AUDUSD TECHS: MA Studies Remain In A Bull-Mode Position

The most notable aspect of February's ISM Manufacturing report was a jump in Prices Paid to 70.5 (+11.5pts) in Feb for its highest since Jun 2022 in a
resurgence of input cost pressure signs after four particularly stable months. That resurgence is seen continuing in March, with the Prices Paid gauge seen rising to 73.8 from 70.5 prior or a fresh post-Jun 2022 high.

• March saw mixed regional Fed prices paid dynamics: they fell sharply in New York and in Kansas City, but rose strongly in Philadelphia and Dallas, with Richmond reporting a diminished % Y/Y 12-month lookback. Overall the average actually fell to a 13-month low (ex-Richmond) though that was heavily influenced by what appears to be an outlier in the Empire State reading (36.6 after 49.1).
• In the Chicago Business Barometer, produced with MNI, Prices Paid gained 3.4 points in March, now at the highest level since last December. Respondents noted that metals were already driving cost increases, and that geopolitical tensions have driven up other costs too.
• March S&P flash PMI "Higher prices were widely linked to the war-related spike in energy costs and tightening supply conditions. Supplier delivery times in manufacturing lengthened to the greatest extent since October 2022."

March's ISM Manufacturing report is expected to show a steady headline PMI reading at 52.3 (52.4 prior), with a pickup in prices reflecting the ongoing energy shock from the conflict in the Middle East. New Orders are seen dipping to 55.0 after 55.8, with the Employment gauge up slightly to 49.0 after 48.8.

• Despite those expectations for a retreat, indicators of manufacturing activity in March have been largely positive.
• Regional Fed surveys' national ISM manufacturing equivalents were very strong across the board in 4 of 5 regions, each of which saw rises in March on an ISM basis, some to multi-year highs. The exception was Dallas which saw a pullback (51.0 from 55.2). Average New Orders across the 5 surveys jumped to 56.5 from 53.6 (led by KC), highest since April 2022; Employment rose to 51.3 from 49.0 for a 4-month high, again led by KC.
• The Chicago Business Barometer, produced with MNI, tempered 4.9 points to 52.8 after three consecutive rises with the decline driven by Employment, Production and New Orders. Lifts in Order Backlogs and Supplier Deliveries provided some offset. The ISM-weighted equivalent fell 3.9 points to 52.0.
• S&P Global flash US manufacturing PMI showed an above-expected 52.4 (cons 51.5) after 51.6 in February - a 2-month high, noting "a more upbeat perspective among manufacturers ... buoyed in part by fewer tariff-related worries". 

SOFR & Treasury options remained mixed late Tuesday, better volumes on net focused on downside puts as underlying futures see-saw off early session highs. Projected rates back to pricing marginally dovish, latest vs. late Monday lvls (*): Apr'26 at 0.5bp (+.8bp), Jun'26 at -1.5bp (-.3bp), Jul'26 at -2.9bp (-.7bp), Sep'26 at -3.1bp (-.3bp), Oct'26 -3.9bp (-.2bp).

• SOFR Options:
  • -1,000 0QH7 96.62 straddles, 83.5
  • +10,000 SFRZ6 97.50/98.25 2x3 call spds, 2.0 net ref 96.36
  • over 14,300 SFRJ6 96.12 puts, 0.5
  • 2,500 SFRZ6 96.50/97.12 4x5 call spds vs. SFRZ6 95.75 puts x4over
  • 7,300 SFRU6 97.00 calls, 7.0 ref 96.33
  • Block, 5,000 SFRZ6 96.62/96.87 call spds , 6.5 ref 96.355
  • -5,600 SFRZ6 96.50 calls, 26.5 ref 96.355/0.43%
  • 2,000 0QJ6 96.00/96.12 put spds ref 96.455
  • +2,000 SFRK6 96.18/96.25/96.37/96.43 call condors, 4.5 ref 96.33
  • -1,500 SFRU6 96.50 calls, 14.75 vs. 96.31/0.38%
  • -1,300 SFRM7 96.75/97.25 call spds, 14.5
• Treasury Options:
  • 6,000 TYK6 109/110 put spds 11 ref 110-31
  • over 13,100 TYK6 108 puts, 7 last ref 110-31 to -30.5
  • over 17,000 FVK6 109.5 calls, 9 last ref 108-08.75
  • +10,000 TYM6 111/112/113 call trees, 4-4.5
  • 1,000 USM6 114/116 call spds
  • 2,800 FVM6 108 straddles, 137 ref 108-06.75
  • +10,000 TYK6 111/111.75/112.5 call trees, 6 net ref 111-00.5
  • 2,000 TYK6 108/109 put spds
  • 4,000 TUK6 103.12 puts, 4.5
  • total volume TYK6 110.5 puts over 36,000
  • +5,000 TYK6 109.25/110.5 put spds vs 112.5 calls, 5 net/spd over
  • -12,000 TYK6 109.5/110.5 put spds, 18, total volume 109.5 put over 24.3k
  • +5,000 TYK6 109.25/110.5 put spds, 22
  • over +10,000 TYK6 109.5/110 put spds, 8 ref 110-29.5
  • 6,000 TYK6 110.5/112.5 put spds, 22 ref 110-30