(61 happened)while WE slept; GILTS; 'tactically bullish' bonds (and becoming bearish commods)
Good morning … 30yr GILTS down what looks to ME to be MORE THAN 100bps …
… but yields are UP today (3bps) and stocks are down … here is a snapshot OF USTs as of 705a:
… HERE is what this shop says be behind the price action overnight…
… WHILE YOU SLEPT
Treasuries are lower with the belly leading as UK Gilts (ex-30yrs) and German Bunds sharply reverse gains on some hot German state inflation readings (see above) and further hawkish ECB speak. DXY is higher (+0.6%) while front WTI futures are UNCHD. Asian stocks were mixed despite yesterday's NY rally, EU and UK share markets are roughly -1.25% lower as a group while ES futures are showing -0.9% here at 6:45am. Our overnight US rates flows were solid with prices leaking steadily on the back of Asian real$ selling of 10's and 30's. Prices then spiked lower when the first German state inflation readings hit with 2-way real$ flows into the descent and large selling seen in the screens. We published too early for London AM hours color while overnight Treasury volume was about 2x average in Asian hours, slowing notably in London-time- now showing 120% of average volume overall here at 6:45am.… Speaking of Treasury 10's, they're still pulling away from their bear trendline which sits today near 3.58%. The lower panel also shows how 'oversold' markets can stay that way for longer than most counter-trend traders can remain solvent. Anyway, we'll get excited about a sustainable correction to lower yields when that bear trend is finally taken out with a daily close
… attachment of the 5y5y OIS rate shows that tomorrow's monthly close is quite likely to confirm 5y5yrs' major range breakout above the 3.08% area. Next support may be in the 4.25% area, the Taper Tantrum highs.
… and for some MORE of the news you can use » IGMs Press Picks for today (29 Sep) to help weed thru the noise (some of which can be found over here at Finviz).
In short-form and no particular order, a few items which pique MY interest after yesterdays NOT A PIVOT by the Bank of England.
ZH noting STRESS in system, One Of The Market's Most Important 'Stress' Indicators Is Flashing Red
And speaking of STRESS, FRBNYs updated CMDI (corp bond distress index)
UBSs Paul Donovan stating of the obvious,
Financial systems need to function
… Emergency bond buying does not have a significant real world impact. Monetary policy does have a real world impact. The announced tax cuts are unlikely to be especially inflationary, as they are unlikely to alter the growth outlook much. The fall of sterling is likely to transmit inflation via commodity prices, prompting rate increases. UK PM Truss is giving media interviews today…
MSs econ dept refusing to be overshadowed by their stock jockey in chief,
What a strong Dollar means for the US economy
Despite substantial appreciation year-to-date, we see little pressure for policymakers to respond to dollar strength for now. Trade-weighted dollar strength is not excessive, in sync with broadly tighter financial conditions and in line with Fed objectives, though inflation benefits are small.
And a couple from the CHARTS department … First from an artist formerly (and perhaps to be again)known as 1stBOS
10yr US Bond Yields look set for an aggressive near-term reversal from key support at 4.00/02%, signaling at least a near-term peak.
… We would now turn tactically bullish at support at 3.855%, with scope for a move to resistance at 3.51/50% initially. We see next support at 4.02%, above which we would turn tactically neutral.
This same organization would turn tactically bullish 5s @ support (4.075%) and will remain tactically bullish long bonds ‘for now’, looking for move down TO resistance of 3.05%. They are ALSO, “Turning bearish on commodities” which matters in as far as inflation, expectations and all things considered. It fits with the RATES view, too.
One final chart from Chris Kimble looking at leadership of semis (on a relative basis),
Tech Stocks Leadership Reaches Important Trend Line Support!
In closing,
… THAT is all for now. Off to the day job…