MNI ASIA MARKETS ANALYSIS: Focus On June CPI Inflation Tuesday

HIGHLIGHTS

• Treasuries look to finish mixed Monday, curves twisting steeper (2s10s +.545 at 52.561) with Bonds underperforming.
• No US economic data on the week opener, focus is on Tuesday's June CPI data, consensus core inflation at a seasonally adjusted 0.3% M/M in June on a rounded basis, but with sizeable risk of undershooting at 0.2%.
• Cleveland Fed President Hammack (non-2025 voter, hawk) reiterated her patient approach to any future policy easing in an interview with Fox Business Monday.
• The USD index is rose Monday, extending the ongoing cautious recovery from cycle lows to ~1.8%.

US TSYS

MNI US TSYS: Tsys Hold Narrow Range Ahead June CPI Inflation Data

• Treasuries held a narrow range finishing near steady/mixed Monday, focus on Tuesday's June CPI inflation data and several Fed speakers ahead of Friday evening's policy blackout.
• Consensus sees core CPI inflation at a seasonally adjusted 0.3% M/M in June on a rounded basis, but with sizeable risk of undershooting at 0.2% (MNI median unrounded estimate at 0.24% M/M /average 0.25%).
• Unscheduled Fed speaker: Cleveland Fed President Hammack (non-2025 voter, hawk) reiterated her patient approach to any future policy easing in an interview with Fox Business Monday. Hammack had previously cited a wide range of estimates of neutral rates from 2% to 4.6%.
• Currently, the Sep'25 10Y contract trades +2 at 110-25 (110-20 low / 110-29.5 high), inside technicals: support at 110-17 (61.8% of the May 22 - Jul 1 bull leg); resistance above at 111-13+/111-28 (High Jul 10 / High Jul 3).
• The Washington Post reported Monday that National Economic Council director Kevin Hassett is "emerging as a leading contender to become the next chair of the Federal Reserve, according to people who have discussed the matter with White House officials".
• The latest earnings cycle with banks and financial stocks reporting tomorrow: Blackrock, JPMorgan Chase & Co, Wells Fargo & Co, Bank of New York Mellon, State Street Corp and Citigroup.

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

• Secured Overnight Financing Rate (SOFR): 4.31% (+0.00), volume: $2.754T
• Broad General Collateral Rate (BGCR): 4.30% (+0.00), volume: $1.121T
• Tri-Party General Collateral Rate (TCR): 4.30% (+0.00), volume: $1.094T
• (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: $265B

FED Reverse Repo Operation:

RRP usage rises to $217.841B this afternoon from $181.637B Friday, total number of counterparties at 45. Usage had fallen to $54.772B on Wednesday, April 16 -- lowest level since April 2021 - compares to yesterday's (July 1) $460.731B highest usage since December 31.

US SOFR/TREASURY OPTION SUMMARY

SOFR & Treasury option trade remained mixed Monday, SOFR leaning towards low delta calls & call spds (+50k Green Mar'26 call spd for instance). Underlying futures off midday lows, curves adding to Fri's steepening (2s10s +0.744 at 52.760). Projected rate cut pricing cooled slightly vs morning (*) levels: Jul'25 at -1.2bp (-1.7bp), Sep'25 at -16.2bp (-15.9bp), Oct'25 at -30.7bp, Dec'25 at -48.9bp (-49.1bp).

SOFR Options:
+4,000 SFRZ5 95.62/SFRH6 95.75 put strip, 5.25 total
6,000 SFRU5 96.50 calls ref 95.85
+10,000 2QZ5 97.00/97.50 call spds vs. 3QZ5 96.75/97.25 call spd, 0.0 net/steepener
+5,000 SFRZ5 95.56/95.62/95.68 put trees, ref 96.14/0.05
Block, +5,000 SFRZ5 95.75/95.87/96.25/96.37 put condors, 6.0 net ref 96.145
-2,500 SFRZ5 96.50 calls, 9.0 ref 96.145
+15,000 SFRQ5 95.81/95.93/96.00 put trees, 1.0
Block, 5,000 2QU5 97.00/97.50 call spds vs. 3QU5 96.75/97.25 call spds. 0.5 net Gr Sep over
Block, +50,000 2QH6 98.00/98.25 call spds, 1.0 ref 96.56
2,400 0QV5 96.81 straddles ref 96.785
4,000 0QQ5 96.87/97.00/97.12 call flys, 1.0 ref 96.735 to -.74
1,000 SFRU5 95.81/95.87/96.18 broken call trees, 0.75 ref 95.855
Block/screen, +8,000 SFRU5 95.87/96.00/96.06/96.18 call condors, 2.75 ref 95.855

Treasury Options:
5,000 TYQ5/TYV5 112.5 call spd
1,500 USV5 106/108 put spds 28 ref 112-06
10,000 TYV5 113/115 call spds ref 110-19.5
5,000 TYU5 112 calls, 25
5,800 TYU5 109 puts, 15 ref 110-25 to -24.5
-2,000 TYV5 110.5 straddles, 218, ref 110-22
2,300 wk3 FV 108.5/109 call spds, 4.5 ref 108-05.5 (exp 7/18)
+1,000 TYQ5 109/109.75/110.5 put flys, 9 vs. 110-23/0.11%
-2,100 TYQ5 110.75 calls, 26 ref 110-23.5/0.52%
-1,670 TYQ5 110/111 put spds, 25 ref 110-25.5/0.57%
2,000 TYU5 110 puts, 31
+2,000 Wednesday wkly TY 112 calls, 1

MNI BONDS: EGBs-GILTS CASH CLOSE: Curves Continue To Steepen, But Gilts Outperform

The previous week's rise in yields took a breather Monday, but curves continues to steepen.

• Yields fluctuated but resolved higher up in early trading, stemming from the weekend's threat of higher US tariffs on the EU and Mexico.
• Bund yields largely retained their early rise. However dovish comments from BoE Governor Bailey (noting potential for easier policy if the labour market deteriorates quicker than the Bank expects) and the soft REC labour market report helped Gilts outperform on the day.
• Core FI was bid into the European cash close, helped by a continued pullback in oil prices.
• 30Y German yields continued to march higher, to another fresh post-2011 high close, as fiscal concerns persisted.
• The UK curve bull steepened on the day, with Germany's twist steepening. Periphery / semi-core EGB spreads moved a little wider.
• On the calendar Tuesday: French PM Bayrou is set to unveil the main proposals of the 2026 state budget and we get the German ZEW survey. In the UK, the Mansion House event Tuesday and inflation and labour market data on Wednesday and Thursday are the key risk events of the week. 

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 2.4bps at 1.876%, 5-Yr is down 1bps at 2.278%, 10-Yr is up 0.4bps at 2.729%, and 30-Yr is up 1.8bps at 3.245%.
• UK: The 2-Yr yield is down 4.4bps at 3.812%, 5-Yr is down 2.8bps at 4.015%, 10-Yr is down 2.2bps at 4.6%, and 30-Yr is down 0.3bps at 5.43%.
• Italian BTP spread up 1.7bps at 86.3bps / Spanish up 0.8bps at 61.4bps

MNI OPTIONS: Unusually Busy Start Of The Week For Sonia Trades

Monday's Europe rates/bond options flow included:

• OEQ5 117.25/117.5/117.75 call fly paper paid 3.75 on 2.6K
• ERU5 98.12/25 call spread paper paid 4.25 on 5K
• ERU5 98.12/98.25/98.37 call fly paper paid 3.5 on 3.5K
• 0RU5 97.9375/97.6875 put spread vs 2RU5 97.625/97.375 put spread. +2RU5 for 1 in 5k
• SFIZ5 97.15/98.00 call spread paper paid 1 on 7K
• SFIZ5 96.25/96.05/95.85 put fly paper paid 3.25 on 5.5K
• SFIZ5 96.35/96.15 put spread vs. SFIH6 96.70/96.85 call spread another 5K trades at 1.25 selling puts to buy the calls, 15K trades there all day
• SFIZ5 96.80/97.00 call spread, bought for 1.5 in 23.075k
• 0NU5 96.80/97.10 1x1.5 call spread paper paid 4 on 10K

MNI FOREX: USD Index Recovering Further, GBP Underperforms

• The USD index is rising once again on Monday, extending the ongoing cautious recovery from cycle lows to ~1.8%. This follows the DXY closing above 20-day EMA resistance on Friday, which marked a bullish development for the greenback.
• Early weakness in G10 was led by the likes of AUD and NZD as the threats of further global tariffs had a negative impact on risk sentiment. Despite the subsequent stabilisation for risk/equities, the dollar remains firmer as we approach the APAC crossover and tomorrow’s US CPI data.
• GBP has also been a notable underperformer, steadying edging lower across US hours and tilting GBPUSD to fresh pullback lows below 1.3440. A UK jobs report from KPMG REC showed a particularly pessimistic/stagflationary set of figures, with permanent staff appointments falling, availability of candidates increasing and permanent staff salary increases rising at the fastest rate since last October. Consequently, EURGBP has broken and cleared above the early July high - putting the cross at the best levels since early April. Price action narrows the gap to the key bull trigger at 0.8738, the 2025 high and near-term upside target.
• Higher US yields continue to underpin USDJPY’s strong rally across July, as markets also remain cautious surrounding BOJ rate hikes and the upcoming upper house election on Sunday. Japan's ruling LDP party received its lowest score in an opinion poll since returning to power in 2012 in a survey by public broadcaster NHK on Monday, underlining the prospect that the governing bloc may struggle this weekend.
• As such, USDJPY reached as high as 147.76 today, just 30 pips shy of the June highs, located at 148.03. Above here, 148.65 remains a key technical point for USDJPY, the May 12 high and a reversal trigger.
• Tuesday’s data calendar is stacked with China activity figures kicking things off. The focus will then swiftly turn to US and Canadian inflation data, final inputs before both the Fed and BOC decisions on July 30. We will also have the beginning of quarterly earnings season with financials the usual early focus.

MNI OPTIONS: Expiries for Jul15 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.1550-70(E2.7bln), $1.1600-15(E1.5bln), $1.1665-70(E680mln), $1.1730(E507mln), $1.1745-60(E1.1bln)
• USD/JPY: Y143.50($960mln), Y144.40-50($1.2bln), Y145.45-50($530mln), Y146.35-50($566mln), Y148.25-30($700mln)
• AUD/USD: $0.6480-00(A$1.6bln), $0.6560(A$631mln)
• USD/CAD: C$1.3570-75($525mln)

MNI US STOCKS: Late Equities Roundup: Interactive Media & Financial Services Leading

• Stocks have gradually recovered from early session lows Monday, indexes back near late Friday session highs. Currently, the DJIA trades up 61.81 points (+0.25%) at 44443.32, S&P E-Minis up 12.0 points (+0.09%) at 6312.00, Nasdaq up 68.55 points (+0.07%) at 20654.08.
• Monday was a generally muted start to the week with no economic data with sidelined trading accounts ahead of Tuesday's CPI inflation data. Not to mention this week kicks off the latest earnings cycle with banks and financial stocks reporting tomorrow: Blackrock, JPMorgan Chase & Co, Wells Fargo & Co, Bank of New York Mellon, State Street Corp and Citigroup.
• Interactive media and entertainment shares buoyed the Communications sector in the second half, leaders include: Warner Bros Discovery +2.69%, Live Nation Entertainment +2.51%, Netflix +1.97% and Take-Two Interactive Software +1.89%.
• Services shares supported the Financials sector: Arch Capital Group +3.56%, PayPal Holdings +3.33%, Globe Life +1.89% and Coinbase Global +1.82%.
• On the flipside, Energy and Materials sectors continued to underperform in late trade, oil & gas stocks weighing on the former with crude prices receding (WTI -1.39 at 67.06): Halliburton -4.51%, APA -3.43%, Schlumberger -2.92% and Occidental Petroleum -2.63%.
• Meanwhile, chemical and mining stocks continued to weigh on the Materials sector in late trade: Dow Inc -4.23%, LyondellBasell Industries -2.27%, Freeport-McMoRan -2.11%, Eastman Chemical -1.56% and Smurfit WestRock PLC -1.38%.

MNI EQUITY TECHS: E-MINI S&P: (U5) Bulls Remain In The Driver’s Seat

• RES 4: 6402.44 1.382 proj of the May 23 - Jun 11 - 23 price swing
• RES 3: 6381.00 1.764 proj of the Apr 7 - 10 - 21 price swing
• RES 2: 6356.12 1.236 proj of the May 23 - Jun 11 - 23 price swing
• RES 1: 6335.50 High Jul 10   
• PRICE: 6313.00 @ 1500 ET Jul 14 
• SUP 1: 6246.25 Low Jul 7 
• SUP 2: 6201.21/6054.38 20- and 50-day EMA values  
• SUP 3: 5811.50 Low May 23
• SUP 4: 5645.75 Low May 7 

The trend condition in S&P E-Minis remains bullish and short-term weakness is considered corrective. Recent activity has resulted in a break of resistance at 6128.75, the Jun 11 high. The breach confirmed a resumption of the uptrend that started Apr 7. This was followed by a break of key resistance and a bull trigger at 6277.50, the Feb 21 high. Sights are on 6356.12, a Fibonacci projection. Key support is at the 50-day EMA, at 6054.38.

COMMODITIES

MNI AMERICAS OIL: WTI crude sold off after Trump threatened secondary tariffs

July 14 - Americas End-of-Day Oil Summary: WTI crude sold off after Trump threatened secondary tariffs (sanctions) of up to 100% on buyers of Russian oil if there is no deal on the Ukraine conflict in 50 days. Trump spoke from the Oval Office after his meeting with NATO SecGen Mark Rutte. "We're going to be doing very severe tariffs [of 100%] on Russia if we don't have a deal in 50 days." The White House later clarified he was referring to secondary sanctions.

• European Union envoys are on the verge of agreeing an 18th package of sanctions against Russia that would include a lower price cap.
• Trump said on Saturday he would impose a 30% tariff on most imports from the EU and Mexico from August 1, adding to similar warnings for other countries and leaving them less than three weeks to hammer out framework deals that could lower the threatened tariff rate.
  • WTI Aug futures were down 2.1% at $66.98
  • WTI Sep futures were down 1.8% at $65.81

TUESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
15/07/2025	0700/0900	***	ES	HICP (f)
15/07/2025	0900/1100	**	EU	Industrial Production
15/07/2025	0900/1100	***	DE	ZEW Current Expectations Index
15/07/2025	1230/0830	***	CA	CPI
15/07/2025	1230/0830	**	CA	Monthly Survey of Manufacturing
15/07/2025	1230/0830	**	US	Empire State Manufacturing Survey
15/07/2025	1230/0830	***	US	CPI
15/07/2025	1230/0830	***	US	CPI
15/07/2025	1255/0855	**	US	Redbook Retail Sales Index
15/07/2025	1300/0900	*	CA	CREA Existing Home Sales
15/07/2025	1315/0915		US	Fed Vice Chair Michelle Bowman
15/07/2025	1645/1245		US	Fed Governor Michael Barr
15/07/2025	1845/1445		US	Boston Fed's Susan Collins
15/07/2025	2000/2100		GB	Mansion House: Chancellor Reeves and BOE Bailey
15/07/2025	2245/1845		US	Dallas Fed's Lorie Logan