As we all have become more intimately aware of, what happens to bonds matters for everything.
As a follow up with one of the firms noted in that post, some daily positions (and stops) one might want to keep in mind as short positions still building noted HERE and HERE).
This afternoons technical update leads with visual of USD 3y1m FWD OIS on a WEEKLY basis … and is described like this
Chart of the Day: A key change in rates markets from last year is that terminal rate pricing has finally jumped higher in the US as more rate hikes are priced in, with the 3y1m FWD OIS swap rate clearly detaching from the 1.40% level it peaked at in Q1 and oscillated around throughout Q4. This reinforces the very clear “head and shoulders” base that is already in place for this market, which still projects a move to significantly higher levels, reinforced by the fresh cross higher in medium-term momentum. We therefore look for a move to 1.80% next, with scope for an eventual move to 2.28% later in 2022, which is the 78.6% retracement of the fall from 2018.
Any / every mention of the 2018 analog will surely make this note popular especially for those looking for clues as to WHAT it may take to have something break.
This same technician goes on to visualize and talk about WHAT NEXT
5yy (daily) neutralizing, “…very successful tactical bearish bias from resistance at 1.095% after support at 1.535% was reached.” A trade back TO RESISTANCE @ 1.41% is where to get tactically bearish (again).
10yy (WEEKLY) — stay tactically BEARISH, look for move TO 1.965 / 2.00% (or resistance @ 1.65%). A move BELOW 1.65 would be stop OUT.
30yy (daily) — stay tactically BEARISH, look for move TO 2.17% (while a move below 2.04% would be a stop OUT).
Meanwhile, JPOW has spoken and we’ve seen a very successful 3yr auction,
3-year auction stops through 0.7 bp - strong result
Today's 3-year auction was strong with a stop through of 0.7 bp and non-dealer bidding of 77.2% vs. a 71.6% average.
3-year auction stops at 1.237% vs. a six auction average of 0.621%.
Bid/Cover was 2.47x compared to an average of 2.42x.
Dealers took 22.8% vs. a 28.4% average.
Directs claimed 15.5% vs. a 18.4% norm.
Indirects were awarded 61.6% vs. an average of 53.2%.
3-year yields were off the intraday peaks, but still net higher on the day going into the auction on volumes nearly 3x the norm. Since the result, rates have ticked lower led by the front end.