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Update: 2014-07-24 11:55:18 ET

Moving the Market

Initial Claims: Actual 284K, consensus 308K, prior 302K (revised 303K)

Continuing Claims: Actual 2500K, consensus 2533K, prior 2507K (revised 2508K)

New Home Sales: Actual 406K, consensus 475K, prior 504K (revised 442K)

Treasury will auction $15B 10y TIPs 

10:05:03 ET
10-Year:-11/32 2.507    GNMAs:     EUR/USD:1.3466    USD/JPY:101.74   
Data Reaction II:
  • Treasuries are climbing off the lows following the soft new home sales (406K actual v. 475K expected) data
  • Early weakness has yields across most of the curve higher by +4bps. 
  • The 10y holds @ 2.505%, and remains on track to close at a one-week high. 
  • A steeper curve remains in play with the 2-10-yr spread wider @ 201.5bps.
  • Precious metals are pressing the lows with gold -$11 @ $1294 and silver -$0.27 @ $20.72. 
  • This afternoon, Treasury will auction $15 bln 10y TIPs.

8:35:29 ET
10-Year:-10/32 2.497    GNMAs:     EUR/USD:1.3472    USD/JPY:101.72   
Data Reaction:
  • Treasuries have slumped to session lows following the better than expected initial (284K actual v. 308K expected) and continuing (2500K actual v. 2533K expected) claims data.
  • Selling is having the biggest impact on the belly with the 5y +4.3bps @ 1.693%. 
  • The 10y trades +3.9bps @ 2.503% as action probes the key psychological level. 
  • The 30y outperforms, +3.4bps @ 3.292%. The yield is now contending with its highest close in a week. 
  • Curve steepening persists as the 2-10-yr spread trades 201bps
  • Precious metals are lower with gold -$8 @ $1297 and silver -$0.11 @ $20.88. 
  • New home sales will cross the wires at 10am ET.

8:07:39 ET
10-Year:-07/32 2.490    GNMAs:     EUR/USD:1.3472    USD/JPY:101.64   
European Yields:
  • Yields are firm across most of Europe. 
  • Eurozone Flash Services PMI (54.4 actual v. 52.7 expected, 52.8 previous) outpaced estimates while Flash Manufacturing PMI (51.9 actual v. 52.0 expected, 51.8 previous) posted a slight miss. 
  • German Bunds are slipping following the upbeat Flash Manufacturing (52.9 actual v. 52.2 expected, 52.0 previous) and Services (56.6 actual v. 54.7 expected) PMI numbers. Notable was the Services reading coming in at its best level since June 2011. A +2bp advance has the 10y @ 1.170%. 
  • UK Gilts are lower after retail sales (0.1% MoM actual v. 0.2% MoM expected) fell short of estimates. Light selling has yields in the belly +2bps, running the 10y up to 2.585%.
  • French OATs are slipping in response to the mixed Flash Manufacturing (47.6 actual v. 48.5 expected, 48.2 previous) and Services (50.4 actual v. 48.9 expected, 48.2 previous) PMI data. Many are taking note of the Services reading, which regained the expansion line following a couple months of contraction. However, the Manufacturing number was the worst since December. A +1bp advance has the 10y @ 1.455%. 
  • Italian BTPs trade flat with the 10y holding @ 2.630%. 
  • Spanish Bonos are slipping in response to the unemployment rate easing to 24.5% (25.9% expected, 25.9% previous). Selling has the 10y +2bps @ 2.570%.

7:28:18 ET
10-Year:-05/32 2.481    GNMAs:     EUR/USD:1.3472    USD/JPY:101.61   
Euro Firms on Strong PMI Data:
  • The Dollar Index hovers little changed near 80.80. 
  • A quiet overnight trade saw action stuck in a 20 cent range as action holds near its best levels since February. 
  • EURUSD is +15 pips @ 1.3475 following the mostly better than expected Flash Manufacturing and Services PMI data from across the region. Highlights included Germany's Flash Services PMI (56.6 actual v. 54.7 expected) posting its best reading since June 2011 and France's Flash Services PMI (50.4 actual v. 48.9 expected, 48.2 previous) regaining the expansion line. Only France's Flash Manufacturing PMI (47.6 actual v. 48.5 expected, 48.2 previous) disappointed. Early selling had the single currency probing the 1.3450 level, but buyers stepped in to defend support in the area. 
  • GBPUSD is -30 pips @ 1.7010 as selling persists for a seventh straight session. Today's weakness comes following the retail sales (0.1% MoM actual v. 0.2% MoM expected) miss, and has action at its lowest levels of July. Support in the 1.7000 area remains in focus with the 50 dma (1.6962) providing further help.
  • USDCHF is -5 pips @ .9015 as trade has given up its early gains. The pair ticked to its best levels in almost six months amid this morning's push towards .9040, but trade was unable to take the level as trade reversed into the red as the euro garnered strength. 
  • USDJPY is +5 pips @ 101.60 as buyers hold control for a fifth day. The bid comes after Japan's trade deficit widened to JPY1.08 trln (JPY1.11 trln expected, JPY0.86 trln) on a 2% drop in exports and 8.4% increase in imports. Resistance at current levels sees additional help from the 50, 100, 200 dma just above. 
  • AUDUSD is flat @ .9440 as action holds near three-week highs. The hard currency climbed to nearly .9475 after neighboring Reserve Bank of New Zealand hiked its key rate 25bps to 3.50%, as expected, and China's HSBC Flash Manufacturing PMI (52.0 actual v. 51.2 expected, 50.7 previous) topped estimates. The .9350 area provides support while any close over .9495 would be the best since November. USDCNY eased to 6.1946, a four-month low. 
  • USDCAD is -5 pips @ 1.0720 as light selling takes hold for a third day. Traders continue to watch support near 1.0700.

6:59:28 ET
10-Year:-05/32 2.483    GNMAs:     EUR/USD:1.3473    USD/JPY:101.63   
Yields Edge Up:
  • Light selling has Treasury yields ticking higher into the cash open
  • Overnight ranges were a touch wider than usual, expanding to 3.5bps. 
  • Up front, the 2y holds +0.4bps @ 0.476%. The yield tested support in the 0.450% area, but was unable to push lower. 
  • The 5y holds +1.8bps @ 1.668%. Action continues to be supported by the 50 and 100 dma near 1.650%. 
  • The 10y trades +1.9bps @ 2.483%. The benchmark yield has threatened its lowest close in 13 months, but so far that outcome remains elusive. 
  • At the long end, the 30y lags, +2.2bps @ 3.280%. Support in the 3.200%/3.250% area has held strong over the past couple of sessions.
  • Selling has swung the curve steeper with the 2-10-yr spread wider @ 200.5bps.
  • Precious metals are in the red with gold -$5 @ $1300 and silver -$0.08 @ $20.91.
  • Data: Initial and continuing claims (8:30) and new home sales (10).
  • Auction: $15 bln 10y TIPs

3:29:14 ET
10-Year:-01/32 2.465    GNMAs:     EUR/USD:1.3458    USD/JPY:101.52   
Treasuries Finish Little Changed:
  • Treasuries ended little changed amid a sleepy session. 
  • Action across the curve was confined to 2bp range as a lack of tradable news and data made for a lackluster day. 
  • Up front, the 2y eased -1.3bps to 0.463%. Participants will be monitoring support in the 0.450% region in the days ahead with a breakdown likely provoking a move towards 0.350%.
  • The 5y slipped -0.8bps to 1.650%. Action pressed both the 50 and 100 dma, but could not break below the level. A move below 1.620% support puts the 200 dma (1.568%) in play. 
  • The 10y fell -0.2bps to 2.464%. The benchmark yield remains just a couple of bps above a 13-month closing low
  • The long bond lagged with the 30y ticking up +0.6bps to 3.258%. The yield lagged throughout the entire session, and finished just off the highs.
  • A slightly steeper curve won out as the 2-10-yr spread widened to 200bps
  • Precious metals ended little changed with gold and silver @ $1306 and $20.98, respectively. 
  • Data: Initial and continuing claims (8:30) and new home sales (10).