STIR: Fed Rates Most Hawkish In A Month Before FOMC Decision

• RES 4: 112-07   High Mar 18 
• RES 3: 111-29   50-day EMA
• RES 2: 111-12+ 20-day EMA 
• RES 1: 111-01+ High Mar 25
• PRICE:‌‌ 110-13+ @ 11:18 GMT Mar 30
• SUP 1: 109-24   Low Mar 27
• SUP 2: 109-22+ 1.764 proj of the Mar 10 - 13 - 18 price swing
• SUP 3: 109-12   2.000 proj of the Mar 10 - 13 - 18 price swing
• SUP 4: 109-01+ 2.236 proj of the Mar 10 - 13 - 18 price swing

A bear cycle in Treasuries remains intact and recent short-term gains have been corrective. Friday’s fresh cycle low confirms a resumption of the downtrend and maintains the price sequence of lower lows and lower highs. This opens 109-22+ next, a Fibonacci projection. On the upside, firm resistance is seen at 111-12+, the 20-day EMA. Short-term gains would be considered corrective and allow the oversold condition to unwind.

• US Data/Speaker Calendar (prior, estimate). All times ET
• 03/30 1030 Dallas Fed Mfg Activity (0.2, 1.5)
• 03/30 1030 Fed Chairman Powell moderated discussion, Harvard
• 03/30 1130 US Tsy $89B 13W & $77B 26W bill auctions
• 03/30 1600 NY Fed Williams on economy
• Source: Bloomberg Finance L.P. / MNI
   

Hawkish move in EUR STIRs in the time since the European Commission’s economic survey.

• We flagged the potential for increased attention on the data ahead of the release, specifically on the inflation front.
• The press release accompanying the data noted that “press Managers’ selling price expectations were sharply up in all four business sectors, and strikingly so in industry. Selling price expectations moved further beyond their long-term average in all business sectors. Consumers’ perceptions of price developments over the past twelve months increased moderately, but their expectations about price developments for the next twelve months surged”. This triggered the hawkish move.
• ECB-dated OIS pricing 80bp of hikes through year-end vs. ~73bp at one point this morning.
• Euribor futures now 0.5-3.0 firmer on the day.
• Thursday’s high in ERZ6 held, with the contract now 7.0 off highs.
• Monday ECB-speak has been fairly neutral but cognisant of stagflationary risk linked to the Iran conflict.
• National level German inflation data is due later, with the regional level readings seen so far roughly in line with national consensus (+2.6% Y/Y for CPI vs. +1.9% last time out).