US: Bessent Downplays Market Volatility, Says Tax Agenda On Track
US Treasury Secretary Scott Bessent has downplayed this week's market volatility in an interview with CNBC. Bessent says the administration is "not concerned about a little volatility," stressing that the market should be more focused on the medium and long term outlook. Bessent also downplays his previous comments interpreted as preparing markets for a recession, saying a "detox does not have to be a recession."
- Bessent expresses confidence that Trump's tax agenda is on track in Congress. Adds that renewing the 2017 Tax Cuts and Jobs Act involves "no stimulus". He also decries CBO scoring for Trump's tax legislation ahead of a likely confrontation on reconciliation.
- Bessent acknowledges that a government shutdown "wouldn't be good" but tries to get ahead of Democrats by squarely attributing a future shutdown to "Democrat disarray".
- Addressing Trump's newly announced 200% tariff on EU alcohol products, he says he's "not sure why one or two items from one or two trading blocks is a big deal".
- Bessent says, "aside from metals and likely autos, everything else is up for grabs for tariff negotiations", noting "if trading partners want to ratchet things up, surplus countries will take the biggest hit".
- When asked about dollar weakness, Bessent says "markets live in the future" noting that markets priced in a lot of Trump's policy between the November election win and his January inauguration.
- Bessent claims that Trump's trade policy has led to a significant decrease in Fentanyl flows and notes that Trump and Xi are likely to meet soon but he "can't tell you when".
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US 10YR FUTURE TECHS: (H5) Bias Remains Higher
- RES 4: 110-25 High Dec 12
- RES 3: 110-19 76.4% retracement of the Dec 6 - Jan 13 bear leg
- RES 2: 110-14 High Dec 14
- RES 1: 110-00 High Feb 7
- PRICE: 108-30 @ 14:13 GMT Feb 11
- SUP 1: 108-20+ Low Feb 4
- SUP 2: 108-06/107-06 Low Jan 23 / 13 and the bear trigger
- SUP 3: 107-04 Low Apr 25 ‘24 and a key support
- SUP 4: 106-11 2.00 proj of the Oct 1 - 14 - 16 price swing
A bull phase in Treasury futures remains in play despite the run lower off recent highs. This leaves the contract holding the bulk of its latest gains. Price has traded through the 50-day EMA of 109-10+. This highlights potential for a stronger reversal and sights are on a climb above the 110-00 handle. On the downside, initial firm support to watch is unchanged at 108-20+, the Feb 4 low. Clearance of it would signal a reversal and the end of the corrective cycle.
US TSY FUTURES: March'25/June'25 Roll Update: 5Y Takes Early Lead
Tsy quarterly futures roll from March'25 to June'25 is still early in the process, but 5s have been leading volumes so far this week. Percentage complete remains low, less than 2% across the curve ahead the "First Notice" date on February 28. Current roll details:
- TUH5/TUM5 appr 2,200 from -5.88 to -5.5, -5.5 last
- FVH5/FVM5 appr 78,100 from -3.0 to -2.25, -2.5 last
- TYH5/TYM5 appr 14,100 from 0.25 to +0.5, +0.5 last
- UXYH5/UXYM5 less than 200 from 4.25 to 4.5, 4.5 last
- USH5/USM5 less than 100 from 5.75 to 6.25, 6.0 last
- WNH5/WNM5 less than 100 from 3.5 to 4.5, 4.25 last
- Reminder, March futures won't expire until next month: 10s, 30s and Ultras on March 20, 2s and 5s on March 31. March Tsy options expire February 21.
EGBS: Natixis Recommend Long Letra Trade
Natixis recommend going long SGLT 07/2025 at 2.40% with a target of 2.25% over a 3-month horizon.
- They look to “capture a faster pace of ECB rate cuts vs. current market expectations.”
