Bond Traders Weekly Outlook: Fed Favorites PCE and ECI

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    U.S. Treasuries sit on their lows after adding to their initial losses.

    The trading day started with modest losses in all tenors that were widened immediately after the start. Recent action saw a slip to fresh lows, which has lifted the 10-yr yield to its highest level in nearly three weeks.
    5-yr yield has been lifted above its 200-day moving average (3.664%) while the 30-yr yield is back above its 50-day moving average (3.765%).

    Selling pressure began building as the focus shifted to action in Europe, where sovereign debt also trades lower while equity markets display modest gains. There has been a continued debate over the next policy move from the European Central Bank as policymaker Centeno said that the ECB should slow or pause its rate hikes while policymaker Kazaks said that there is an option for a 25- or 50-bps rate hike at the May meeting.

    Chinese government is reportedly blocking Secretary of State Blinken’s visit to Beijing due to displeasure about an FBI probe into the downed Chinese spy balloon.

    U.S. Dollar Index is up 0.1% at 101.70.

    Equities are off to a subdued start with the S&P 500 (+0.1%) having the spent the first hour of trade inside a nine-point range.

    2-yr: +6 bps to 4.16%
    3-yr: +5 bps to 3.89%
    5-yr: +7 bps to 3.68%
    10-yr: +5 bps to 3.58%
    30-yr: +5 bps to 3.79%


    Treasury yields moved higher after report housing starts growth seen in single-family starts and single-family permits — a leading indicator — which is needed given the limited supply of existing homes for sale.


    2-yr: +2 bps to 4.20%
    3-yr: +2 bps to 3.93%
    5-yr: +1 bp to 3.70%
    10-yr: UNCH at 3.59%
    30-yr: UNCH at 3.81%


    Bonds Wrap: U.S. Treasuries ended Tuesday mixed.

    Longer tenors slim gains, 2-yr note down, its yield to a fresh four-week high.

    Crude oil slipped toward last week’s low before recovering the bulk of its loss while the U.S. Dollar Index fell 0.3% to 101.76.

    2-yr: +3 bps to 4.21%
    3-yr: UNCH at 3.91%
    5-yr: -2 bps to 3.68%
    10-yr: -2 bps to 3.57%
    30-yr: -2 bps to 3.79%


    U.S. Treasuries are on track for a lower start with shorter tenors expected to show slight relative weakness in the early going.

    Treasury futures selling pressure built as the focus turned to Europe, where the U.K. released hotter than expected inflation figures for March. Still CPI slowed to 10.1% from 10.4% on a yr/yr basis while core CPI held at 6.2% yr/yr.

    Inflation readings from the eurozone were also hotter than expected, accelerating the yr/yr core CPI growth rate to 5.7% from 5.6% while CPI slowed to 6.9% yr/yr from 8.5%.

    The early selling in Treasuries is lifting the 10-yr yield to a four-week high with its 50-day moving average (3.659%) looming above.

    Crude oil is back near its low from April 3 (79.00) while the U.S. Dollar Index is up 0.4% at 102.15.

    Market participants will not receive any top tier data today but he U.S. Treasury will hold a $12 bln 20-yr bond reopening this afternoon.

    2-yr: +6 bps to 4.27%
    3-yr: +6 bps to 3.97%
    5-yr: +5 bps to 3.73%
    10-yr: +5 bps to 3.62%
    30-yr: +2 bps to 3.81%


    Early Bonds: Economic slowdown worries have driven buying interest in Treasury market.

    2-yr note yield down 8 basis points to 4.21%
    10-yr note yield down 6 basis points to 3.57%.

    2-yr: -8 bps to 4.18%
    3-yr: -9 bps to 3.88%
    5-yr: -9 bps to 3.63%
    10-yr: -6 bps to 3.54%
    30-yr: -4 bps to 3.75%


    Next Week’s U.S. Treasury #Bond Auction Schedule
    Tuesday $42 billion 2 year notes next Tuesday
    Wednesday $43 billion 5 your notes
    Thursday $35 billion 7 year notes
    All issues will settle May 1


    Treasury yields rose sharply after the data release of flash Manufacturing and Services PMI readings for April.

    IHS Markit Manufacturing PMI rose to 50.4 in the preliminary April reading from 49.2.
    The Services PMI rose to 53.7 in the preliminary April reading from 52.6.

    10-yr note yield, at 3.51% just before the release, sits at 3.56% now.
    2-yr note yield, at 4.08% a short time ago, sits at 4.17% now.

    Early reversal has returned yields on the 5-yr note and longer tenors to their opening levels from yesterday. Equities trade on a modestly lower note with the S&P 500 (-0.2%) showing a slimmer loss than the Nasdaq (-0.4%).

    2-yr: -1 bp to 4.16%
    3-yr: +2 bps to 3.89%
    5-yr: +2 bps to 3.66%
    10-yr: +2 bps to 3.56%
    30-yr: +2 bps to 3.77%


    U.S. Treasuries ended the week mostly lower, the 2-yr Treasury note yield rose six basis points this week to 4.16% and the 10-yr note yield rose five
    [See the full post at: Bond Traders Weekly Outlook: Fed Favorites PCE and ECI]

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