US TSYS: RATES HEAVY AS EQUITIES CONTINUE TO EXTEND NEW HIGHS

US TSY SUMMARY: Strong risk-on move on an otherwise muted session, volumes

likely to continue evaporate (TYH<980k in late trade) as pre-holiday malaise

deepens. Early rate pressure on back of large buy program in equities that

pushed S&Ps to new all-time highs (3196.75 but retracing). No react to in-line

Markit data manufacturing PMI 52.5.

- Contributing factor -- yld curves extended steeper late morning after large

2s30s Block steepener underscored move (* +24,652 TUH 107-20.62, buy through

107-20.25 post time offer vs. -5,344 USH 157-00, sell through 157-03 post-time

bid)

- Surprisingly no react to MNI EXCLUSIVE: "China Reluctant To Reveal Trade Deal

Details" story, agriculture purchases being touted by US way over historical

highs. Talking points outweighing hard details of Phase 1 trade deal so far.

- Tight stops triggered on mid-morning sale, fast$ and prop buying short end.

- The 2-Yr yield is up 3.9bps at 1.6427%, 5-Yr is up 6.5bps at 1.718%, 10-Yr is

up 6.5bps at 1.8871%, and 30-Yr is up 5.6bps at 2.3081%.

TECHNICALS

US 10YR FUTURE TECHS: (H0) Bearish Focus

*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: 128-15 @ 17:42 GMT, Dec 16

*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 rallied sharply off the day low Friday however today price is in a

retracement mode. 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: 99.280 - High Dec 16

*PRICE: 99.230 @ 17:48 GMT Dec 16

*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 were firmer Monday however today, futures are in retracement

mode. Recent gains were 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: 98.7800 @ 18:02 GMT, Dec 16

*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 Monday however today price is retracing.

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: 152.18 @ 18:10 GMT, Dec 16

*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: Rates heavy as equities continue to extend new highs; yld

curves mostly steeper. Update:

* 3M10Y  +5.686, 31.561 (L: 24.037 / H: 32.598)

* 2Y10Y  +2.960, 24.235 (L: 20.61 / H: 24.789)

* 2Y30Y  +2.085, 66.344 (L: 62.823 / H: 67.268)

* 5Y30Y  -0.906, 58.848 (L: 57.907 / H: 59.923)

Current futures levels:

* Mar 2-Yr futures down 2.875/32 at 107-20.25 (L: 107-19.8751999999999 / H:

107-22.75)

* Mar 5-Yr futures down 10.25/32 at 118-13.5 (L: 118-13 / H: 118-22.5)

* Mar 10-Yr futures down 19.5/32 at 128-13.5 (L: 128-13 / H: 128-30)

* Mar 30-Yr futures down 1-12/32 at 156-27 (L: 156-24 / H: 158-02)

* Mar Ultra futures down 2-2/32 at 183-31 (L: 183-22 / H: 185-27)

US EURODLR FUTURES CLOSE: Weaker across the strip, at/near session lows

w/parallel shift in Greens through Golds. Current White pack (Mar 20-Dec 20):

* Mar 20 -0.010 at 98.255

* Jun 20 -0.040 at 98.315

* Sep 20 -0.055 at 98.375

* Dec 20 -0.060 at 98.38

* Red Pack (Mar 21-Dec 21) -0.075-0.080

* Green Pack (Mar 22-Dec 22) -0.085-0.095

* Blue Pack (Mar 23-Dec 23) -0.085-0.090

* Gold Pack (Mar 24-Dec 24) -0.085-0.090

US DOLLAR LIBOR: Latest settles

* O/N +0.0008 at 1.5306% (-0.0068 last week)

* 1 Month +0.0074 to 1.7448% (+0.0223 last wk)

* 3 Month -0.0011 to 1.8985% (+0.0091 last wk)

* 6 Month -0.0095 to 1.8934% (+0.0162 last wk)

* 1 Year -0.0042 to 1.9596% (+0.0407 last wk)

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): 1.54%, $1.017T

* Broad General Collateral Rate (BGCR): 1.50%, $413B

* Tri-Party General Collateral Rate (TGCR): 1.50%, $382B

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

17-Dec 0800 Dal Fed Pres Kaplan, moderated discussion C2cl Foreign Relations,

Q&A

17-Dec 0830 Nov housing starts (1.314m, 1.340m)

17-Dec 0830 Nov building permits (1.461m, 1.405m)

17-Dec 0830 Dec NY Fed Business Leaders Index

17-Dec 0855 14-Dec Redbook retail sales m/m

17-Dec 0915 Nov industrial production (-0.8%, 0.8%)

17-Dec 0915 Nov capacity utilization (76.7%, 77.4)

17-Dec 1000 Oct JOLTS job openings level (7024, 7000)

17-Dec 1000 Oct JOLTS quits rate

17-Dec 1000 Dec IBD/TIPP Optimism Index (52.9, --)

17-Dec 1230 NY Fed Pres Williams, opening remarks to panel of economists, NY

17-Dec 1230 Bos Fed Pres Rosengren, Forecasters Club of NY

PIPELINE: Limited high grade issuance expected this week 

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

12/16 Nothing in the pipeline as yet; $21.07B priced on month so far

-

Canada outpaces US$ issuance for week: C$7.85B vs. $3.55B

12/13 No new US supply Friday

12/12 No new US supply Thu-Wed

Canadian issuance

12/12 C$5.25B *Canada Housing Trust 5Y +27a

12/12 C$500M *Altgas Ltd 3Y +92

Eurodollar/Tsy options 

Eurodollar options:

* +25,000 short Jan 83/85 strangles, 6.5 on screen

* +7,000 Mar 90 calls, cab

* 6,000 Mar 85/87 call spds, 0.5

* 3,000 Mar 80/82 put spds, 4.0

* +4,000 Jun 83/86/87 call trees, 3.5

* 5,000 Jun 86/87/88 call trees on screen, cab

* 8,000 short Mar 88/91 2x3 call spds, 1.5

* Update, >+10,000 Sep 87/88 call strip, 8.5

* +6,000 Sep 87/88 call strip, 8.5

* 5,000 Mar 83/85/86 call flys, 1.25

* +8,000 Mar 88 calls, 0.5

* 2,500 Sep 82 puts, 5.0 w/ Sep 83/86 call spds, 7.0

* +2,500 short Jan 82/83 2x1 put spds, 1.5

* Just over 6,000 Jun 87/90 call spds on screen at 1.0 earlier

Tsy options:

* +9,000 TYH 127 puts,20/64 on screen

* -3,000 TYF 128.5 puts, 13/64 vs. 128-25/0.36%

* 2,000 TYG 127.5 puts, 12/64 vs. 128-25/0.20%

Recap overnight trade

* -50,000 TYF/TYG 130 call spds, 12/64

* >-22,000 TYH 130 calls, 28/64

* >-30,000 TYG 130 calls 13- to 17/64

* +10,000 TYG 129.5 calls, 25/64

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

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