STIR: Fed June Cut Odds Drift Further On Improved Risk Environment
Apr-23 10:34
- Fed Funds implied rates are 0.5-4bp higher for 2025 meetings with a firmer risk environment following US President Trump saying he has no intention of firing Powell (but still urges lower rates) and a softer stance on China trade.
- Cumulative cuts from 4.33% effective: 2bp May, 17.5bp Jun, 36.5bp Jul and 82.5bp Dec.
- The Dec 2025 implied rate is 3-4bps lower than overnight highs but otherwise at its highest since early last week.
- The SOFR implied terminal yield of 3.225% (SFRU6) sits +7bp on the day.
- Today’s data focus is on flash PMIs and the Fed’s Beige Book. There is another heavy line-up for Fedspeak although the ‘opening remarks’-heavy nature of today’s speaking schedule could limit content and all speakers have spoken recently.
- Yesterday’s Fedspeak ended up being surprisingly light on headlines amidst Trump’s pressure on the Fed (prior to him somewhat rolling back) although Kugler was marginally less hawkish having previously more explicitly pushed the inflation side of the dual mandate.
- Kugler (permanent voter): "I will support maintaining the current policy rate for as long as these upside risks to inflation continue, while economic activity and employment remain stable. I remain committed to achieving both of our dual-mandate goals of maximum employment and stable prices”. She had said Apr 7 that inflation was now the more pressing issue with regards to tariffs and that the Fed needs to make sure it doesn't rise.
- 0900ET – Goolsbee (’25, dove) opening remarks at economic mobility summit (text tbd)
- 0930ET – Musalem (’25, hawk) opening remarks at Fed Listens event (text tbd)
- 0935ET – Waller (permanent voter, dove) opening remarks at Fed Listens event (text only)
- 1435ET – Musalem (’25, hawk) informal closing remarks
- 1830ET – Hammack (’26, hawk) on balance sheet (text + Q&A)
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GERMAN T-BILL AUCTION RESULTS: 3/9-Month Bubills
Mar-24 10:32
| Type | 3-month Bubill | 9-month Bubill |
| Maturity | Jun 18, 2025 | Dec 10, 2025 |
| Allotted | E2.195bln | E1.295bln |
| Previous | E2.002bln | E1.025bln |
| Total sold | E2.5bln | E1.5bln |
| Target | E2bln | E2bln |
| Avg yield | 2.158% | 2.105% |
| Previous | 2.279% | 2.102% |
| Bid-to-cover | 1.56x | 1.44x |
| Previous | 2.13x | 2.31x |
| Bid-to-offer | 1.37x | 1.25x |
| Previous | 1.7x | 1.58x |
| Previous date | Feb 24, 2025 | Feb 24, 2025 |
US 10YR FUTURE TECHS: (M5) Trend Needle Points North
Mar-24 10:28
- RES 4: 113-04 2.0% 10-dma envelope
- RES 3: 112-13 1.500 proj of the Jan 13 - Feb 7 - Feb 12 price swing
- RES 2: 112-01/02 High Mar 4 / 1.382 proj of Jan 13-Feb 7-12 swing
- RES 1: 111-25 High Mar 11
- PRICE: 110-29 @ 10:17 GMT Mar 24
- SUP 1: 110-20+ 20-day EMA
- SUP 2: 110-12+ Low Mar 6 & 13
- SUP 3: 110-05/00 50-day EMA / High Feb 7 and a key support
- SUP 4: 109-13+ Low Feb 24
Treasury futures are trading in a broad range and this consolidation phase marks a pause in the uptrend. Moving average studies continue to highlight a dominant uptrend - they remain in a bull-mode position. Recent gains have resulted in a print above 111-22+, the Dec 3 ‘24 high. A clear breach of this level would open 112-02 and 112-13, Fibonacci projections. Firm support is unchanged at 110-00, Feb 7 high.
CROSS ASSET: MONTH END EXTENSION
Mar-24 10:28
Although some are showing above averages in the EU Govies versus previous March for MS, overall they are still on the average side.
Bloomberg Bonds:
- US Tsys: +0.07yr (average).
- EU Govies: +0.08yr (average).
- UK Govies: -0.03yr (non event).
MS Bonds:
- US Tsys: +0.05yr (small).
- EU Govies: +0.07yr (average).
- UK Govies: -0.03yr (non event).
Barclays FX:
- Their Overall rebalancing Model shows a strong USD buying, while it indicates moderate buying against most majors, their strongest signal is against the EUR.
