STIR: Contained Reaction To FOMC/SEP, Losses Only Slightly Pared

Treasuries slowly drifted higher today although pulled back after a brief test of resistance two hours out from the early close, with reasonable volumes considering the US was out for Presidents’ Day. Headlines have generally been light but with likely seemingly some geopol risk premia supporting the core FI space after it became apparent that Iran’s IRGC is holding ‘Smart Drills’ near the Strait of Hormuz to “test readiness in the face of 'possible security and military threats”.

• TYH6 trades at 113-07+ (+02) having earlier touched 113-12 to extend the post-CPI high of 113-07+ and more notably tested 113-11 (Dec 1, 2025 high). Volumes were relatively solid for a US holiday at 489k.
• With the short-term bull cycle remaining in play, a stronger clearance here could open a key 113-22+ (Nov 22, 2025 high). Potentially before then, 113-15 would mark a 4.00% 10Y yield having closed Friday at 4.048%.
• Rates meanwhile sees SOFR futures up to 1.5 ticks lower on the day, led by the U6. The terminal implied yield of 3.01% (M7) follows Friday's close of 3.005% for its lowest since late November.
• Fed Funds futures have 25bp cuts fully priced for July and October, with just 2.5bp of cuts for the next FOMC meeting in March.
• Fed Vice Supervision Bowman (voter, dove) earlier today described Friday's CPI inflation data being "a little softer" than most expected but in line with her expectations. She reiterated that we sees at least 75bp of cuts for 2026, unchanged from her December SEP submission.
• Tomorrow sees weekly ADP covering up to Jan 31 plus some early February surveys with Empire Manufacturing and the NAHB housing index. This week’s data calendar is heavily backloaded with Q4 GDP/Dec PCE and flash Feb PMIs all on Friday.
• Friday also sees the next scheduled SCOTUS opinion day, followed by further opinion days on Feb 24/25. As before, markets will have to wait for the sessions themselves to determine if a tariff ruling is on the agenda, usually from 10ET onwards.

• RES 4: 1.2081 High Jan 27 and key resistance  
• RES 3: 1.2007 76.4% retracement of the Jan 27 - Feb 6 bear leg
• RES 2: 1.1961 61.8% retracement of the Jan 27 - Feb 6 bear leg
• RES 1: 1.1929 High Feb 10
• PRICE: 1.1853 @ 16:33 GMT Feb 16
• SUP 1: 1.1830 20-day EMA
• SUP 2: 1.1766 Low Feb 06 and key short-term support
• SUP 3: 1.1693 76.4% retracement of the Jan 19 -0 27 bull leg
• SUP 4: 1.1670 Low Jan 22  

EURUSD is unchanged and a bullish theme remains intact. A rally on Feb 9 highlights a stronger reversal that suggests a recent bearish correction has concluded. Note that MA studies are in a bull-mode position, highlighting a dominant M/T uptrend. A resumption of gains would open 1.1961 and 1.2007, Fibonacci retracement points. Key resistance and the bull trigger is at 1.2081, the Jan 27 high. Key short-term support lies at 1.1766, the Feb 6 low.  

Silver Bulletin reports in a new polling update, “After a rough week in the polls, Donald Trump’s net approval rating is back down to its second term low of -15.0. The share of Americans who approve of the job he’s doing also hit a second term low of 40.5 percent.”

• Silver Bulletin writes, “Those numbers mean that Trump is now slightly less popular than Joe Biden was at this point in his first term (-11.5 net approval) and less popular than himself during term one (-12.0 net approval).”
• The Economist notes, "Trump’s overall approval rating has ticked up because Americans think that the president is doing a better job on the issue that matters most to them: inflation and prices. Though it is still negative, his net rating on this has risen from -34 in October to -23."

Figure 1: “Donald Trump's net approval rating

Source: Silver Bulletin