US TSYS: PHASE 1 DEAL SIGNED, TRADE WIN OR FRAGILE TRUCE?

US TSY SUMMARY: Holding higher levels after the bell, but off early session

highs on a choppy session -- belying decent volumes (TYH>1.1M) trade action

seemed muted/markets thin as US/China signed phase 1 trade deal. Experts will be

pouring over the 94 page document to weigh whether deal a win or fragile truce.

Meanwhile, House voted to send impeachment articles to Senate. E-minis chopping

around steady in late trade while gold holding appr $9.5 higher.

- Not much react to multiple Fed speakers all humming the same line, strong

jobs, wages climbing, everything is awesome (Fed enters media blackout Saturday

through Jan 30, FOMC Jan 28-29). 

- Mixed flows, block sale Eurodlr Red packs (EDH1-EDZ1) 0.00 helped siphon off

support ahead midday, ongoing deal-tied hedging in shorts to intermediates,

real$ and bank buying 10s and 30s after earlier two-way in intermediates to long

end, modest steepener unwinds.

- The 2-Yr yield is down 1bps at 1.5597%, 5-Yr is down 2.1bps at 1.5985%, 10-Yr

is down 2.8bps at 1.783%, and 30-Yr is down 3.4bps at 2.2359%.

TECHNICALS: 

US 10YR FUTURE TECHS: (H0) Recent Recovery Extends 

*RES 4: 130-17+ High Nov 1

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

*RES 2: 129-25+ 76.4% retracement of the Jan 8 - Jan 9 decline

*RES 1: 129-18   61.8% retracement of the Jan 8 - Jan 9 decline

*PRICE: 129-10+ @ 16:32 GMT, Jan 15

*SUP 1: 129-04   Intraday low 

*SUP 2: 128-25   Low Jan 14

*SUP 3: 128-17+ Low Jan 97

*SUP 4: 128-05   Low Dec 30 and Low Jan 2 

10yr futures traded firmer Wednesday, extending the past 5-day recovery. Whether

this is the start of a stronger bull run is too early to tell. The sharp

sell-off from Jan 8 still hangs over sentiment and for now the recovery is

considered a correction. Further gains would open 129-18, 61.8% of the Jan 8 -

Jan 9 decline. A break of 129-18 is needed to signal a stronger bullish outlook

and open 130-06, Jan 8 high and key resistance. Support lies at 129-04 and

128-25.

AUSSIE 10-YR TECHS: (H0) Top Yet to Be Challenged 

*RES 3: 98.8950 - High Dec 10 and 11

*RES 2: 98.8913 - 100-DMA

*RES 1: 98.8600 - High Jan 8

*PRICE: 98.8050 @ 16:21 GMT, Jan 15

*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

The near-term top of 98.8600 printed last week remains in place as of Wednesday,

with the modest grind higher doing little to trouble bears just yet. This

continues to suggest 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

98.7239 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): Going Nowhere

*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: 152.00 @ 16:24 GMT, Jan 15

*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: Holding higher levels after the bell, but off early session

highs on a choppy session -- belying the decent volumes (TYH>1.1M) trade action

seemed muted/markets thin as US/China signed phase 1 trade deal. Experts will be

pouring over the 94 page document to weigh whether deal a win or fragile truce.

Meanwhile, House voted to send impeachment articles to Senate. Update:

* 3M10Y  -2.272, 21.63 (L: 20.605 / H: 23.92)

* 2Y10Y  -1.563, 22.119 (L: 21.887 / H: 24.117)

* 2Y30Y  -2.113, 67.48 (L: 67.48 / H: 70.104)

* 5Y30Y  -1.202, 63.641 (L: 63.474 / H: 65.078); Current futures levels:

* Mar 2-Yr futures up 1.125/32  at 107-24.25 (L: 107-23.375 / H: 107-24.75)

* Mar 5-Yr futures up 4/32  at 118-31.5 (L: 118-27.25 / H: 119-00.75)

* Mar 10-Yr futures up 7.5/32  at 129-12 (L: 129-04 / H: 129-14)

* Mar 30-Yr futures up 21/32  at 158-18 (L: 157-27 / H: 158-23)

* Mar Ultra futures up 42/32  at 186-13 (L: 185-01 / H: 186-18)

US EURODLR FUTURES: Steady in the short end to modestly higher out the strip,

earlier block sale Red packs (EDH1-EDZ1) at even helped siphon off support ahead

midday. Latest levels:

* Mar 20 steady at 98.260

* Jun 20 steady at 98.325

* Sep 20 steady at 98.400

* Dec 20 +0.010 at 98.420

* Red Pack (Mar 21-Dec 21) +0.005 to +0.010

* Green Pack (Mar 22-Dec 22) +0.010 to +0.015

* Blue Pack (Mar 23-Dec 23) +0.015 to +0.020

* Gold Pack (Mar 24-Dec 24) +0.010 to +0.020

US DOLLAR LIBOR: Latest settles

* O/N -0.0028 at 1.5284% (-0.0047/week)

* 1 Month -0.0006 to 1.6690% (-0.0076/wk)

* 3 Month -0.0065 to 1.8361% (-0.0016/wk)

* 6 Month +0.0005 to 1.8650% (-0.0071/wk)

* 1 Year -0.0104 to 1.9527% (-0.0139/wk)

US SWAPS: Spds running wider by the bell, session highs w/wings outpacing

intermediates. Modest flow included light payer unwinds and deal tied hedging.

Current levels:

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

Wed 1500    +1.00/+7.62    +0.62/+1.25   +0.44/-3.56    +0.88/-30.12

1300        +0.50/+7.12    +0.56/+1.19   +0.25/-3.75    +0.75/-30.25

Wed Open    +0.12/+6.75    +0.06/+0.69   +0.12/-3.88    +0.38/-30.62

Tue 1500    +0.50/+6.25    +0.88/+0.38   +1.00/-4.25    +1.00/-31.12

Tuesday recap: Spds running wider after the bell with 5s-30s leading the charge,

5Y dis-inverting late as Tsy yld curves bull flatten. Decent rate and spd paying

on move, deal-tied flow in 5s-10s.

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

* Daily Effective Fed Funds Rate: 1.54%, volume: $76B

* Daily Overnight Bank Funding Rate: 1.54%, volume: $179B

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

* Secured Overnight Financing Rate (SOFR): 1.55%, $1.009T

* Broad General Collateral Rate (BGCR): 1.52%, $388B

* Tri-Party General Collateral Rate (TGCR): 1.52%, $371B

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

16-Jan 0830 Jan Philadelphia Fed Mfg Index (2.4 rev, 3.6)

16-Jan 0830 Dec retail sales (0.2%, 0.3%) ex. mv's (0.1%, 0.5%), ex gas (0.0%,

0.4%)

16-Jan 0830 Dec imports price index (0.2%, 0.3%); exports (0.2%, 0.2%)

16-Jan 0830 Jan NY Fed Business Leaders Index (3.0, --)

16-Jan 0830 11-Jan jobless claims (214k, 218k)

16-Jan 1000 Nov business inventories (0.2%, -0.2%)

16-Jan 1000 Jan NAHB home builder index (76, 74)

16-Jan 1000 Fed Gov Bowman, KC 2020 eco outlook

16-Jan 1030 10-Jan natural gas stocks w/w

16-Jan 1130 US TSY $35B 4W Bill auction

16-Jan 1130 US TSY $35B 8W Bill auction

16-Jan 1600 Nov net TICS flows (-$48.3B, --)

16-Jan 1600 Nov long term TICS flows ($32.5B, --)

16-Jan 1630 15-Jan Fed weekly securities holdings

PIPELINE: Dealer names starting to launch after recent earnings

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

01/15 $4.25B *ADB (Asia Development Bank) $2.25B 3Y +5, $2B 10Y +17

01/15 $2.25B *JBIC (Japan Bank for Int Cooperation) 3Y +26

01/15 $3B #JP Morgan Chase PerpNV5 fix to FRN 4.6%

01/15 $1.5B #Citigroup Perp NC5 $1k Par pfd 4.7%

01/15 $400M #American Campus Comm 10Y +108

01/15 $300M #Embotelladora Andina 30Y +175

01/15 $1B EAA (Erste Abwicklungsanstalt) 3Y +10

01/15 $1B PBF Energy 8NC3

01/15 $Benchmark Sumitomo Mitsui Finance 5Y +90a

01/16 $Benchmark Province of Ontario 3Y +17a

Eurodollar/Tsy options 

Eurodollar options:

* +10,000 Jun 81/82 put spds, 2.25 vs. 98.32/0.20%

* 3,250 short Feb 83/86 call over risk reversals, 1.0

* -7,500 Mar 83 calls, 1.25

* -2,500 Mar 81/82/83/85 call condors, 9.5 vs. 98.255/0.30%

* +4,000 Sep 81/82/87/88 call condors, 9.5 vs. 98.425/0.10%

* +4,000 Dec 86/88/90 call trees, cab

* +3,000 Sep 87/90 call spds, 2.25

* +10,000 short Dec 77/80 put strip, 8.0

* Update, >18,500 Mar 82/83/85 call flys, 1.5 vs. 98.255/0.30%

* +10,000 Sep 77/80 put spds, cab earlier

* -4,000 short Feb 87/88 1x2 call spds, cab

* +10,000 Jun 86/87 call spds .25 over Jun 81 puts

* +7,000 Jun 81/82 put spds even vs. Apr 85 calls

* 1,500 short Feb 85/86/87 call flys on screen

* +10,000 Green Feb 88 calls, 1.0

* 2,000 short Apr 83 puts 4.0 vs. 98.52/0.24%

* +4,000 Sep 83/85/86/87 call condors, 2.0 vs. 98.385/0.10%

Overnight Block

* -30,000 Sep 82/87 call over risk reversals, 0.5

Tsy options:

* -5,000 FVG 119.75/120 1x2 call spds, 0.0

Early boost for implieds as underlying pared gains w/equities back in black

* +2,000 TYH 129 puts, 26/64

* >6,000 TYG 129.5/130 call spds on 1x1 at 8/64 and 1x2 at 6/64 earlier

* +2,000 TYH 128.5/131 strangles, 24/64 vs. 128-11/0.12%

* -5,000 FVG 119 puts, 10.5- to 10/64

* 1,000 wk3 TY 128.2/128.7/129/129.2 put condors, 4/64 earlier

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

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