US Treasuries Decline, US Dollar Rises

US Treasuries Decline, US Dollar Rises

US Treasury Complex

US government debt declined Friday in a curve-steepening trade as Greek woes and a declining NAS 100 failed to generate buying interest. While the final revision to the Michigan Consumer Sentiment (MSI) survey was better than expected, it did not warranted a 6 bspt spike in the 10-yr T-Note yield. This move was a continuation of the repricing in yields that has been happening since April

• Yield
  • 2-yr: +2 bpts to 0.70%
  • 5-yr: +5 bpts to 1.75%
  • 10-yr: +6 bpts to 2.48%
  • 30-yr: +7 bpts to 3.25%

• News
  • The University of Michigan Consumer Sentiment Index was revised up to 96.1 in the final June reading from a preliminary reading of 94.6. That is up from a reading of 90.7 in May. The Briefing.com Consensus expected the Consumer Sentiment Index to remain at 94.6
    • That was the best reading since the Consumer Sentiment Index reached 98.1 in January
    • The gain in sentiment was likely a reaction to large improvements in labor market conditions. That offset concerns about higher gasoline prices.
    • Spending trends follow income and not sentiment
  • Greek Prime Minister Alexis Tsipras turned down a 5-month extension from Greece’s official creditors and returned home to Athens
    • Discussions will continue over the weekend. One person, cited by The Guardian, put the chance of a weekend agreement over 50%
      • The same person was not so certain about Greek parliamentary approval
  • The Shanghai Composite lost more than 7% overnight

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US Dollar (.DXY) Index

The USD rose against all peers Friday except the Swiss Franc (CHF), as investors sought a safe haven from the uncertainty in the Eurozone

• The Michigan Sentiment (MSI) survey for June moved up to 96.1, ahead of the consensus of 94.6 and the reading from May which was also 94.6
• U.S. Dollar (.DXY)Index: +0.32% to 95.49

• GBP/USD: -0.16% to 1.5723
• EUR/USD: -0.43% to 1.1158
  • Greek PM Alexis Tsipras went home to Athens after declining a 5-month extension, which Syriza politicians said would only prolong Greece’s depression
  • The delegations from Greece and its official creditors will continue to meet over the weekend
  • There remains an option because Christine Lagarde, the managing director of the IMF, has 1 month to report to its board that Greece failed to make a payment.
• USD/JPY: +0.26% to 123.89
  • The pair rallied on higher Treasury yields, which makes the long side of USD/JPY more attractive to carry traders
  • Core CPI for Japan grew 0.1% Y-Y in May, higher than expected
  • Japanese household spending grew 4.8% Y-Y
• USD/CHF: -0.09% to 0.9358
  • The Swissy rallied on safe-haven demand
• USD/CAD: -0.02% to 1.2328
• AUD/USD: -1.14% to 0.7649
• NZD/USD: -0.85% to 0.6837

Have a terrific weekend.

HeffX-LTN

Paul Ebeling

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