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US Open: Markets ticking over, WTI eases to 1wk low


There are no US government bond auctions today & there are no official Fed speaker's on today's calendar either. Overnight data saw Jun Japanese Eco Watchers Survey Current which rose to 47 from 45.7 & beat the 46.1 f/c while the Outlook component firmed to 47.9 from 46.3 vs 46.5 predicted. Ahead, the second half slate is extremely light with US Jun NY Fed 1yr inflation expectations (3.17% prior) & May Consumer Credit also on the calendar. Turning to the markets, Nikkei shed 0.3% but still outperformed its peers while the Hang Seng softened 1.55% to a low since the 26th April. Front month WTI futures declined to one week nadir. Bitcoin weakened to $54313.2 overnight on concerns of potential selling by creditors of the failed Mt, Gox exchange vs a 4.5mth base at $53602 on the 5th July but subsequently rebounded to $57645. Sep24 US 10yr notes initially hit a thirteen day peak at 110-20+ but then retreated to 110-10+. The US 2-10yr yield spread has steepened a fraction to -32.3bps compared to its circa five week wide at -29.4bps which was made on the 1st July.

- US 10yr TIPS resumes the 2-1/2 month decline from 231.1 (2024 peak - 25 April) via 216.6 (1 July high) to threaten 196.1 (21 June low)

- Studies turn negative and a sustained downside break of 196.1 then 194.0/195.4 (4 April low/50% retrace of 159.7/231.1) signals risk to the 184.5/187.0 zone

- This consists of 25 March higher low at 184.5 and 61.8% retracement of 159.7/231.1 advance at 187.0

- Only a return above 216.6 and 216.8 (10 June minor lower high) offers relief to a 9-month falling trendline, currently at 222.4


After having been projected to win the French election, the right wing National Rally only came 3rd with 143 seasts wit the New Popular Front gaining 182 seats & Macron's centrists alliance 163 seats. Sep24 OATs traded in a 3/5pt range this morming and shed as much as 53 ticks to 123.36. Recall, Friday saw a 10 day high at 123.97. The OAT/Bund 10yr yield spread is flatter at a 26 day tight of 65.2bps & the Gilt/Bund 10yr spread is in to 155.8bps & continues to close in on the 2024 tight at 153.9bps. New UK Chancellor Reeve said that the government respects business, wans to partner with business & will restore mandatory housing targets. Reeve reiterated pleges not to raise VAT, national insurance and income tax. The first half data slate was very light, German May Exports and Imports were sharply weaker than prior and heavily missed their consensus forecasts while EC Jul Sentix Investor Confidence declined aggressively to -7.3 from 0.3% vs -0.5% predicted. Core equity indices posted gains of between 0.3% & 0.5%, CAC saw a 25 day high while Brent futures fell to a one week nadir.

- Declined from 96.405 (29 December 2023 peak) to 95.095 (29/30 May lows), before recovering through the 50DMA to range under 95.365 (21 June high)

- Studies improve (note the 75% bullish rating on this week's Sentiment Matrix) and while s-term dips hold 95.240 (18/19 June lows), watch for fresh tests of 95.365

- A clearance would suggest a return to 95.460 (16 May lower high), above which ends this year's downtrend and primes the recovery for 95.615 (4 April high)

- Only below 95.240 cautions and suggests a prolonged consolidation above 95.095

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