-20. This has

clouded the technical outlook somewhat, but has given bears some pause for

thought as prices look slightly more stable. It still looks too soon to call for

an extension of the recent recovery though. Nonetheless, prices show little sign

of retreating much further with mid-November lows holding for now. Momentum will

be needed before the outlook turns convincingly positive, with bulls needing to

reclaim 99.0150.

JGB TECHS: (Z9): Strikes a New Contract Low

*RES 3: 154.07 - 1.0% 10-dma envelope

*RES 2: 153.93 - High Nov 6

*RES 1: 153.64 - High Nov 21

*PRICE: 152.29 @ 20:42 GMT, Dec 11

*SUP 1: 152.03 - 2.0% Lower Bollinger Band

*SUP 2: 151.86 - Contract Lows

*SUP 3: 151.02 - 1.0% 10-dma envelope

Having struck new contract lows earlier this week, the outlook remains

resolutely bearish. The relevance of these levels for the Dec (Z9) contract,

however, can be called into question - with focus now on the roll completion

headed into the new year. For bulls to regain any composure, markets must top

the Nov 6 high at 153.93.

TSY FUTURES CLOSE: Hovering near late session highs after the bell, generally

light overall volume (TYH just over1M) for a FOMC with majority (13 out of 17)

seeing no hike in 2020. Yld curves mostly flatter w/3M10Y near lows. Update:

* 3M10Y  -5.965, 22.290 (L: 21.349 / H: 27.734)

* 2Y10Y  -1.677, 17.112 (L: 16.228 / H: 19.05)

* 2Y30Y  -0.909, 60.176 (L: 57.64 / H: 61.408)

* 5Y30Y  +0.496, 58.197 (L: 54.697 / H: 58.597)

Current futures levels:

* Mar 2-Yr futures up 2.5/32 at 107-23.5 (L: 107-20.75 / H: 107-23.875)

* Mar 5-Yr futures up 7.25/32 at 118-26.75 (L: 118-18 / H: 118-27.25)

* Mar 10-Yr futures up 12.5/32 at 129-10 (L: 128-26.5 / H: 129-11)

* Mar 30-Yr futures up 29/32 at 158-31 (L: 157-26 / H: 159-02)

* Mar Ultra futures up 1-9/32 at 187-10 (L: 185-15 / H: 187-15)

US EURODLR FUTURES CLOSE: Mostly higher, near post-Fed chair Q&A highs, short

end underperforming as Fed drops "uncertainty", majority on hold through 2020.

Current White pack (Dec 19-Sep 20):

* Dec 19 -0.002 at 98.102

* Mar 20 +0.005 at 98.285

* Jun 20 +0.010 at 98.370

* Sep 20 +0.025 at 98.440

* Red Pack (Dec 20-Sep 21) +0.040 to +0.045

* Green Pack (Dec 21-Sep 22) +0.040 to +0.045

* Blue Pack (Dec 22-Sep 23) +0.040 to +0.045

* Gold Pack (Dec 23-Sep 24) +0.040 to +0.045

US SWAPS: Spds running wider with long end off earlier highs, fast$/prop acct

payer unwinds as rates surged on Fed Chair Powell inflation questions. Latest

Spd levels:

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

Wed 1500    +1.00/+1.19    +0.50/-3.00   +0.06/-7.25    +0.12/-32.50

1200        +0.69/+0.88    +0.06/-3.44   -0.12/-7.44    +0.75/-31.88

1000        +0.94/+1.12    +0.12/-3.38   +0.12/-7.19    +0.88/-31.75

Wed Open    +0.62/+0.81    +0.00/-3.50   -0.12/-7.44    +0.25/-32.38

Tue 1500    -0.94/+0.50    -0.50/-3.25   -0.50/-7.25    +0.12/-32.62

US DOLLAR LIBOR: Latest settles

* O/N -0.0036 at 1.5254% (-0.0037/wk)

* 1 Month +0.0049 to 1.7405% (+0.0254/wk)

* 3 Month +0.0001 to 1.8874% (-0.0031/wk)

* 6 Month +0.0096 to 1.8883% (+0.0015/wk)

* 1 Year +0.0104 to 1.9433% (+0.0201/wk)

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

* Daily Effective Fed Funds Rate: 1.55%, volume: $76B

* Daily Overnight Bank Funding Rate: 1.55%, volume: $160B

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

* Secured Overnight Financing Rate (SOFR): 1.55%, $1.049T

* Broad General Collateral Rate (BGCR): 1.51%, $410B

* Tri-Party General Collateral Rate (TGCR): 1.51%, $387B

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

12-Dec 0830 07-Dec jobless claims (203k, 215k)

12-Dec 0830 Nov Final Demand PPI (0.4%, 0.2%)

12-Dec 0830 Nov PPI ex. food and energy (0.3%, 0.2%)

12-Dec 0830 Nov PPI ex. food, energy, trade (0.1%, 0.2%)

12-Dec 1030 06-Dec natural gas stocks w/w

12-Dec 1300 US Tsy $16B 30Y Bond (912810SK5) auction re-open

12-Dec 1630 11-Dec Fed weekly securities holdings

PIPELINE: Still no new US$ corp issuance, while Telus issue C$1B 

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

12/11 No new supply Wednesday

Canadian issuance

12/11 C$1B *Telus Corp C$600M +10Y +158, C$400M +30Y +230

Eurodollar/Tsy options: 

Eurodollar Options

* -10,000 short Dec 83 puts, 1.0

* +4,000 Mar 82/83 2x1 put spds, 6.0

* +5,000 short Jan 87 calls, 1.5

* 7,500 Green Dec 83/85 risk reversals, 0.0 on screen

* 10,000 short Feb 86/87 call spds, 2.5

* +/- 5,000 short Jun 85/87 call spds 3.5 over 81 puts

* 5,000 Dec 81/88 call spds, 28.0

* +8,000 short Dec 83 puts, 2.0

* +4,000 Mar 82/83/85/86 call condors, 2.75

* +2,500 Jan 81/82 put spds, 1.5

* Update, total +15,000 Sep 87/92 call spds, 5.5

* Update, total -5,000 Dec 81 straddles, 2.75

* +8,000 Red Dec 97/100 call spds, 0.5 -- paper still eying offers

* +7,300 Jun 83/86 call spds, 6.0 on screen

* +2,500 Sep 87/92 call spds, 5.5

* -2,000 Mar 81 straddles, 2.75

Overnight trade and Block recap

* Block +20,000 short Jan 83 put/short Feb 87 call risk reversals, 0.5 net/call

over

* 12,000 Mar 81 puts, 0.5

Tsy options:

Overnight trade and Block recap

* Block 10,000 TYH 130/131/131.5 call trees, 0.0

* Block 10,000 USF 159/160/161.5 call trees 1/64 over USF 154.5 puts

* >+27,000 TYF 130.5 calls, 4/64

* >14,000 TYF 126.5 puts, 1/64

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

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