Good morning … The wait for HIMCOs latest quarterly continues AND I’ve little to add TO the price action at the moment SO I’ll be brief …
Kinda surprised stocks not up BIGLY on this one …
April 16, 2025 at 8:27 AM UTC Bloomberg: China Open to Talks If Trump Shows Respect, Names Point Person
… fake news? Perhaps the “IF” is tempering optimism … Maybe I was hoping for some sorta risk ON move funded by steeper / cheaper USTs which might help get this afternoons $13bb 20yr auction priced …
20yy DAILY: RANGEbound and here we are stuck in the middle …
… momentum (stochastics, bottom panel) remain more bullishly leaning here on DAILY chart and presses lower off ‘support’ (5.00) where TLINE resistance somewhere closer TO 4.60% … for more, see thoughts below from the very best techAmentalists (CitiFX) out there …
In as far as a couple things driving the ‘price action’ …
ZH: Empire Fed Manufacturing Expectations Plunge To Worst Since 9/11
ZH: "Headline Fatigue Is Real Now" - Bonds & Bullion Bid As Top Goldman Trader Warns "Tape Remains Fragile"
… Treasury yields were lower across the board with the belly outperforming (7y -4bps, 2Y unch, 30Y -2bps). All yields re lower from pre-Friday's surge in yields...
Bloomberg's Alyce Andres points out five potential drivers of today's bond gains:
Bond investors took solace in the fact that Jamie Dimon said the deleveraging in Treasuries that caused yields to rise to cycle highs may be somewhat over for now.
There’s been some dip demand in spread product. That’s been reflected via widening in US interest-rate swap spreads and has created some demand in Treasuries.
Dealing desks report macro money executing on curve flatteners trades amid recent steepening. That’s fueling gains at the back-end.
At the same time, investors are resetting bets for lower interest rates by purchasing at the short-end, according to dealing desks that see the flows.
All that said, volumes are very light, with trading flows in June 10-year contracts about half the 15-day moving average a day ahead of Federal Reserve Chair Jerome Powell’s address to Economic Club of Chicago at 1:30 p.m. ET Wednesday. Thinned liquidity can often allow prices to extend beyond expectations…
… surprising not a mention of the SLR comments by Bessent’s nbr 2 … oh well, there are a few words from Global Wall just below and so …
April 15, 2025 at 3:28 PM EDT Bloomberg: US Bonds Gain as Official Says Capital Rule Change Is on Agenda
(Bloomberg) -- US government debt rallied Tuesday, erasing declines after a Treasury Department official said a rule change was under consideration that could lower trading costs for banks.
… I’ll skip right to it but first … here is a snapshot OF USTs as of 614a:
… for somewhat MORE of the news you might be able to use … a few more curated links for your dining and dancing pleasure …
… The prospects for SLR relief and capital reform remain topical after Deputy Treasury Secretary Michael Faulkender’s discussion of the topic on Tuesday. Faulkender said, “The question that we continue to ask ourselves is, in times of market volatility, or if there were to be a stress event, do we have adequate liquidity coming into the system,” … “So to the extent that the SLR is binding terms during times of stress unnecessarily, are there ways for us to increase the capacity of the bond market to handle large volume days?” There’s been discussion about lowering the required SLR for some time but the fact that Faulkender’s comments on capital reform were linked to the recent market turbulence suggests that adjustments to SLR rules may be a higher line item for US officials than previously anticipated …
Following the treasury buyer's strike last week, US yields tested some key resistance levels. Since then, however, we have seen signs of calming treasury markets with the worst of tariff noise seemingly behind us and price action reflecting 'safe haven' status again. We also note resistances have held on a weekly basis, and note some reversal indicators in techs, which suggest a short term bullish bias …
…5y yields 5y yields tested resistance at 4.15% (55w MA), but did not close above on a weekly basis. We think we could have hit the highs at least in the short term, having traded lower from the highs in the past few days.
We see support at 3.82% (October 16 low), followed by 3.38-3.39% (2024 low, 200w MA).
…30y yields Tested the 5.00% resistance level (2025 Jan high) last week twice amidst the term premia shock. We think short term bias is for a move lower in yields here, We think support is likely at 4.65% (55d MA).
AND a few guesstimates to who may be selling USTs …
14 April 2025 SocGEN: Who’s selling US Treasuries and why?
…Bottom line: The decline in foreign demand for US Treasuries is a paradigm shift in the demand dynamic and recent events could accelarate this trend. Over the longer-run foreign demand has helped compress US Treasury term premia and reduced borrowing costs for US taxpayers. A reversal in this trend should lead to higher term premia and therefore higher net interest outlays, a key contributor to deficits projections for the next decade
… And from the Global Wall Street inbox TO the intertubes, a few curated links …
A dot com with a VIEW … (as in, some excellent eye candy and visual context…)
April 16, 2025 at 4:04 AM UTC Bloomberg: A Matter of Trust as Markets Ponder What’s Next Everyone is in a state of suspended animation.
… A similar pattern has emergedin the relationship between stocks and bonds, proxied by the SPY and TLT exchange-traded funds which follow the S&P 500 and 20-year Treasury bonds. Stocks boomed and then busted after the election, and then underwent a screeching fall after “Liberation Day,” which has been reversed. As it stands, stocks have lost no ground to bonds in the last nine months — and the tariffs shock we have just experienced was little worse than the brief market seizure that followed the sudden strengthening of the Japanese yen last summer:
Markets are maintaining a nervous calm in part because it’s a holiday week, but primarily because two key questions must be answered before they can set a clear new direction. Neither can be resolved quickly. The first is what kind of tariff regime will finally result, as this will largely determine a new global trading system. That system has already changed greatly since the Trump 1.0 trade conflict, as China has attempted to diversify away from the US, but the extent of enduring new barriers to trade is still unknown.
This one from Brookings caught my eyes …
April 14, 2025 Brookings: What’s going on in the US Treasury market, and why does it matter?
