US TSYS: Bear Steepening With Trump Auto Tariffs In Focus
The Treasury curve bear steepened Wednesday, with UK developments and US headlines at the fore.
- Treasuries started the session on the front foot, helped in part by European developments including softer-than-expected UK CPI. Later, UK developments would come to the fore again as the government fiscal announcement first brought Gilts (and Treasuries alongside) first lower and then back higher.
- Headlines emerging through the day that President Trump planned an imminent announcement on auto tariffs (confirmed to be announced by the White House for 4pm ET Wednesday) weighed on risk appetite, with major equity aggregates down 1+% and the US dollar index rising to 3 week highs. That in turn helped Treasuries off late morning lows.
- The 5Y Treasury Note auction was the weakest since at least October, tailing 0.5bp and drawing a slightly negative reaction in the broader Treasury market.
- In a limited data slate, durable goods orders/shipments surprised to the upside, another positive on the "hard" data front compared with the softer survey data seen elsewhere.
- Regional Fed presidents Musalem and Kashkari echoed the recent FOMC theme of patience in making any future rate decisions, amid high levels of govenrment policy uncertainty.
- Latest cash levels: The 2-Yr yield is down 0.9bps at 4.0043%, 5-Yr is up 1.1bps at 4.0789%, 10-Yr is up 2.1bps at 4.3345%, and 30-Yr is up 2.5bps at 4.6833%. The Jun 25 T-Note future is down 5.5/32 at 110-18.5, having traded in a range of 110-12.5 to 110-23.
- Thursday's data slate is on the heavy side, with the third reading of Q4 GDP, Feb trade balance, and initial jobless claims among other items on the docket, while we also hear from Boston Fed's Collins and Richmond's Barkin.
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USDJPY TECHS: Bears Remain In The Driver’s Seat
- RES 4: 154.80 High Dec 12 ‘24 and a key resistance
- RES 3: 153.70 50-day EMA
- RES 2: 152.62 20-day EMA
- RES 1: 150.74 High Feb 21
- PRICE: 149.21 @ 15:56 GMT Feb 24
- SUP 1: 148.85 Low Feb 24
- SUP 2: 148.65 Low Dec 3 ‘24 and a key support
- SUP 3: 148.01 Low Oct 9 ‘24
- SUP 4: 146.95 61.8% retracement of the Sep 16 ‘24 - Jan 10 bull leg
USDJPY bears remain in the driver’s seat and the pair again traded to a fresh short-term cycle low. The move down has exposed the next key support at 148.65, the Dec 3 ‘24 low. A break of this level would strengthen a bearish condition and pave the way for an extension towards 146.95, a Fibonacci retracement. On the upside, initial firm resistance to watch is 152.62, the 20-day EMA.
USDJPY TECHS: Bears Remain In The Driver’s Seat
- RES 4: 154.80 High Dec 12 ‘24 and a key resistance
- RES 3: 153.70 50-day EMA
- RES 2: 152.62 20-day EMA
- RES 1: 150.74 High Feb 21
- PRICE: 149.21 @ 15:56 GMT Feb 24
- SUP 1: 148.85 Low Feb 24
- SUP 2: 148.65 Low Dec 3 ‘24 and a key support
- SUP 3: 148.01 Low Oct 9 ‘24
- SUP 4: 146.95 61.8% retracement of the Sep 16 ‘24 - Jan 10 bull leg
USDJPY bears remain in the driver’s seat and the pair again traded to a fresh short-term cycle low. The move down has exposed the next key support at 148.65, the Dec 3 ‘24 low. A break of this level would strengthen a bearish condition and pave the way for an extension towards 146.95, a Fibonacci retracement. On the upside, initial firm resistance to watch is 152.62, the 20-day EMA.
US: Polls Hint At Inflation Risk To Trump, Consumer Sentiment Dips
A Reuters/Ipsos poll released Sunday underscored that President Donald Trump is putting “considerable effort into policies that many Americans don't like, or don't consider very important... Fighting inflation motivates 58 percent of the survey’s respondents. Just 32 percent approve of Trump's performance on prices… Fifty-three percent of the country opposes what they see from Trump’s Department of Government Efficiency, while 42 percent of the country supports the endeavor.”
- The Hill notes on the Ipsos survey, “President Trump is flying high… but polls at his one-month mark are flashing yellow,” noting that Trump "has acknowledged higher inflation but tried to sidestep the topic last week during a Fox News interview. Both the president and Vice President JD Vance have said lowering grocery prices will take time."
- The University of Michigan notes: “Consumer sentiment extended its early month decline, sliding nearly 10% from January. The decrease was unanimous across groups by age, income, and wealth. All five index components deteriorated this month, led by a 19% plunge in buying conditions for durables, in large part due to fears that tariff-induced price increases are imminent.”
Figure 1: Consumer Sentiment, Monthly and Three-Month Moving Average
Source: University of Michigan
