August Refunding: Coupons Rise Again - TDS

Ross J Burland FXStreet

Analysts at TD Securities noted that the Treasury delivered a more aggressive $1bn/month increase in 5yr auction sizes compared with the February and May refundings.

Key Quotes:

"The 2yr and 3yr auction sizes will continue to increase by $1bn/month while 7yr, 10yr, 30yr and 2yr FRN sizes will increase by $1bn over the quarter. Ongoing front-end auction size increases should continue to flatten the 5s30s curve and widen the 2yr Treasury-OIS spread."

"Treasury announced that the first 2m bill will be auctioned on October 15. The bill will be auctioned on Thursday and settled on Tuesday, and 1m bills will gradually transition to this schedule as well. The change will include a transition period to aid bill investors who cannot invest in overnight repo. Treasury did not announce a size for the new auction, but we expect an initial $35-45bn size for 2m bills. We expect modest declines in existing bill auction sizes to make room for the new issue, and look for Treasury to hold a higher cash balance in Q4."

"We look for bill supply to increase by $150bn in July and August, likely helping to pressure FRAOIS wider in the near-term. We maintain our 45bp target for Dec 2018 FRAOIS.
Treasury delayed the decision on a new 5yr TIPS and altering the TIPS auction calendar to November. We expect a new October 2019 5yr TIPS issue to be announced in November 2018. Given the magnitude of the alteration to the TIPS auction calendar, Treasury will prefer to give markets ample time to set up. This should be supportive for 5yr TIPS BEs in the near-term."

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

AUD/USD falls to near 0.7100 after slipping below 50-day EMA

AUD/USD depreciates after registering minor gains in the previous day, trading around 0.7120 during the Asian hours. The technical analysis of the daily chart shows the pair consolidating sideways within a rectangle pattern, as neither bulls nor bears gain control. The AUD/USD pair is holding a slight bearish tone however as it sits beneath both the nine-day and 50-day EMAs.

160.00: USD/JPY back near intervention territory after upbeat US jobs report

US Nonfarm Payrolls beat expectations by a wide margin in May, with 172K jobs added. The US Dollar rebounds after the release, helping USD/JPY recover from its intraday lows. Warnings from Japanese authorities continue to limit upside potential near the 160.00 threshold.

Gold targets $4,300 amid stronger Dollar

Gold faces increasing selling interest and navigates the area of three-month lows near the $4,300 mark per troy ounce on Friday. The precious metal’s decline comes as traders assess the stronger-than-expected NFP, while the bid bias in the Greenback and higher US Treasury yields also collaborate with the retracement.

Cardano hits five-year low even as Hoskinson clarifies "break" isn't an exit

Cardano (ADA) price is down 10% at press time on Friday, extending losses over 30% so far this week amid Charles Hoskinson's clarification that "break" isn't an exit.

Week ahead – Fed countdown begins amid US inflation data and geopolitical risks

Fed Chair Warsh’s first meeting approaches as key US inflation data could reshape expectations. Oil prices remain elevated as US-Iran talks continue; tariffs also return to the spotlight. ECB is expected to hike; will it be a one-off move or is July live?

The US economy defies the rules: 100 days into the Oil shock and the recession signal is still missing

More than three months after the start of the Iran war and the resulting disruption to global energy markets, the US economy continues to display remarkable resilience. The conflict has triggered a sharp rise in Oil prices, reignited inflationary pressures and fueled widespread concerns about a potential economic slowdown.