TARIFFS: Macron Asks European Businesses To Suspend Investments In US
French President Emmanuel Macron, speaking on US tariffs following a meeting with business leaders, calls for EU investments in the US to be suspended. Macron: "We are not naive, so we are going to protect ourselves. [It is] important that future investments, or those announced in recent weeks, be, for a time, suspended, until things have been clarified with the United States. What would be the message of having major European players start investing billions of euros in the American economy at a time when they are hitting us,"
- Macron says the tariffs are a shock for international trade, that they are "brutal, unjustified and unprecedented". Macron: "Percieved trade imbalances do not take into account digital services...Indirect consequences of tariffs may lead other countries in Asia to boost exports to Europe...The US economy and consumers will become poorer and weaker."
- On the EU response, Macron says the Union "Will react in an organised and unified manner" and that the response "will be more massive than the previous response". Macron: "If Europeans work together in their response to US tariffs, we will succeed in dismantling US tariffs...Europe must react industry by industry."
- Macron says that the Trump administration's diagnosis of trade imbalances is correct, "but tariffs are the wrong answer...Western economies need to be more productive."
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GILTS: Still Underpinned As Equities & Oil Falter
A fresh move lower in equities counters any weakness that followed the latest round of German fiscal headlines, leaving gilt futures in the upper half of today’s range.
- First resistance at 93.51 has been pierced, with any fresh extension higher set to target the Feb 6 high and bull trigger (93.83).
- Yields 3-5bp lower, front end continues to outperform on the day.
- Offshore matters still dominate given macro readthrough for U.S. tariff choices/subsequent retaliation from targeted nations and European feedthrough from potential fiscal loosening in Germany.
- Oil lower alongside global growth worries, providing further support.
EQUITY TECHS: E-MINI S&P: (H5) Double Top Reversal
- RES 4: 6178.75 High Dec 6 ‘24 and key resistance
- RES 3: 6166.50 High Jan 19
- RES 2: 6029.03 50-day EMA
- RES 1: 5924.0 Low Feb 25
- PRICE: 5805.25 @ 14:45 GMT Mar 4
- SUP 1: 5784.00 Low Nov 4 ’24
- SUP 2: 5730.00 Low Sep 18 ‘24
- SUP 3: 5698.25 Low 50.0% retrace of the Aug 5 - Dec 6 ‘24 bull leg
- SUP 4: 5658.00 Low Sep 12 ‘24
A sharp sell-off in the S&P E-Minis contract this week, reinforces a short-term bear threat. The contract has traded to a fresh low and the move down has resulted in a print below the next key support at 5809.00, the Jan 13 low. A clear break of this level would highlight a stronger reversal and confirm a double top pattern on the daily scale. This would open 5784.00, the Nov 4 ‘24 low. Initial firm resistance to watch is 6029.03, the 50-day EMA.
STIR: SOFR Option Update, Call Buying Edges Puts, Supports Implieds
Underlying futures continue to gain. Projected rate cuts through mid-2025 gaining vs. late Monday levels (*) as follows: Mar'25 at -3.1bp (-1.8bp), May'25 at -14.0bp (-10.2bp), Jun'25 at -31.9bp (-26.0bp), Jul'25 at -43.1bp (-35.3bp).
- Block, 15,000 0QM5 97.00/97.50 call spds 7.5
- +10,000 0QM5 97.00/97.50 call spds, 7.5 ref 96.01
- +5,000 SFRZ5 96.00 puts, 15.5
- -3,000 SFRZ5 96.43 straddles, 72.0 ref 96.415
- +5,000 SFRU5 97.00 calls 11.0 ref 96.275
- -5,000 SFRJ5 96.12/96.37 call spds, 3.75 ref 96.005
- +20,000 0QM5 97.00/97.50 call spds, 7.25 ref 96.565
- -30,000 0QM5 95.12/95.50 put spds .75 vs. 96.545 to -.535/0.06%
- -10,000 SFRN5 95.56/95.75/95.93 put flys, 4. ref 96.26
- -5,000 SFRZ5 96.25/96.50 call spds, 10.0 ref 96.41
