MNI ASIA MARKETS ANALYSIS: Fed Favor Patient Policy Stance

HIGHLIGHTS

• Headline risk added to morning volatility as Trump admin officials commented on trade negotiations while multiple Fed speakers commented on the economy after exiting the policy blackout.
• Treasury bounced after Pres Trump posted on his media platform that a 80% tariff on China "seems right", but is "up to Scott B" (referring to Treasury Secretary Scott Bessent).
• Senior trade advisor, Peter Navarro, told Bloomberg TV that the UK trade deal is “significant not just as a deal but a template for future deals.”
• NY Fed President Williams said there was no hurry to cut rates, echoing a similar stance to Chairman Powell after Wednesday's FOMC announcement.

US TSYS

MNI US TSYS: Fed Speakers Echo Chairman Powell, No Hurry to Cut Rates

• Treasuries look to finish steady (TYM5) to mildly mixed, curves flatter with Bonds weaker late Friday.
• Rates bounced after Pres Trump posted on his media platform that a 80% tariff on China "seems right", but is "up to Scott B" (referring to Treasury Secretary Scott Bessent).
• The WSJ reported "President Trump's suggestion of lowering tariffs on Chinese imports to 80% was just a number he "threw out there," White House press secretary Karoline Leavitt said without explaining more on how he arrived at the figure."
• Multiple Fed speakers commented on the economy after exiting the policy blackout. A smaller Federal Reserve balance sheet would benefit the economy by creating greater clarity about the central bank's main policy instrument and allowing officials to heed closer to traditional policy rules, former Fed Governor Kevin Warsh.
• Atlanta Fed Bostic supports no rate adjustment amid uncertainty while NY Fed’s Williams echoes Chairman Powell's view there is no hurry to cut rates. Speakers resume at this evening's Hoover conference at 1945ET with StL Fed Musalem, Cleveland Fed Hammack & Fed Gov Cook on policy panel with ECB's Schnabel.
• Slow start to the week ahead, main focus is on next Tuesday's CPI inflation data for April, Retail Sales next Thursday.

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

• Secured Overnight Financing Rate (SOFR): 4.29% (-0.01), volume: $2.545T
• Broad General Collateral Rate (BGCR): 4.28% (-0.01), volume: $1.066T
• Tri-Party General Collateral Rate (TCR): 4.28% (-0.01), volume: $1.034T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $113B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $313B

FED Reverse Repo Operation

RRP usage inches up to $142.272B this afternoon from $139.768B yesterday, total number of counterparties at 31. 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.

US SOFR/TREASURY OPTION SUMMARY

SOFR options saw better put structure buying throughout the session, volume picking up in the second half as underlying rates continued to retreat from midmorning highs. Projected rate cut pricing held steady to slightly cooler vs. morning levels (*) as follows: Jun'25 steady at -4.3bp, Jul'25 steady at -17.2bp, Sep'25 -34.9bp (-35.1bp), Oct'25 -49.7bp (-50.7bp).

SOFR Options:
+20,000 SFRM5 95.68/95.75 put spds w/ 5,000 SFRM5 95.25/95.37 put spd and 95.12/95.37 put spd, pays 11.0 for the strip ref 95.745
over +6,000 3QZ5 94.00/95.00 put spds, 3.5 vs. 96.30/0.06%
+40,000 SFRZ5 95.62/95.87 put spds, 5.5 ref 96.35 (paper +40-50k SFRZ5 95.68 puts, 3.5 yesterday)
15,000 SFRZ5/2QZ5 96.75/97.00 call spd spd 3.25 net 2QZ5 over
+4,000 0QN5 97.25/3QN5 96.87 call spds 3.25 0QN5 over
+3,000 SFRM5 95.93/96.18 call spds 1.25 ref 95.745
1,500 SFRH6 95.87/96.87 call spds vs. 0QH6 96.12/97.12 call spds
4,000 3QZ5 94.00/95.00 put spds ref 96.35
19,800 SFRV5 96.12/96.37 2x1 put spds ref 96.36
3,800 SFRN5 95.62/95.75 call spds ref 96.075
5,000 0QK5 96.81/97.06/97.31 call flys ref 96.695
3,000 SFRN5 95.62/95.75 put spds ref 96.07

Treasury Options:
2,000 TYM5 113/114 1x2 call spds ref 110-29.5
10,000 wk2/wk3 TY 111 call spd, 21 ref 111-00
4,000 Wed wkly 10Y 112/112.5 call spds ref 110-30 to -31.5
4,300 FVN 109.5/110.5 call spds ref 108-13.25
4,000 TYN5 110.5/111.5 2x1 put spds ref 110-27.5
2,000 USM5 116/117 call spds
5,000 Monday wkly 10Y 110.75/111 call spds (exp 5/12)
8,400 wk5 FV 109/110 call spds vs wk5 TY 113/114 call spds
4,000 TYM5 111/112 2x1 put spds ref 110-25.5
3,000 wk5 US 118/120 call spds ref 113-21
over 8,300 TYM5 109.75 puts ref 110-29
Block/screen, 39,200 TYM5 109.5 puts, 9-8 ref 110-26.5
Block, -20,000 FVM5 109 calls, 7 ref 108-05
3,000 FVN5 108.5/109/109.5/110.5 broken call condors ref 108-08.5
2,000 TYM5 112/113/115 broken call flys ref 110-25.5

MNI FOREX: USD Backtracks Thurs Gains, But Conviction Looks Light

• Having rallied against all others on Thursday, the dollar backtracked for much of Friday trade, despite various White House cabinet members talking up the possibility of further trade deals from various countries in the very short-term.
• Markets are also on watch for any news stemming from the beginning of the US-China trade talks over the weekend. While no major breakthroughs are expected, markets were on alert after Trump posited that 80% China tariffs "seems right", although the final decision will be with his Treasury Secretary. Tariffs at 80% are still uncomfortably close to the levels the Chinese believe are effectively a trade embargo - and will still severely limited crossborder flows.
• As such, equities were sold on Trump's thought, which fed into renewed pressure on USD/JPY, confirming recent gains as corrective in nature. The 50-day EMA, at 146.22, remains intact for now. A clear break of this EMA would highlight a possible reversal. Moving average studies are in a bear-mode position and continue to highlight a dominant downtrend.
• Focus for next week rests on the April US CPI print - at which inflation is expected to hold steady at 2.4% for the headline Y/Y. A higher print would justify the cautious approach to the last FOMC rate decision, on which most Fed members seemed to affirm their preference for a gradual approach to policy in speeches Friday.
• GBP was among the better performers Friday, aiding GBP/USD to a near 100 pip bounce off the overnight low. Volumes were atypically light, with cumulative activity near 30% short of recent averages - meaning the recovery may be built on only light conviction. As such, attention remains on the recent breach of support at 1.3249, the 20-day EMA. This signals scope for a deeper correction. Note too that a minor head and shoulders formation has developed on the daily chart. 

MNI FX OPTIONS: Expiries for May12 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.0920(E1.2bln), $1.1250(E1.1bln), $1.1350(E650mln)
• USD/JPY: Y142.45-50($1.0bln), Y144.00-05($510mln), Y145.00($1.9bln), Y145.65($950mln)
• GBP/USD: $1.3200(Gbp525mln), $1.3315(Gbp620mln), $1.3385(Gbp846mln)
• USD/CAD: C$.3800($1.2bln)

MNI US STOCKS: Late Equities Roundup: Interactive Media, Food & Beverage Lagging

• SPX emini and Nasdaq indexes drifted near steady levels late Friday, the DJIA modestly weaker heading into the weekend. Currently, the DJIA trades down 98.14 points (-0.24%) at 41268.29, S&P E-Minis down 3.5 points (-0.06%) at 5681.75, Nasdaq down 6.1 points (0%) at 17922.41.
• Communication Services and Consumer Staples underperformed in the second half, laggers in the former included TKO Group Holdings -3.74%, News Corp -1.35%, Alphabet -1.08% and Electronic Arts -0.84%
• Food & beverage shares weighed on the Consumer Staples sector: Tyson Foods -1.85%, Altria Group -1.51%, Kraft Heinz -1.30% and Keurig Dr Pepper -1.20%.
• On the positive side, Energy and Communication Services sectors outperformed in late trade, oil and gas shares buoyed the Energy sector as crude prices continued to march higher (WTI +0.99 at 60.90): Expand Energy +3.84%, EQT +2.92%, APA +2.81%, Occidental Petroleum +2.09%, Devon Energy +1.97% and Exxon Mobil +1.32%.
• Meanwhile, auto shares buoyed the Discretionary sector: Tesla +5.44%, Aptiv +2.21% and Ford Motor +1.41%.
• Note, the latest earnings cycle is on the downswing, some larger names still expected next week include: NRG Energy, Hertz Global Holdings, Acadia Healthcare, Cantor Equity Partners, Coreweave, Cisco Systems, Walmart, Deere & Co, Cava Group, Applied Materials, Take-Two Interactive Software and Copart Inc.

MNI EQUITY TECHS: E-MINI S&P: (M5) Trend Needle Points North

• RES 4: 5863.29 200-dma    
• RES 3: 5837.25 High Mar 25 and a bull trigger
• RES 2: 5773.25 High Apr 2      
• RES 1: 5741.00 High May 8                              
• PRICE: 5680.50 @ 1445 ET May 9
• SUP 1: 5560.62 20-day EMA                       
• SUP 2: 5355.25/5127.25 Low Apr 24 / 21 and a key support
• SUP 3: 4996.43 76.4% retracement of the Apr 7 - 10 bounce
• SUP 4: 4832.00 Low Apr 7 and the bear trigger

The bullish trend condition in S&P E-Minis remains unchanged. The contract has recently breached the 50-day EMA, at 5626.70. A continuation higher would expose 5837.25 next, the Mar 25 high and a bull trigger. It is still possible that the entire rally since Apr 7 is a correction. A reversal lower would signal the end of this corrective phase and expose initially, support at 5127.25, the Apr 21 low. First support to watch is 5560.62, the 20-day EMA.

COMMODITIES

MNI AMERICAS OIL: WTI crude pared some of its rally after Trump’s Truth post

May 9 - Americas End-of-Day Oil Summary: WTI crude pared some of its rally after Trump’s Truth post on a possible 80% tariff on China dented growing optimism on loosening global trade barriers.

• Focus is on any signs that some kind of agreement from talks between the US and China with President Trump suggesting he remains positive. US Treasury Secretary Bessent and Trade Representative Greer will meet China’s Vice Premier Lifeng in Switzerland on Saturday.
• Donald J. Trump: @realDonaldTrump “80% Tariff on China seems right! Up to Scott B.”
• Downward pressure comes from market oversupply risks from an OPEC+ led increase in supply and concerns for an impact of a global slowdown on oil demand.
• OPEC+ continues to be frustrated at Kazakhstan which again intends to exceed its OPEC+ obligations and output targets. OPEC oil output edged lower in April despite a scheduled output hike taking effect, according to a Reuters survey found.
  • WTI June futures were up 1.9% at $61.02
  • WTI July futures were up 1.8% at $60.59

MONDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
12/05/2025	0500/1400		JP	Economy Watchers Survey
12/05/2025	0800/0900		GB	BOE Lombardelli At BOE Bank Watcher's Conference
12/05/2025	1030/1130		GB	BOE Greene On Monetary policy outlook
12/05/2025	-	***	CN	Money Supply
12/05/2025	-	***	CN	New Loans
12/05/2025	-	***	CN	Social Financing
12/05/2025	-		EU	ECB's Cipollone At Eurogroup Meeting
12/05/2025	1250/1350		GB	BOE Mann On Neutral Rate Of Interest
12/05/2025	1425/1025		US	Fed Governor Adriana Kugler
12/05/2025	1430/1530		GB	DMO likely to publish FQ2 consultation agenda
12/05/2025	1530/1130	*	US	US Treasury Auction Result for 26 Week Bill
12/05/2025	1530/1130	*	US	US Treasury Auction Result for 13 Week Bill
12/05/2025	1600/1200	***	US	USDA Crop Estimates - WASDE
12/05/2025	1600/1700		GB	BOE Taylor Fireside Chat With Ed Balls
12/05/2025	1800/1400	**	US	Treasury Budget
13/05/2025	2301/0001	*	GB	BRC-KPMG Shop Sales Monitor