Treasury starts Auctioning, Market Shaking! | IFCM UAE
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Treasury starts Auctioning, Market Shaking!

U.S. Treasury auctions offering a total of $271 billion of new debt, which with U.S. inflation data of the week, could stop the recent decline in Bond Yields and increase the investors' fear of higher inflation.

In 2021 10-year yield rose more than 80bp so far, following better expectations of economic growth and higher inflation and another 4 trillion dollar bonds, which expects to be issued this year. This week's Treasure auctions will include $24 billion of 30-year bonds on Tuesday and a total of $151 billion in bills. On Monday, both three and 10-year notes worth $96 billion in full will be sold by the U.S. Treasury.

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After dropping back to 1.66% of U.S. 10 Year bond yields, these auctions seem to be a Brake in this process. However, besides these auctions, we have to keep the eyes on tomorrow's US CPI data, which in case of a more significant raise than 1.5% of expectation, will lead yields higher, as higher inflation can erode their value over time.

While the most recent Fed projections see inflation reaching 2.4% this year, well above target, the central bank believes it will fall back to 2% next year. According to a “Reuters” survey, the consumer price index, which does not map perfectly onto the Fed's metric, is expected to have risen 2.5% year-over-year in March, according to a "Reuters" survey.

April 1 is the beginning of a new fiscal year in Japan. That means that with begging of the new fiscal year, we may see more demand from Japan, which helps the supply curve, since Japanese buyers back in and currency markets.

USD Index Technical overview


Technically in the daily chart, it is still in a clear uptrend, as long as it is trading above 50 DMA at 91.40. Pivot point sits at 92.20, and breathing above R1 at 92.37 will open the higher-level doors at 92.60 and 92.76 (R2 and R3). On the flip side, lower than S1 at 91.95, can weigh more on prices and put the S2 and S3 respectively at 91.80 and 91.55 in the spotlight.

Details
Author
Ahura Chalki
Publish date
19/12/23

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