Reply To: Traders Market Weekly: Fed and BOJ Dribble Ahead


U.S. Treasuries began June on a firmly higher note, sending yields on all tenors back below their respective 50-day moving averages to levels last seen two weeks ago.

Treasuries opened the day with solid gains after overnight action saw the release of final May Manufacturing PMI readings with reports

China (51.7), Japan (50.4), South Korea (51.6), and India (57.5) showing ongoing expansion while Australia’s (49.7) reading remained in contraction.

In Europe, only Spain (54.0) and the U.K. (51.2) reported expansionary readings while readings from Germany (45.4), France (46.4), Italy (45.6), and Switzerland (46.4) came in below 50.0, indicating an ongoing contraction in the manufacturing sector.

Treasuries inched higher during the first 90 minutes of trade, rallying strongly after the ISM Manufacturing Index for May (actual 48.7%; consensus 49.6%; prior 49.2%) showed a deepening contraction in the domestic manufacturing sector, which contrasted with an ongoing expansion in the final May S&P Global U.S. Manufacturing PMI (actual 51.3; prior 50.9) that was released 15 minutes ahead of the ISM report.

The rally, which left Treasuries on their highs, was also supported by a plunging price of oil despite a weekend OPEC+ decision to maintain production at the current reduced level into next year, and the Atlanta Fed’s second consecutive downward revision to its GDPNow forecast for Q2 GDP (to 1.8% from 2.7%). The U.S. Dollar Index fell past its 200-day moving average toward levels last seen in early April, dropping 0.5% to 104.14.

2-yr: -7 bps to 4.82%
3-yr: -8 bps to 4.62%
5-yr: -11 bps to 4.42%
10-yr: -11 bps to 4.40%
30-yr: -10 bps to 4.55%