GERMANY: Merz Claims Good Relations w/Trump Amid Verbal Spat

The latest weekly CFTC CoT report showed asset managers building on their overall net long position in Tsy futures, while leveraged funds trimmed their net short in the week ending March 24.

• Broader non-commercial accounts added to net shorts in TU, TY & WN futures, while trimming net shorts across FV and UXY futures. They also trimmed a small net long in US futures. The cohort is still net short across much of the curve, with the modest net long in US futures providing the exception to the wider theme. The reduction in FV net shorts was particularly sizeable. See the table below for the exacts of the positioning movement for this cohort.

Source: MNI - Market News/CFTC/Bloomberg Finance L.P.

Treasuries are modestly firmer across the curve, extending Friday’s gains in cross-asset moves that were more typical of traditional risk-off periods, despite equity futures seeing a sizeable bounce off overnight lows. President Trump told the FT that the US could “take the oil in Iran” whilst the WSJ reports he is weighing a military operation to extract nearly 1,000lbs of uranium from Iran. 

• Cash yields are 2.5-3.7bp lower from Friday’s close, with declines led by the belly.
• Declines in yields are led entirely in real terms, with the 5Y yield of -3.7bps for example driven by +0.2bp for the breakeven and -3.8bp for the real yield.
• TYM6 trades at 110-13+ (+08+) off an earlier high of 110-17+, on solid cumulative volumes of 445k.
• Friday’s equity pressure saw more traditional risk-off behavior with core fixed income firming, helping TYM6 lift off a fresh low of 109-24 early in the US session.
• Short-term gains have been corrective though, with resistance seen at 111-01+ (Mar 25 high), and a bear cycle remains in place with support at that 109-24 before 109-22+ (Fibo projection of Mar 10-13-18 price swing).
• Data: Dallas Fed mfg Mar (1030ET)
• Fedspeak: Fed Chair Powell in moderated discussion (1030ET, Q&A only), NY Fed’s Williams on economy (1600ET, text + Q&A) – see STIR bullet
• Bill issuance: US Tsy $89B 13W & $77B 26W bill auctions (1130ET)
• Politics: Trump in White House internship program photo (1015ET), Trump in policy meeting (1330ET), Trump in signing time (1600ET)

• In FX, a bearish theme in EURUSD remains intact and recent short-term gains appear to have been corrective. Resistance to watch is at the 50-day EMA, at 1.1660. A confirmed breach of this EMA would signal a stronger reversal. The bear trigger lies at 1.1411, the Mar 13 and 16 low. Clearance of this support would resume the downtrend.
• The trend condition in GBPUSD remains bearish - moving average studies are in a bear mode position highlighting a dominant downtrend. Resistance to watch is at the 50-day EMA, at 1.3432. The bear trigger is 1.3219, the Mar 13 low. Clearance of this level would resume the downtrend and open, the Nov 26 ‘25 low.
• A fresh cycle low in USDJPY last Friday confirms a resumption of the uptrend and maintains the bullish price sequence of higher highs and higher lows. Clearance of the 160.00 handle also strengthens the bullish condition. Sights are on 160.79 next, a 1.500 projection of the Jan 27 - Feb - 12 price swing. Initial firm support lies at 157.28, the 50-day EMA.