08:36 am - Data Reaction:
- Treasuries have slipped to their worst levels of the session following the strong durable orders (2.6% actual v. 2.0% expected).
- Selling continues to weigh heaviest on the belly of the curve as the 5y trades +6bps @ 1.771%.
- A +3.4bp advance has the 10y @ 2.720% as trade tests resistance in the area helped by the 200 dma.
- At the long end, the 30y trades +2.6bps @ 3.495%.
- Curve flattening persists as the 5-30-yr spread is tighter @ 172.5bps.
- Precious metals remain near their lows with gold -$13 @ $1272 and silver -$0.33 @ $19.11.
- Attention now turns to this afternoon's $29 bln 7y note auction.
07:24 am -
Dollar Holds Little Changed:
- The Dollar Index holds little changed near 79.85.
- Overnight action was quiet, limited to a tight 10 cent range.
- EURUSD is +5 pips @ 1.3820 as action continues to chop around near the key 1.3800 support level. The single currency ticked to its best levels of the morning (1.3843) following better than expected German Ifo Business Climate (111.2 actual v. 110.5 expected, 110.7 previous) before giving up those gains in response to comments made by ECB head Mario Draghi. Mr. Draghi was back to his usual ways of attempting to talk the euro lower by suggested the ECB could drop its deposit rate below zero, if necessary, while also suggesting the central bank should review the frequency of its meetings as not every central bank meets monthly.
- GBPUSD is +10 pips @ 1.6790 amid a rather uneventful trade. Early action has been confined to a 30 pip range with trade breaking down to its worst levels of the session following the better than expected CBI Realized Sales (30 actual v. 18 expected, 13 previous). Sterling has since recovered the post-data losses as trade held support in the 1.6775 area.
- USDCHF is -5 pips @ .8825 as light selling persists for a third session. The early weakness has the pair probing minor support in the area that is helped by the 50 dma.
- USDJPY is -10 pips @ 102.45 amid a lackluster trade. Action has spent much of the past week hovering near the 102.50 pivot as neither bulls nor bears have been able to gain the upper hand.
- AUDUSD is -25 pips @ .9260 as sellers remain in charge for a second day. Today's weakness has the hard currency nearing .9250 support, and comes after neighboring New Zealand saw its central bank hike its key rate 25 bps to 3.00%, as expected. USDCNY ticked up to 6.2377, a fresh 14-month high.
- USDCAD is -15 pips @ 1.1015 as trade lingers at the resistance level. Action over the past week has been locked in a tight 50 pip range between 1.1000/1.11050.
07:01 am -
Treasuries See Early Selling:
- Treasuries hold modest losses as sellers look to regain control following two days of gains.
- Overnight ranges were extremely tight, confined to 2bps across most of the curve.
- Early selling seems to be concentrated on the belly as the 5y trades +4bps @ 1.751%. The selling has the yield at a three-week high, and within a handful of bps of the September/March highs near 1.800%.
- The 10y holds +1.7bps @ 2.703%. Overnight action tested the 2.680% pivot, but was unable to breach the level.
- At the long end, the 30y is +1.9bps @ 3.488%. Action over the past two weeks has settled into a range between 3.450%/3.550%.
- A flatter yield curve has taken hold with the 5-30-yr spread tighter @ 173.5bps, a level last seen in the fall of 2009.
- Precious metals are on their lows with gold -$7 @ $1277 and silver -$0.36 @ $19.07.
- Data: Initial and continuing claims and durable orders (8:30).
- Auction: $29 bln 7y notes.