Chair Powell spoke at the FBA General Body Meeting in Amsterdam earlier today and that speech came after the Producer Price Index report from the BLS reported a moderate uptick. On an unadjusted basis, the index for final demand moved up 2.2 percent for the 12 months ended in April, the largest increase since rising 2.3 percent for the 12 months ended April 2023. Among noteworthy comments from the Fed Chair in today's address, he stated that "Inflation in Q1 was notable for the lack of further progress, adding that his committee did not expect a smooth road on inflation, while reiterating that we have to be patient and let policy do its work. He added that the confidence in inflation moving back down is lower than it was, echoing last Friday's report from the University of Michigan inflation expectations and the fact that his confidence on inflation slowing owing to the current restrictive monetary policy was is not as high as it had been before.

On the subject of bonds and yields, today, yields happen to be pulling back just ever so slightly while the USD remains resilient in comparison to the basket of currencies it is measured against. We present below a trade idea for the 30Y Treasury futures expecting yields to progress along the slope lower. Given that this could potentially be a swing trade and allowing for the current contract to expire in the next 16-odd days, we consider it better to hold the September expiration for a measured move:

Chart: Download here → https://app.screencast.com/V15Uivbjh5pQ6

Trade setup (ZBU24) 

Buy range: 114'18 ~ 115'19

Stop: 113'17 [Potential loss if stopped out while acquiring at the bottom of the range -$150]

Profit target: 118'10 [Potential gain if traded from bottom or range to target +$3,750]