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US TSYS: Tsys Futures Fall To Early Sept Lows Ahead Of NFP

US TSYS
USGlobalBulletMarketsFixed Income BulletsRegionNorth America
  • Tsys futures closed just off session lows on Thursday and at levels that have not been seen since early September in the lead up to Friday's headline jobs report. Rates have been under pressure since after mixed data, while higher oil prices also weighed on levels. TU closed -05 at 103-31⅜, TY -16+ at 113-29 with the contract now trading below technical support of 114-00.5 (Sep 4 low) with and testing 113-29.5 (50-day EMA).
  • Cash tsys curves bear-flattened, with better selling seen through the belly of the curves, with the 5s30s about 2.5bps flatter. The 2yr yield closed +6.3bps at 3.706%, while the 10yr closed +6.4bps at 3.847%.
  • Initial jobless claims increasing to 225k (sa, cons 221k) in the week to Sep 28 after a slightly upward revised 219k (initial 218k). No sign of an impact from Hurricane Helene, which made landfall on the Florida Gulf Coast in the evening of Sep 26 to leave very little time to show in this week’s data. Florida NSA claims for example fell 1.1k to 6.45k.
  • ISM Services were clearly stronger than expected with some genuinely strong readings for both prices paid and new orders but the decline in employment back into contractionary territory takes some of the gloss off an otherwise strong report. ISM Services: 54.9 (cons 51.7) in Sep after 51.5 in Aug and 51.4 in Jul for its highest since Feb’23. Prices paid: 59.4 (cons 56.0) after 57.3 – highest since Jan and back to the 59.3 averaged in 2023. Employment: 48.1 (cons 50.0) after 50.2 for what had been two months above 50. It returns close to the 47.7 averaged in a disappointing string of readings through 1H24.
  • All eyes will now turn to headline nonfarm payrolls where growth is seen accelerating marginally to 150k in September after the weaker than expected 142k in August.
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  • Tsys futures closed just off session lows on Thursday and at levels that have not been seen since early September in the lead up to Friday's headline jobs report. Rates have been under pressure since after mixed data, while higher oil prices also weighed on levels. TU closed -05 at 103-31⅜, TY -16+ at 113-29 with the contract now trading below technical support of 114-00.5 (Sep 4 low) with and testing 113-29.5 (50-day EMA).
  • Cash tsys curves bear-flattened, with better selling seen through the belly of the curves, with the 5s30s about 2.5bps flatter. The 2yr yield closed +6.3bps at 3.706%, while the 10yr closed +6.4bps at 3.847%.
  • Initial jobless claims increasing to 225k (sa, cons 221k) in the week to Sep 28 after a slightly upward revised 219k (initial 218k). No sign of an impact from Hurricane Helene, which made landfall on the Florida Gulf Coast in the evening of Sep 26 to leave very little time to show in this week’s data. Florida NSA claims for example fell 1.1k to 6.45k.
  • ISM Services were clearly stronger than expected with some genuinely strong readings for both prices paid and new orders but the decline in employment back into contractionary territory takes some of the gloss off an otherwise strong report. ISM Services: 54.9 (cons 51.7) in Sep after 51.5 in Aug and 51.4 in Jul for its highest since Feb’23. Prices paid: 59.4 (cons 56.0) after 57.3 – highest since Jan and back to the 59.3 averaged in 2023. Employment: 48.1 (cons 50.0) after 50.2 for what had been two months above 50. It returns close to the 47.7 averaged in a disappointing string of readings through 1H24.
  • All eyes will now turn to headline nonfarm payrolls where growth is seen accelerating marginally to 150k in September after the weaker than expected 142k in August.