MNI ASIA MARKETS ANALYSIS: Confidence Continues Decline

HIGHLIGHTS

• Treasuries look to finish modestly higher, holding a narrow range since midday after gradually recovering from this morning's opening lows.
• Tsy pared losses after Philly Fed non-mfg index came out much lower than prior -32.5 vs. -13.1, extended gains after Conf. Board Consumer Confidence came out lower than expected, New Home Sales dipped but up-revision of prior more than made up for the move.
• The Richmond Fed's manufacturing survey for March fully reversed February's improvement, with forward-looking survey components pulling back sharply, but inflation expectations soaring.

MNI US TSYS: Tsys Consolidate, Consumer Confidence Dips, Fed Gov Kugler Wait & See

• Treasuries look to finish modestly higher, holding a narrow range since midday after gradually recovering from this morning's opening lows.
• Tsy futures pared losses after Philly Fed non-mfg index comes out much lower than prior -32.5 vs. -13.1. Futures extended gains after Conf. Board Consumer Confidence came out lower than expected, New Home Sales dipped but up-revision of prior more than made up for the move.
• Fed Gov Kugler (permanent FOMC voter)'s overall view on rates is unsurprisingly very similar to pre-FOMC and the Committee's overall signaling of a wait-and-see stance on rate moves
• Little react to this afternoon's $69B 2Y note auction (91282CMV0), in-line with 3.984% high yield vs. 3.985% WI.
• Tsy Jun'25 10Y futures trade 110-23.5 (+6) vs. 110-26 high, initial technical resistance well above at 111-17.5/25 (High Mar 20 / 11). Curves still steeper but off earlier highs: 2s10s +.296 at 29.876 (31.698 high), 5s30s +2.459 at 59.074 (59.800 high).
• Cross asset roundup: Bbg US$ index receded (-1.21 at 1270.55), Gold trades +8.0 at 3019.04, stocks near steady (SPX Eminis) to mildly mixed, the tech-heavy Nasdaq mildly higher.
• Wednesday focus on Durables/Cap Goods at 0830ET, Tsy 5Y Sale at 1300ET, Fed Speak: MN Fed Kashkari Fed listens event (no text, Q&A) at 1000ET, StL Fed Musalem on economy/policy (text, Q&A) at 1310ET.

SOFR FIXES AND PRIOR SESSION REFERENCE RATES
​​​​​​​
SOFR Benchmark Settlements:

• 1M -0.00003 to 4.32163 (+0.00152/wk)
• 3M +0.00697 to 4.30281 (+0.00498/wk)
• 6M +0.02118 to 4.21567 (+0.01101/wk)
• 12M +0.05253 to 4.05632 (+0.03294/wk)

US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 4.30% (+0.01), volume: $2.444T
• Broad General Collateral Rate (BGCR): 4.29% (+0.01), volume: $954B
• Tri-Party General Collateral Rate (TCR): 4.29% (+0.01), volume: $933B
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $106B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $296B

FED Reverse Repo Operation

RRP usage rebounds to $214.786B this afternoon from $196.565B Monday. Compares to $58.770B (lowest level since mid-April 2021) on February 14. The number of counterparties at 48.

US SOFR/TREASURY OPTION SUMMARY

Heavy SOFR put volume reported in early NY trade, Tsy option volumes remained muted but leaned towards low delta puts & spds with underlying futures climbing off early lows, holding modest gains through the second half. Projected rate cuts through mid-2025 gain slightly vs. early morning levels (*) as follows: May'25 at -3.9bp, Jun'25 at -18.3bp (-16.3bp), Jul'25 at -29.5bp (-27bp), Sep'25 -44.5bp (-41.5bp).

SOFR Options:
over 64,600 0QU5 95.50 puts, 4.5 ref 96.42 (45.5k piece followed by smaller lots)
6,000 SFRJ5 95.75 puts ref 95.865
2,000 SFRZ5 95.62/95.87/96.06 broken put flys ref 96.23
Blocks, 9,000 SFRU5/SFRZ5 95.68/95.81 put spd spds, 0.25 adds to 23k on Monday
4,000 SFRM5 96.00/96.12/96.37/96.50 3x2x2x2 call condors ref 95.855
8,000 SFRM5 95.62/95.75 put spds ref 95.855
3,000 SFRZ5 96.62/97.12 call spds ref 96.23
2,000 0QK5 95.75/96.00 put spds ref 96.425
2,000 SFRN5 95.62/95.75 put spds ref 96.09

Treasury Options:
2,000 FVM5 107.75 straddles, ref 107-23
2,000 TYK5 111.5/112 call spds 8 ref 110-21
over 13,000 TUK5 103.37/103.5 put spds ref 103-13
4,600 TYM5 107.5/109 3x2 put spds ref 110-11
2,000 TUK5 103.12 puts ref 103-11
1,800 TYK5 109/109.5 put spds 
over 5,200 TYK5 112.5 calls, 13 ref 110-11
1,200 TYM5 113/115/117 call flys, ref 110-12

MNI BONDS: EGBs-GILTS CASH CLOSE: Gilts Underperform Ahead Of Remit

Gilts underperformed Bunds Tuesday ahead of Wednesday's Gilt remit announcement and UK inflation data.

• Core EGBs and Gilts softened in morning trade, with EGBs in particular weighed by some renewed optimism over US tariffs, as well as heavier corporate issuance.
• Bunds regained ground in afternoon trade, helped by a pullback in energy prices as Ukraine and Russia announced a US-brokered ceasefire. Gilts failed to participate in the rally, hence the underperformance for the day.
• March German IFO was more solid than expected overall, with the expectations component picking up noticeably.
• The German curve bear steepened on the day through the 10Y segment; in the UK, the belly and 30Y segments underperformed.
• Periphery EGBs benefited from a broader risk-on tone with equities gaining: spreads tightened on the day, though closed off the session's tightest levels.
• Wednesday's focus will be the UK Spring fiscal statement and Gilt remit, which could include the largest gross issuance target since 2020/21. MNI's preview is here. Also bearing attention as usual is UK CPI (MNI preview here).

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 1.6bps at 2.137%, 5-Yr is up 2.3bps at 2.427%, 10-Yr is up 2.7bps at 2.798%, and 30-Yr is up 2bps at 3.131%.
• UK: The 2-Yr yield is up 4bps at 4.301%, 5-Yr is up 4.5bps at 4.386%, 10-Yr is up 4bps at 4.753%, and 30-Yr is up 4.7bps at 5.369%.
• Italian BTP spread down 0.5bps at 109.6bps / Spanish down 0.7bps at 62.3bps 

MNI OPTIONS: Call Structure Selling Continues Tuesday

Tuesday's Europe rates/bond options flow included:

• IKM5 117/114.5ps vs 119.5c, bought the ps for 81 in ~1.7k
• ERM5 98.00/98.12cs, bought for 1.25 in 4k
• ERM5 97.875 / 98.00 call spread, sold for 4 in 10k (apparent unwind)
• ERZ5 98.50/98.75cs, sold at 1.75 in 30k
• 0RK5 98.00/98.12cs vs 97.56p, bought the cs for 1.75 in 10k
• SFIK5 95.60/95.50ps, bought for 1.25 in 3k
• SFIU5 95.45/95.75/96.05c fly, sold at 9.75 in 5k
• SFIZ5 96.00/96.20/96.30 broken call fly, bought for 4.75in 2.5k

MNI FOREX: USDJPY Reverses South, Focus Shifts to GBP as CPI/Spring Statement Awaits

• In stark contrast to yesterday’s price dynamics in G10 FX markets, USDJPY is now the worst performing major pair, reflective of the pull lower for US yields. While the pair is 0.6% lower on Tuesday, and 120 pips off the overnight highs, spot still remains higher on the week.
• Today’s peak print of 150.94 closely matched a firm resistance for the pair, respecting both the Feb 07 low and the 50-day EMA. A clear break of this area would signal scope for a stronger rally.
• Overall, the primary trend direction is down, and recent gains are considered corrective. A resumption of weakness would refocus sights on initial support at 148.18, the Mar 20 low. Further out, key support and the bear trigger remain at 146.54, the Mar 11 low, of which clearance would resume the technical downtrend.
• GBPUSD remains a touch firmer this week, just above 1.2950, ahead of the plethora of short-term risk events for the UK. Standing out here are the Spring Statement and UK inflation data which are due on Wednesday.
  • Please see the attached report for the latest analyst views on GBP, as well as a full technical update for a number of GBP crosses: https://mni.marketnews.com/4c0UAhX
• EURUSD has exhibited a 53pip range on the session, broadly consolidating just above the 1.0800 handle. The pair’s pullback from the 1.0955 highs has so far fallen just shy of initial targets/support, with the bullish trend outlook remaining unchanged for now.
  • However, a corrective technical phase remains in play. First support to watch remains a touch below the overnight lows at 1.0765, the 20-day EMA. Below here, 1.0624 represents a more significant support, the 50-day EMA and a short-term pivot level.
• In emerging markets, the Brazilian real is the best performing currency following a hawkish tilt to the latest set of central bank minutes. USDBRL has fallen 1.25% to levels around 5.69 as we approach the close.

MNI FX OPTIONS: Expiries for Mar26 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.0690(E912mln), $1.0775-90(E766mln), $1.0900-25(E2.3bln)
• USD/JPY: Y148.00-10($932mln), Y151.74($519mln), Y152.00($955mln)
• AUD/USD: $0.6370-80(A$699mln)
• USD/CAD: C$1.4200($556mln), C$1.4240($634mln), C$1.4500($781mln)
• USD/CNY: Cny7.2430($600mln), Cny7.3000($500mln)

MNI US STOCKS: Late Equities Roundup: Narrow Ranges, Media & Discretionary Leading

• Stocks continue to hold narrow ranges late Tuesday, trading near steady (SPX Eminis) to mildly mixed, the tech-heavy Nasdaq mildly higher. Currently, the DJIA trades down 92.54 points (-0.22%) at 42491.35, S&P E-Minis down 3 points (-0.05%) at 5812.5, Nasdaq up 27.8 points (0.2%) at 18216.44.
• Communication Services and Consumer Discretionary sectors outperformed in late trade, interactive media and entertainment names supporting the former with Netflix +2.21%, Fox Corp +1.87%, Take-Two Interactive Software +1.65% and Interpublic Group +1.45%
• Consumer Discretionary sector buoyed by Wynn Resorts +2.25%, Garmin +1.58%, General Motors +1.48% and Ulta Beauty +1.33%.
• On the flipside, Utilities and Health Care sectors underperformed in the second half, Vistra Corp -2.81%, Eversource Energy -2.68%, FirstEnergy  -2.64%, Edison International and Dominion Energy both -2.34%.
• Meanwhile, pharmaceuticals weighed on the Health Care sector: Merck & Co -5.43%, AbbVie -3.86%, Regeneron Pharmaceuticals -3.36% and Amgen -3.11%.

MNI EQUITY TECHS: E-MINI S&P: (M5) Holding On To Its Recent Gains

• RES 4: 5970.87 61.8% retracement of the Feb 19 - Mar 13 bear leg 
• RES 3: 5924.59 50-day EMA 
• RES 2: 5864.25 Low Jan 13 and a recent breakout level
• RES 1: 5834.00 Intraday high                   
• PRICE: 5814.25 @ 1456 ET Mar 25 
• SUP 1: 5650.75/5559.75 Low Mar 18 / 13 and the bear trigger                 
• SUP 2: 5483.50 2.00 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
• SUP 3: 5396.00 2.236 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
• SUP 4: 5341.87 2.382 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing          

The trend condition in S&P E-Minis is bearish and the latest recovery appears corrective. MA studies are unchanged - they remain in a bear-mode set-up, highlighting a dominant downtrend. However, this week’s gains have resulted in a breach of the 20-day EMA, at 5803.08. This signals scope for a continuation higher near-term - towards 5864.25, the Jan 13 low. A reversal lower would refocus attention on 5559.75, the Mar 13 low and bear trigger.

MNI AMERICAS OIL: WTI Crude Oil reversed earlier slight gains and is down on the day

March 25 - Americas End-of-Day Oil Summary: WTI Crude Oil reversed earlier slight gains and is down on the day as the market weighs a partial ceasefire agreement between Ukraine and Russia against the impact of announced US tariffs on countries that buy Venezuelan oil and signs of economic weakness including today’s disappointing consumer sentiment number.

• Ukraine today agreed to a partial ceasefire with Russia after US-Russia and US-Ukraine talks in recent days, involving a Black Sea and energy infrastructure truce.
• The API US oil inventory data is due at 16:30ET ahead of the EIA Weekly Petroleum Status Report tomorrow. A Reuters survey indicated a crude stock draw of 2.6mbbl in the week ended Mar. 21. Distillate stocks are seen down 2.2mbbl and gasoline stocks to draw 2.2mbbl. Refinery runs are expected up 0.3 percentage points.
• US crude stocks likely drew by 2.8m bbl in the week to March 21, according to Macquarie.
• U.S. President Trump signed an order to charge importers of Venezuelan oil and gas a 25% “secondary” tariff from April 2, whether it comes indirectly or directly. The supply accounts for just under 1% of global output.
• Trade in Venezuela’s oil to China stalled March 25 following Trump’s order threatening secondary tariffs on buyers of Caracas’ barrels, Reuters said.
  • WTI May futures were down 0.1% at $69.00
  • WTI June futures were down 0.1% at $68.60

WEDNESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
26/03/2025	0700/0700	***	GB	Consumer inflation report
26/03/2025	0700/1500	**	CN	MNI China Money Market Index (MMI)
26/03/2025	0745/0845	**	FR	Consumer Sentiment
26/03/2025	0800/0900	**	SE	Economic Tendency Indicator
26/03/2025	0800/0900	***	ES	GDP (f)
26/03/2025	1000/1000	**	GB	Gilt Outright Auction Result
26/03/2025	1100/0700	**	US	MBA Weekly Applications Index
26/03/2025	-		GB	OBR Spring Forecasts
26/03/2025	1230/0830	**	US	Durable Goods New Orders
26/03/2025	1230/1230		GB	Chancellor Reeves to deliver Spring Statement
26/03/2025	1330/1330		GB	DMO to announce FY25/26 financing remit (approx time)
26/03/2025	1400/1000		US	Minneapolis Fed's Neel Kashkari
26/03/2025	1430/1030	**	US	DOE Weekly Crude Oil Stocks
26/03/2025	1530/1530		GB	DMO agenda for quarterly consultation
26/03/2025	1530/1130	**	US	US Treasury Auction Result for 2 Year Floating Rate Note
26/03/2025	1700/1300	*	US	US Treasury Auction Result for 5 Year Note
26/03/2025	1710/1310		US	St. Louis Fed's Alberto Musalem
26/03/2025	1730/1330		CA	BOC Meeting Minutes
26/03/2025	1800/1900		EU	ECB's Cipollone in panel on Digital Finance
27/03/2025	-		NO	NorgesBank Meeting