MNI ASIA MARKETS ANALYSIS: Cautious Risk-On Into Fed Blackout

HIGHLIGHTS

• Treasuries look to finish near the top end of Friday's range, a comparatively sedate session to another volatile week. The Federal Reserve entering policy Blackout tonight through the next FOMC on May 7.
• Stocks mostly firmer despite some negative trade related headlines in late NY trade, rebounding after Pres Trump tweeted he "Won't Drop China Tariffs Unless They Give Us Something".
• FX relatively stable and more constructive tone for risk sentiment this week has weighed on the low yielding currencies, helping the likes of USDJPY extend its corrective cycle.

MNI US TSYS: Assessing Headline Risk, Rates & Stocks Firmer

• Treasuries looked to finish near moderate late session highs Friday, headline risk trumping data ahead of the weekend. Treasuries traded in a narrow range for much of the session, extending highs after Pres Trump tweeted he "Won't Drop China Tariffs Unless They Give Us Something" followed by "People Are Starting To Understand How Good Tariffs Are".
• Earlier headlines, however, suggested some thawing in US-China relations as an interview with President Trump was published in which he said he and China's Xi had been in contact, while the Chinese were considering easing tariffs on some US imports.
• Treasury futures pare gains slightly after higher than expected UofM sentiment & current conditions data. Overall 1Y inflation expectations were revised down to 6.5% (prelim 6.7%) in the final April release for a still large acceleration from 5.0% in March and its highest since 1981.
• Tsy Jun'25 10Y contract is currently +9.5 at 111-16.5 after climbing to high of 111-19.5 earlier. Curves mixed: 2s10s -1.377 at 49.790, 5s30s +0.637 at 84.464. Recent gains appear corrective and the resistance to watch is 111-25, the 50.0% retracement of the Apr 7 - 11 bear leg sell-off. Clearance of this level would undermine the bearish theme.
• Cross asset roundup: BBG US$ index firmer but on low end of the range: +1.30 at 1225.18; S&P eminis +28.0 at 5539.25, Gold broadly weaker but off lows (3308.25, -1.16%).

REFERENCE RATES (PRIOR SESSION)
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US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 4.29% (+0.01), volume: $2.542T
• Broad General Collateral Rate (BGCR): 4.28% (+0.01), volume: $1.049T
• Tri-Party General Collateral Rate (TCR): 4.28% (+0.01), volume: $1.012T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $103B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $303B

FED Reverse Repo Operation

RRP usage retreats below $100B to $94.021B this afternoon from $130.004B yesterday. Usage had fallen to $54.772B last Wednesday, April 16 -- lowest level since April 2021. Conversely, usage had surged to the highest level since December 31, 2024 on Monday, March 31: $399.167B. The number of counterparties at 27.

US SOFR/TREASURY OPTION SUMMARY

SOFR & Treasury option flow remained mixed Friday, positioning in wings ahead of the weekend (not to mention the Fed entering policy blackout through the next FOMC annc on May 7). Underlying futures firmer, near late session highs (TYM5 at 111-17, +10 vs. 111-19.5 high). Projected rate cuts holding steady for the most part slight variations vs. early morning levels (*) as follows: May'25 at -2.7bp (-2.1bp), Jun'25 at -16.6bp (-16.5bp), Jul'25 at -37.1bp (-36.1bp), Sep'25 -56.1bp (-55.1bp).

SOFR Options:
-4,000 SFRK5 96.25/96.50 call spds, 0.75
+10,000 SFRZ5 95.43/95.68 put spds, 1.5 vs 96.565/.05%
Block, 5,000 SFRU5 95.25/95.75 put spds, 2.75 vs 96.245/0.10%
Block, 17,650 SFRM5 96.25 calls, 4.0 ref 95.875
Block, 7,000 SFRH6 97.25/98.25 call spds, 17.0 ref 96.695
Block, 3,500 0QH5 97.25/98.00 call spds 16.5 vs. 2QH5 97.00/98.00 call spds, 17.0
Block, 10,000 SFRZ5 95.43/95.68 put spds, 1.75
5,000 SFRZ5 96.50 straddles
2,000 0QK5 96.87/97.12/97.25 broken call flys
3,900 2QK5 97.00/97.18 call spds ref 96.695
3,000 SFRU5 97.50/98.00/98.25 broken call flys ref 96.225

Treasury Options:
5,400 FVM5 107/107.75 put spds 13.5 ref 108-19.5
over 5,000 TYK5 111 straddles 21 ref 111-09.5
2,000 TYM5 111.5 straddles, 1-26
5,000 USM5 118/120 call spds, 34 ref 115-31
2,600 TYM5 114.5 calls, 8 ref 111-13
over 11,600 TYK5 112.5 calls, ref 111-13
1,800 TYK5 110/111 call spds ref 111-10.5
3,000 TYN5 112.5/114.5 call spds vs. TYM5 112/114 call spds 
over 19,500 TYK5 111.5 calls, 4-5
15,000 TYM5 110/111 2x1 put spds, 1 ref 111-07.5 to -06.5
over 15,100 TYM5 111 puts, 50-51 ref 111-07
4,000 FVK5 108.5/109 call spds

MNI BONDS: EGBs-GILTS CASH CLOSE: Gilts Outperform As Trade Headlines Stay Dominant

European curves flattened Friday, with Gilts outperforming Bunds.

• Once again, US trade developments were at the forefront of global markets, with early headlines suggesting some thawing in US-China relations as an interview with President Trump was published in which he said he and China's Xi had been in contact, while the Chinese were considering easing tariffs on some US imports.
• UK retail sales surprised to the upside for a third consecutive month, helping Gilt yields open higher, but 10Y yields would close on the lows.
• Bund yields opened higher and traded within the prior session's ranges for the remainder of the day.
• The German curve bear flattened on the day, with the UK's slightly flatter (parallel shift down in yields through the 10Y segment, with 30Y outperforming). For the week as a whole, the German curve twist flattened  (2Y +3.3bp, 10Y -0.3bp), with the UK's bull flattening (2Y -6.2bp, 10Y -8.7bp).
• Periphery / semi-core EGB spreads closed modestly wider, though came off widest levels of the session.
• Next week's calendar includes flash Eurozone inflation prints for April and a first look at Q1 GDP across EZ member states.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 3.4bps at 1.719%, 5-Yr is up 2.9bps at 2.017%, 10-Yr is up 2.1bps at 2.469%, and 30-Yr is up 1.2bps at 2.889%.
• UK: The 2-Yr yield is down 2.1bps at 3.858%, 5-Yr is down 2.1bps at 3.974%, 10-Yr is down 2.1bps at 4.479%, and 30-Yr is down 2.5bps at 5.219%.
• Italian BTP spread up 0.8bps at 110.5bps / Spanish up 1.1bps at 65.4bps

MNI EGB OPTIONS: Rate Call Structure Buying Continues At End-Week

Friday's Europe rates/bond options flow included:

• RXM5 135.00/135.50/136.50c ladder, bought for -1.5 in 7k
• ERU5 98.3125/98.37/98.4375/98.50c condor bought for 0.75 in 4k
• ERU5 98.25/98.37/98.50/98.62c condor vs 98.00/97.75ps, bought the condor for 1.5 in 8k
• SFIQ5 96.65/96.75/96.90/97.00c condor, bought for half in 5k
• SFIU5 96.40/96.60cs vs 95.80p, bought the cs for 3.5 in 3k (also bought Thurs in 10k)

MNI FOREX: Japanese Yen Weakness Stands Out Amid More Stable Markets

• The relatively stable and more constructive tone for risk sentiment this week has weighed on the low yielding currencies, helping the likes of USDJPY extend its corrective cycle. This dynamic continues to play out as we approach the weekend, with the pair briefly testing the 144 handle, representing a near 3% recovery from the Tuesday low.
• While a notable recovery, spot remains shy of initial resistance, which comes in at 144.56, the 20-day EMA. A clear break of this level would signal scope for a stronger recovery and might target firmer resistance at the 50-day EMA, around 147.40. Overall, moving average studies are in a bear-mode position highlighting a dominant downtrend for now.
• The recent pullback in EURJPY appears corrective and today’s 0.75% advance underpins this theme. Attention is on 164.19, the Mar 18 high and a bull trigger. Clearance of this hurdle would resume the uptrend.    
• Elsewhere in G10, SEK and NZD have also weakened notably, however other major pairs have exhibited tighter trading ranges.
• Initial dollar strength weighed on EURUSD, prompting a low print of 1.1316. Dips to the low 1.13s have been well supported across the final three sessions of the week, keeping a bullish trend condition intact. Key support is unchanged at the 20-day EMA, at 1.1201. A break of this average would signal scope for a deeper retracement.
• Canada holds elections to its 45th Parliament on Monday, 28 April, amid a political landscape that has changed beyond all recognition since the start of the year. Separately next week, Eurozone inflation data, the BOJ and US employment are all calendar highlights.

MNI FX OPTIONS: Expiries for Apr28 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.1250(E2.6bln)
• USD/JPY: Y140.00($1.5bln)
• AUD/USD: $0.6620(A$787mln)

MNI US STOCKS: Late Equities Roundup: Late Session Support

• Stocks are gaining again, the DJIA still lagging gains SP eminis and Nasdaq shares despite some negative trade related headlines in late NY trade. Stocks retreated in the second half after Pres Trump tweeted he "Won't Drop China Tariffs Unless They Give Us Something" followed by ""People Are Starting To Understand How Good Tariffs Are".
• Currently, the DJIA is down 20.63 points (-0.05%) at 40071.59, S&P E-Minis up 31 points (0.56%) at 5542.5, Nasdaq up 182.7 points (1.1%) at 17348.78.Little change in leading/lagging sectors as before: Discretionary & IT outperforming Materials and Financials:
• Consumer Discretionary and Communication Services sectors continued to lead gainers in late trade, Tesla leading the Discretionary sector gaining +9.66%. Elsewhere, Chipotle Mexican Grill +4.93%, Best Buy Co +2.24%, Tractor Supply +1.80% and Amazon.com +1.39%.
• Notable gains in IT stocks included VeriSign +8.35%, NVIDIA +4.54%, First Solar +3.94%, Arista Networks +3.57%, Micron Technology +3.51% and Palantir Technologies +3.21%.
• Materials sector weighed by chemical and mining stocks, the latter as gold fell near 2% to 3285.0 Friday: Eastman Chemical -6.35%, Newmont -3.55%, Avery Dennison -2.18%, PPG Industries -1.60% and Albemarle -1.41%.
• Meanwhile, insurance companies weighed on the Financial sector: Erie Indemnity -10.21%, Aon -8.11%, Arthur J Gallagher -3.38%, Brown & Brown -3.35%, Willis Towers Watson -1.75% and W R Berkley -1.71%.
• Earnings resume Monday with Domino's Pizza, Roper Technologies and Revvity reporting ahead of the open. After Monday’s close: Alexandria Real Estate, Welltower Inc, Brown & Brown, Nucor, Waste Management, Cadence Design Systems, SBA Communications, Solaris Energy, Noble Corp, Universal Health Services and Teradyne. 

MNI EQUITY TECHS: E-MINI S&P: (M5) Breaches Resistance

• RES 4: 5837.25 High Mar 25 and a bull trigger    
• RES 3: 5773.25 High Apr 2      
• RES 2: 5625.35 50-day EMA and a key resistance
• RES 1: 5554.50 Intraday high                             
• PRICE: 5549.00 @ 1504 ET Apr 25  
• SUP 1: 5355.25/5127.25 Low Apr 24 / 21 and a key support                      
• SUP 2: 4996.43 76.4% retracement of the Apr 7 - 10 bounce
• SUP 3: 4832.00 Low Apr 7 and the bear trigger
• SUP 4: 4760.88 1.618 proj of the Feb 19 - Mar 13 - 25 price swing 

The corrective bull cycle in S&P E-Minis that started on Apr 7, remains in play for now. The contract has traded higher this week and in the process breached a number of important short-term resistance points. Price has cleared the 20-day EMA and pierced 5528.75, the Apr 10 high. The next key resistance to watch is 5625.35, the 50-day EMA. Initial key support lies at 5127.25, the Apr 21 low. A break would be bearish.

MNI AMERICAS OIL: WTI Crude is on track for a net weekly decline

April 25 - Americas End-of-Day Oil Summary: WTI Crude is on track for a net weekly decline despite late short covering around trade uncertainty. Some softening seen Friday today amidst improved sentiment around a Russia-Ukraine peace agreement. Meanwhile, markets are closely watching for signs of tariff de-escalation expected over the coming weeks, particularly between the US and China.

• White House Middle East envoy Steve Witkoff met Russian President Vladimir Putin today for their fourth set of in-person talks. AFP says ‘possible’ direct Russia-Ukraine talks were discussed. Witkoff was set to raise with Putin a US demand that Ukraine have the right to develop its own army as part of any peace agreement, according to Bloomberg.
• In a TIME interview on April 22, Trump said he thought Putin will make peace in Ukraine, and that he thought a deal was going to happen.
• Trump said the US administration is in talks with China, counter to Chinese claims that no discussions had taken place. China is considering exempting some US imports from its 125% tariffs.
• Upside is limited by uncertainty around Kazakhstan's commitment to OPEC+ targets, potential June OPEC+ output increases, and ongoing US-Iran nuclear talks.
• Saudi crude exports are set for growth in May amid increased production quotas, lower OSPs, and signs of a weaker-than-normal seasonal domestic demand rise, Vortexa says.
• Russia’s oil producers are drilling wells at the fastest pace in five years, Bloomberg reports.
• Kpler have revised the global oil demand growth forecast for 2025 from 0.8 mb/d to 0.64 mb/d due to escalating US–China trade tensions.
• Phillips 66 said the bulk of their annual turnarounds are complete with Bayway 2Q refinery utilization projected at mi-90%.
• The Baker Hughes oil rig count was up 2 w/w to 483, which was down 16 or 3.2% y/y. Canadian oil rigs were down 6 to 81 from 87 a week ago and up 25 from 56 a year ago.
• US cracks are slightly firmer on the day amidst weaker underlying crude prices as compared with the products, especially ULSD that benefitted from tighter inventories.
  • WTI June futures were up 0.4% at $63.02
  • WTI July futures were up 0.4% at $62.37
  • RBOB May futures were up 0.6% at $2.12
  • ULSD May futures were up 1.1% at $2.17
  • US gasoline crack up 0.1$/bbl at 25.45$/bbl
  • US ULSD crack up 0.3$/bbl at 25.72$/bbl

MONDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
28/04/2025	0600/0800	**	SE	PPI
28/04/2025	1000/1100	**	GB	CBI Distributive Trades
28/04/2025	1400/1000	**	US	housing vacancies
28/04/2025	1430/1030	**	US	Dallas Fed manufacturing survey
28/04/2025	1530/1130	*	US	US Treasury Auction Result for 13 Week Bill
28/04/2025	1530/1130	*	US	US Treasury Auction Result for 26 Week Bill
29/04/2025	2301/0001	*	GB	BRC Monthly Shop Price Index