STIR: Fed Cut Pricing Pared Ahead Of Tariff Announcement
Futures-implied Fed rate cut pricing is off session highs as we await the White House's tariff announcement (link to livestream here). Dec Fed funds are currently implying around the fewest cuts seen this week, around 71bp, vs around 78bp this morning, with the pullback coming alongside a nascent risk-on move in equities ahead of the Trump event.
- That's still close to 3 cuts implied, but the first cut is only fully priced by July (2 meetings from now), with the second in October.
- Also potentially of note though overshadowed by the tariffs announcement is commentary scheduled at 1630ET by Fed Governor Kugler (permanent voter) on inflation expectations and policymaking (text + Q&A expected).
| Meeting | Current FF Implieds (%), LH | Cumulative Change From Current Rate (bp) | Incremental Chg (bp) | Yest (Apr 01) |
| May 07 2025 | 4.30 | -3.5 | -3.5 | 4.28 |
| Jun 18 2025 | 4.17 | -16.3 | -12.8 | 4.12 |
| Jul 30 2025 | 4.02 | -31.3 | -15.0 | 3.96 |
| Sep 17 2025 | 3.86 | -47.5 | -16.2 | 3.79 |
| Oct 29 2025 | 3.75 | -57.7 | -10.2 | 3.69 |
| Dec 10 2025 | 3.63 | -70.5 | -12.8 | 3.57 |
| Jan 28 2026 | 3.57 | -76.2 | -5.7 | 3.52 |
| Mar 18 2026 | 3.48 | -84.6 | -8.4 | 3.44 |
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US STOCKS: Late Equities Roundup: Energy & Tech Stocks Underperforming
- Stocks remain weaker in late Monday trade, near second half lows amid some position squaring. Stocks consolidated after this morning's data, higher than expected ISM Prices Paid while ISM Mfg, Orders and Employment figures were lower than expected as Treasuries reversed early losses to new session highs.
- Currently, the DJIA trades down 304.55 points (-0.69%) at 43540.85, S&P E-Minis down 39.5 points (-0.66%) at 5925, Nasdaq down 202.6 points (-1.1%) at 18648.99.
- Energy and Information Technology sectors continued to underperform in late trade, the Energy sector weighed by falling crude prices (WTI -1.46 at 68.30 - following OPEC+ headlines announcing production hikes): laggers included APA -6.43%, ConocoPhillips -5.24%, Devon Energy -4.36% and Diamondback Energy -4.09%.
- Semiconductor makers continue to weigh on the Tech sector: Nvidia -6.97% (reportedly as "Singapore is investigating whether Dell Technologies Inc. and Super Micro Computer Inc. servers shipped to Malaysia housed Nvidia Corp. chips barred from China" Bloomberg reprted). Meanwhile, Enphase Energy -5.77%, First Solar -4.91% andf Broadcom -4.32%.
- On the positive side, Real Estate and Health Care sectors continued to outperform in late trade, investment trusts buoyed the former with Weyerhaeuser +4.68%, Welltower +2.14% and American Tower +2.02%. Viatris +3.30%, Stryker +2.42% and Medtronic +2.40%led gainers in the Health Care sector.
- Expected earnings announcements for Tuesday include Target Corp and AutoZone Inc before the open while Crowdstrike Holdings and Ross Stores report after the close.
USDJPY TECHS: Corrective Cycle
- RES 4: 154.80 High Dec 12 ‘24 and a key resistance
- RES 3: 152.97 50-day EMA
- RES 2: 151.47 20-day EMA
- RES 1: 151.30 High Mar 3
- PRICE: 150.21 @ 16:25 GMT Mar 3
- SUP 1: 148.57 Low Feb 25 and the bear trigger
- SUP 2: 148.01 Low Oct 9 ‘24
- SUP 3: 147.22 2.0% 10-dma envelope
- SUP 4: 146.95 61.8% retracement of the Sep 16 ‘24 - Jan 10 bull leg
A bearish theme in USDJPY remains intact and short-term gains are considered corrective. Support at 148.65, the Dec 3 ‘24 low, has been pierced. A clear break of this level would strengthen the bearish condition and pave the way for a move towards 146.95, a Fibonacci retracement. On the upside, initial firm resistance to watch is 151.47, the 20-day EMA. A break of it would suggest scope for a stronger correction.
US: "Large Share Of Americans" Support Increased Funding For Govt Services
A new YouGov survey has found that, “large shares of Americans favor increasing funding for dozens of government services; very few support cuts.” The survey asked about “spending in 40 areas, and in none of these areas did a majority of Americans support a reduction in spending.”
- YouGov notes: “More than 70% of Americans think federal funding should be increased, either a lot or a little, for each of a half dozen areas: elderly care, veterans services, cybersecurity, health care services, disaster relief, and mental health care services. Majorities also want more funding directed to homelessness services, food assistance, infrastructure, disability assistance, border security, early childhood education, and K-12 education, along with several others.
- “Foreign aid is the only instance in which a share approaching a majority (49%) supports a reduction in federal funding. Around one-third (35%) want to reduce funding for artificial intelligence.”
- The survey comes after Elon Musk reissued his instruction to federal government workers to justify their work or face dismissal, an email that threated to drive a wedge between Musk’s DOGE and some Cabinet officials who advised workers to disregard the email.
Figure 1: Support for Public Service
