US TSYS: Hang Seng Bull Kicks Off Global Risk-On

     US TSY SUMMARY: Hang Seng bull market helped kick off global risk-on tone

Monday, equities buoyed despite ongoing spread of Covid-19 virus. 

- Rates fell to new session lows after ISM non-mfg index rose 11.7pt to 57.1 in

June, offsetting the downturn caused by the pandemic.

- Some desks trying to wrap their head around post ISM data moves, fast

extension of session lows after the data beat expectations but has since

rebounded back near top end of session highs. Market was a "bit stretched" into

the release one desk explained, despite the decent early volumes, sellers lost

conviction after the move, suggesting shorts covered on lack of more significant

follow-through.  

- Turned out to be an inside range session on light volume as Tsys climbed off

second half lows w/equities reluctant to climb higher amid late US$ selling. Yld

curves holding steeper profile. 

- The 2-Yr yield is up 0.6bps at 0.1586%, 5-Yr is up 1.1bps at 0.3069%, 10-Yr is

up 1.5bps at 0.6841%, and 30-Yr is up 1.7bps at 1.4445%.

TECHNICALS:

US 10YR FUTURE TECHS: (U0) Bullish Focus Still Intact     

*RES 4: 140-00   Psychological round number

*RES 3: 139-25   Contract high, Mar 25

*RES 2: 139-22+ 0.618 projection of Jun 5 - 11 rally from Jun 16 low

*RES 1: 139-14/16  High Jun 30 / High Apr 21 and key resistance

*PRICE: 138-29 @ 16:15 BST Jul 06

*SUP 1: 138-23+ Low Jul 2 

*SUP 2: 138-07   Low Jun 16 and key near-term support

*SUP 3: 137-22   Low Jun 10

*SUP 4: 136-22   Low Jun 5 and the bear trigger 

Despite the pullback off last week's, 10yr futures remain bullish. Price has

recently been edging closer towards key resistance of 139-16, Apr 21 high. This

level marks the trigger for a recovery towards major resistance at 139-25, Mar

25 high. A break of 139-25 would represent an important technical break and

confirm a resumption of the broader uptrend, exposing initially the 140-00

handle. Key support is at 138-07, a break would risk a deeper pullback.

AUSSIE 3-YR TECHS: (U0) Testing Key Support 

*RES 3: 99.780 - High Apr 01 and bull trigger

*RES 3: 99.750 - High May 21 and 22 

*RES 1: 99.730 - Congestion highs between Jun 15 - 22

*PRICE: 99.700 @ 16:17 BST Jul 06

*SUP 1: 99.690 - Low Jun 05 and key support

*SUP 2: 99.665 - 100-dma

*SUP 3: 99.645 - Low Mar 20

The short-end of the Aussie is trading at the lows of last week testing support

at 99.700. A break of this level would signal scope for an extension lower

towards 99.690, Jun 8 low. Clearance of these two levels would also represent a

potentially significant technical break. On the upside, the initial hurdle for

bulls is at the 99.730 congestion, highs between Jun 15 - 22. A break would

signal scope for a climb towards 99.780, Apr 1 high further out.

AUSSIE 10-YR TECHS: (U0) Bulls Find Support

*RES 3: 99.3600 - High Apr 02

*RES 2: 99.2250 - High Apr 17 

*RES 1: 99.1350 High Jun 29 

*PRICE: 99.0500 @ 16:18 BST, Jul 06

*SUP 1: 99.0200 - Low Jul 2 and 3 

*SUP 2: 98.9725 - 50.0% retracement of the Jun 8 - 29 rally

*SUP 3: 98.9342 - 61.8% retracement of the Jun 8 - 29 rally

Aussie 10yr futures recovered off last week's lows of 99.0200 and maintain a

more positive tone for now in line with the overall bullish trend. This keeps

the focus on initial key resistance at 99.1350, Jun 29 high where a break would

open 99.2250, Apr 17 high. On the downside, initial key key support has for now

been defined at 99.0200. A break of this level would expose a deeper decline

towards 98.9725, a Fibonacci retracement.

JGB TECHS: (U0): Rebounds Off Recent Lows

*RES 3: 153.50 - High Mar 16 

*RES 2: 153.06 - High Mar 31 and key resistance

*RES 1: 152.29 - HIgh Jun 12

*PRICE: 151.80 @ 16:20 BST, Jul 06

*SUP 1: 151.18 - Jun 8 low

*SUP 2: 150.61 - Low Mar 19 and key support

*SUP 3: 150.50 - 1.0% 10-dma envelope

JGBs bounced last Thursday, reversing some of the losses seen earlier in the

week. Prices remain above the key 151.18 level, Jun 8 low where a break would

unsettle bulls. The recovery off 151.57 is a positive development and signals

scope for a climb towards 152.29, the Jun 12 high. A rally through the 50-dma at

152.16 would also represent a bullish development. Key supports for now has been

defined at 151.18.

TSY FUTURES CLOSE: Steeper all day, yld curves scale back late as rate futures

extend session highs into the closing bell on light volumes (TYU<650k). Equities

still holding near top of range (ESU0 +28.5). Update: 

* 3M10Y  +1.153, 53.882 (L: 51.789 / H: 56.596)

* 2Y10Y  +0.556, 52.025 (L: 51.797 / H: 54.432)

* 2Y30Y  +0.796, 128.059 (L: 127.793 / H: 131.067)

* 5Y30Y  +0.439, 113.421 (L: 113.156 / H: 115.768); Current futures levels:

* Sep 2-Yr futures down 0.375/32  at 110-12.375 (L: 110-12 / H: 110-13)

* Sep 5-Yr futures down 1.75/32  at 125-20.75 (L: 125-17.75 / H: 125-23.75)

* Sep 10-Yr futures down 3/32  at 139-0 (L: 138-24.5 / H: 139-05.5)

* Sep 30-Yr futures down 9/32  at 178-0 (L: 177-06 / H: 178-18)

* Sep Ultra futures down 14/32  at 217-2 (L: 215-16 / H: 217-28)

US TSYS/SUPPLY: US Tsy bill/note auctions for week. 

DATE     TIME   AMOUNT   SECURITY    (CUSIP)/ANNC  AWARDED

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

06 Jul  1130ET   $54B    13W Bill     (912796TN9)   0.150%

06 Jul  1130ET   $51B    26W Bill     (9127963T4)   0.165%

07 Jul  1130ET   $35B    42D Bill     (912796XF1)

07 Jul  1130ET   $35B   119D Bill     (912796TP4)

07 Jul  1300ET   $46B    3Y Note      (912828ZY9)

08 Jul  1300ET   $29B  10Y Note R/O   (912828ZQ6)

09 Jul  1130ET   TBA     4W Bill      (9127963N7) 

09 Jul  1130ET   TBA     8W Bill      (9127963X5)

09 Jul  1300ET   $19B  30Y Bond R/O   (912810SN9)

US EURODLR FUTURES CLOSE: Whites steady/marginally higher after the bell, EDU

and EDZ outperforming after scale seller over 20k 3M spds at 0.030; Reds-Golds

weaker but off lows. Current White pack levels:

* Sep 20 +0.005 at 99.735

* Dec 20 +0.005 at 99.705

* Mar 21 steady at 99.795

* Jun 21 steady at 99.820

* Red Pack (Sep 21-Jun 22) -0.010 to -0.005

* Green Pack (Sep 22-Jun 23) -0.005

* Blue Pack (Sep 23-Jun 24) -0.010 to -0.005

* Gold Pack (Sep 24-Jun 25) -0.015 to -0.010

US DOLLAR LIBOR: Latest settles

* O/N +0.0000 at 0.0828% (+0.0118 last wk)

* 1 Month +0.0032 to 0.1658% (-0.0156 last wk)

* 3 Month +0.0006 to 0.2765% (-0.0319 last wk)

* 6 Month -0.0020 to 0.3642% (+0.0048 last wk)

* 1 Year +0.0100 to 0.5156% (-0.0607 last wk)

US SWAPS: Spds running tighter by the bell, low end modest session range,

resumption swappable corporate supply weighing. Current levels:

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

Mon 1500  -0.81/+6.44    -0.56/+2.94    -0.50/-2.75    -1.50/-49.50

1200      -0.75/+6.50    -0.50/+3.00    -0.50/-2.75    -1.50/-49.50

1000      -0.69/+6.56    -0.50/+3.00    -0.50/-2.75    -1.50/-49.50

Mon Open  -0.25/+7.00    -0.25/+3.50    -0.25/-2.50    -1.38/-49.38

Mon 0700  -0.12/+7.12    -0.25/+3.50    -0.19/-2.44    -1.50/-49.50

FED: NY Fed operational purchase

* Tsy 0Y-2Y, $12.801B accepted of $39.253B submitted

Balance of week's schedule:

* Tue 07/07 1010-1030ET: Tsy 20Y-30Y, appr $1.750B

* Wed 07/08 1010-1030ET: Tsy 4.5Y-7Y, appr $6.025B

* Thu 07/09 1010-1030ET: TIPS 7.5Y-30Y, appr $1.225B

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

07-Jul 0855 04-Jul Redbook retail sales m/m (-0.7%, --)

07-Jul 0900 Atl Fed Pres Bostic Tenn Bizz Roundtable; audience Q&A

07-Jul 1000 May JOLTS quits rate

07-Jul 1000 May JOLTS job openings level (5046, 4500)

07-Jul 1000 Jul IBD/TIPP Optimism Index

07-Jul 1130 US Tsy $35B 42D Bill auction (912796XF1)

07-Jul 1130 US Tsy $35B 119D Bill auction (912796TP4)

07-Jul 1300 US Tsy $46B 3Y Note auction (912828ZY9)

07-Jul 1400 Rich Fed Pres Barkin, SF Fed Pres Daly, US economy/NABE event

PIPELINE: $21.45B to price Monday, financial names lead issuance in second half

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

07/06 $2.5B #Mizuho $1.1B 4NC3 +105, $400M 4NC3 L, $1B 11NC10 +152

07/06 $2B #Simon Property $500M 5Y +160, $750M 10Y +200, $750M 30Y +240

07/06 $2B #American Honda Finance $1.25B 3Y +70, $750M 5Y +90

07/06 $1.5B #Caterpillar $500M 1.5Y FRN L+22, $1B 3Y +48

07/06 $600M #Jabil +10Y +240

07/06 $500M #National Bank of Canada 3Y +77

07/06 $500M *Shinahan Financial 5.5Y covid-bond +105

07/06 $2.5B #Nomura Holdings $1.5B 5Y +155, $1B 10Y +200

07/06 $350M #Realty Income 2031 tap +165

Eurodollar/Tsy options

EURODLR OPTIONS:

* 3,000 Dec 95/96/97 call flys

* Update, total 7,000 short Sep 95/96/97 put flys, 0.5

* Block 5,000 Green Jul 97 calls, 2.0 at 0724:44ET w/another 4k on screen

On screen earlier:

* 2,000 short Sep 95/96/97 put flys

TSY OPTIONS: moving out the curve

* -1,500 USU 177/180 1x2 call spd w/ USU 178/181 1x2 call spd strip trades after

over -4,000 TYU 138.5/139.5 1x2 call spds w/ TYU 139/140 1x2 call spd strip, 6-

to 7/64 total cr on package

* 1,000 USQ 173.5/176 3x2 put spds, 52/64

* Update, over -4,000 TYU 138.5/139.5 1x2 call spds w/ TYU 139/140 1x2 call spd

strip, 6- to 7/64 total cr on package

* 3,000 TYQ 141/143 call spds trade on the follow at 1/64

* -1,600 TYU 138.5/139.5 1x2 call spds w/ TYU 139/140 1x2 call spd strip, 6/64

cr

* 1,200 TYU 140.5/141.5 call spds, 6/64

* 5,000 TYU 136/136.5 put strips from 15- to 16/64

* +2,500 USU 175/176/177 put flys, 5/64 paper still bid for small

* +1,000 TYU 139 calls, 42/64 vs. 138-29/0.48%

* -1,000 FVQ 125.75 calls, 8/64

* Small buyer USQ 177.5 straddles, 2-55/64 after seller 1,000 USQ 177 calls,

1-47- to 1-46/64, USQ 178 calls trade 1-18/64

* 2,000 TYQ 138.75 puts, 22- to 21/64

Bblock trade lodged at 01:10:21 London, 20:10:21 NY:

- TYU0 140.50 Call -10K blocked at 0-15

- TYU0 137.50 Put +10K blocked at 0-15

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

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