MNI ASIA MARKETS ANALYSIS: Growth Concerns Sink Stocks

MNI (NEW YORK) - HIGHLIGHTS:

• Equities Suffer Worst Session Of 2025 On US Growth Fears
• Dollar Regains Ground, Yen Outperforms Peers On Safe Haven Rally
• End-2025 Implied Fed Rates See Lowest Close Since October, 3+ Cuts Firmly Expected

US TSYS: Equity Rout Sparks Safe Haven Rally

The short-end led a Treasury rally Monday, mirroring a sharp drop in equities.

• Concerns over a US economic slowdown/recession were evident in what was shaping up as the sharpest drop in equities in over 2 years at one point, with S&P and Nasdaq futures off over 3% each late and cyclical stocks bearing the brunt (tech -4.5%, consumer discretionary -4.1%).
• Yields bounced off the lows alongside a late pickup in equities, but curves still managed to close sharply bull steeper with 2Y yields posting their 2nd biggest daily fall of the year to the lowest since October.
• Futures markets added about half a 25bp rate cut to the Fed easing path through end-2025, with at least 3 cuts now firmly expected (the first by June).
• The 2-Yr yield is down 9.6bps at 3.904%, 5-Yr is down 10bps at 3.9858%, 10-Yr is down 7.7bps at 4.2245%, and 30-Yr is down 4.7bps at 4.5508%.
• Jun 10-Yr futures (TY) up 21/32  at 111-7.5 (L: 110-22.5 / H: 111-13.5)
• Data was thin: the NY Fed's February consumer expectations survey showed an uptick in 1Y and 3Y inflation views to multi-month highs, but not in nearly as dramatic a shift as the latest UMich consumer surveys.
• Tuesday's key release is January JOLTS job openings, with February CPI the week's highlight Wednesday (analyst unrounded expectations center on a deceleration in core PCE to 0.27% M/M from 0.45% in January - MNI's preview will be out Tuesday).

SOFR FIXES AND PRIOR SESSION REFERENCE RATES

US TSYS/OVERNIGHT REPO: SOFR Steady In Range, Could Drift Lower

Secured rates softened slightly Friday, with SOFR dipping 1bp to 4.34% per NY Fed data. 

• SOFR's been steady in the 4.33-4.35% area in March, following the usual month-end dynamics in late-February (4.39% Feb 28th).
• Secured rates are generally expected to drift lower, with key dates to watch on Tuesday 11th (cash returning to market due to bill redemptions which should help the downward drift in rates) and Monday 17th (mid-month coupon Treasury auction settlements which could put upward pressure on rates).
• Effective Fed Funds were steady once again at 4.33%.

REPO REFERENCE RATES (rate, change from prev. day, volume):
* Secured Overnight Financing Rate (SOFR): 4.34%, -0.01%, $2477B
* Broad General Collateral Rate (BGCR): 4.33%, -0.01%, $959B
* Tri-Party General Collateral Rate (TGCR): 4.33%, -0.01%, $940B

New York Fed EFFR for prior session (rate, chg from prev day):
* Daily Effective Fed Funds Rate: 4.33%, no change, volume:  $110B
* Daily Overnight Bank Funding Rate: 4.33%, no change, volume:  $284B

 

US TSYS/OVERNIGHT REPO: ON RRP Takeup Remains Close To 2025 Average

Takeup of the Fed's Overnight Reverse Repo facility fell $7.3B to $129.1B Monday, slightly more than reversing Friday's $7B rise. 

• This leaves the level at 5-session lows, but at fairly typical levels for the year so far (average: $132B in 2025).
• ON RRP takeup could rise Tuesday in line with the Treasury bill paydowns that we flagged in our earlier SOFR note.
   

STIR: SOFR FIX - 10/03/25

US SOFR/TREASURY OPTION SUMMARY

Monday's US rates/bond options flow included:

• TYJ5 108.50 puts paper paid 0-02 on 30K.
• Weekly TY options 110.00/109.75 put spread 9K blocked at 0-03, looks like a buyer of the put spread, this expires on Friday. Covered via 540 TYM5 futures at 110-25+.
   

BONDS: EGBs-GILTS CASH CLOSE: Bunds Outperform As Fiscal Uncertainty Lingers

Core European curves twist steepened Monday, with short-end instruments strengthening to start the week.

• Bunds largely held on to morning gains triggered by a broader risk-off move, as US economic concerns lingered, while uncertainty over German fiscal negotiations remained a prominent theme (Bunds jumped after the Green Party said they wouldn't support the current fiscal expansion proposal).
• UK instruments benefited too but traded with little clear direction through most of the session, sagging toward the cash close.
• Even so, central bank easing expectations were little changed (end-2025 ECB steady at 44bp of further cuts, BOE 57bp, up by 1bp).
• In data, German industrial production was a little stronger than expected while the trade surplus slipped  in January, but this wasn't a market mover.
• Bunds outperformed Gilts on the day. Periphery / semi-core EGB spreads were mixed, with Spain outperforming and Italy underperforming.
• Tuesday's calendar is relatively thin (Dutch final Feb inflation, ECB Rehn speech), with more attention on events later in the week including the ECB conference and US CPI data on Wednesday.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 3.1bps at 2.216%, 5-Yr is down 2.5bps at 2.491%, 10-Yr is down 0.3bps at 2.833%, and 30-Yr is up 0.7bps at 3.121%.
• UK: The 2-Yr yield is down 0.8bps at 4.195%, 5-Yr is up 0.3bps at 4.285%, 10-Yr is up 0.6bps at 4.644%, and 30-Yr is up 1.9bps at 5.226%.
• Italian BTP spread up 1bps at 113.2bps / Spanish down 0.8bps at 65.3bps 

EUROPE OPTIONS: Two-Way Plays In German Bonds Monday

Monday's Europe rates/bond options flow included:

• OEK5 116/114 1x1.5 put spread paper paid 26-26.5 on 5K
• RXJ5 126.50/125.50 put spread paper paid 18 on 10K
• RXJ5 130/131 call spread paper paid 11 on 4K
• RXK5 126.5/125/123.5 put fly paper paid 16.5 on 5K
• RXM5 126/125/124 put fly paper paid 7.5 on 5K
• ERM5 97.9375/98.0625 call spread bought for 2-2.25 in 20k
• SFIZ5 96.20/96.30 call spread v 95.75/95.65 put spread, bought the call spread for 1.25 in 4k
• 0NM5 96.30/96.50 call spread bought for 6.5 in 10k

FOREX: CAD/JPY Slippage Follows Equities Lower Still

• Equity selling remained the dominant theme Monday, with markets happy to press global equity markets again to lower levels. At the midpoint of US trade, the S&P 500 shed close to 2.5%, with tech and growth-led names still the underperformers. The NASDAQ Comp dropped to 17,500 - further into correction territory and through to new multi-month lows.
• Weakness across CAD today (triggered partly by softer oil prices, but also by slipping global equities and tariff risk) is keeping the currency at the softer end of the G10 table, while solid JPY trade is pressuring CAD/JPY toward key support.
• Today's 101.68 low coincides with key support of Y101.67 - the mid-2024 pullback low prompted by the BoJ's JPY-buying intervention last year. Clearance here would be resolutely bearish for the cross, opening levels last seen in 2023 and leaving the next key support at Y100 psychologically, and Y99.93, the 76.4% retracement for the upleg posted off the 2023 low.
• The clear downward near-term momentum in the cross follows the Rengo pay tally from last week - underlining pay demands at their highest level in over 30 years for the 2025 Shunto round. While the March BoJ decision sees only an outside of a rate hike - but the May 1st meeting could be more consequential, for which the decision could be contingent on the Tankan survey on April 1, reports from the Bank's branch managers' meeting on April 7, the updated Rengo tally in April, and CPI.
• NOKSEK has rallied through the course of the morning, with the stronger-than-expected Norwegian February inflation report driving a sharp repricing in front-end NOK rates. 2-year NOK swap rates (vs 3m NIBOR) are ~20bps higher today at 4.34%, while 2-year SEK rates are down 1bp. NOKSEK traded higher by as much as 1.5% Monday, narrowing the gap to resistance at 0.9517, the 20-day EMA.
• JOLTs jobs data is among the Tuesday highlights, particularly as markets look for higher quality information on the state of the US labour market after last Friday's NFP print. The Fed remain inside their pre-meeting media blackout period, leaving an appearance from ECB's Rehn the sole CB appearance Tuesday. 

OPTIONS: Expiries for Mar11 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.0540-50(1.2bln), $1.0800-15(E752mln), $1.0875(E504mln)
• USD/JPY: Y146.45-65($1.0bln), Y148.70($543mln)
• EUR/GBP: Gbp0.8325-35(E626mln)
• AUD/USD: $0.6300-10(A$946mln), $0.6385(A$2.5bln)
• NZD/USD: $0.5645(N$652mln)
• USD/CAD: C$1.4390-00($943mln), C$1.4470($617mln)

EQUITY TECHS: E-MINI S&P: (H5) Bear Cycle Extension

• RES 4: 6178.75 High Dec 6 ‘24 and key resistance  
• RES 3: 6166.50 High Jan 19
• RES 2: 5993.68 50-day EMA
• RES 1: 5791.00/5942.67 High Mar 7 / 20-day EMA                
• PRICE: 5657.75 @ 14:52 GMT Mar 10 
• SUP 1: 5656.50 Intraday low               
• SUP 2: 5584.85 61.8% retracement of the Aug 5 - Dec 6 ‘24 bull leg
• SUP 3: 5523.00 Low Sep 11 2024
• SUP 4: 5499.25 Low Sep 9 2024      

A bear threat in S&P E-Minis remains present and today’s extension strengthens bearish conditions. The move down also reinforces the significance of the breach of 5809.00, the Jan 13 low. This level marked the mid-point of a double top on the daily chart and the break confirms the pattern and an important short-term reversal. Sights are on 5584.85, a Fibonacci retracement. Firm resistance to watch is 5993.68, the 50-day EMA.

DATA/EVENTS CALENDAR

Date	GMT/Local	Impact	Country	Event
11/03/2025	2330/0830	**	JP	Household spending
11/03/2025	2350/0850	***	JP	GDP
11/03/2025	0001/0001	*	GB	BRC-KPMG Shop Sales Monitor
11/03/2025	1000/0600	**	US	NFIB Small Business Optimism Index
11/03/2025	-	***	CN	New Loans
11/03/2025	-	***	CN	Money Supply
11/03/2025	-	***	CN	Social Financing
11/03/2025	1255/0855	**	US	Redbook Retail Sales Index
11/03/2025	1400/1000	***	US	JOLTS jobs opening level
11/03/2025	1400/1000	***	US	JOLTS quits Rate
11/03/2025	1600/1200	***	US	USDA Crop Estimates - WASDE
11/03/2025	1700/1300	***	US	US Note 03 Year Treasury Auction Result
12/03/2025	0001/0001	*	GB	RICS House Prices
12/03/2025	0730/0730		GB	DMO propose calendar for first 3 weeks of FY25/26
12/03/2025	0845/0945		EU	Lagarde at "ECB and Its Watchers" conference Frankfurt
12/03/2025	1000/1000	**	GB	Gilt Outright Auction Result
12/03/2025	1100/0700	**	US	MBA Weekly Applications Index
12/03/2025	1100/1200		EU	ECB Wage Tracker
12/03/2025	1230/0830	***	US	CPI
12/03/2025	1345/0945	***	CA	Bank of Canada Policy Decision
12/03/2025	1430/1030	**	US	DOE Weekly Crude Oil Stocks
12/03/2025	1515/1615		EU	Lane at "ECB and Its Watchers" conference Frankfurt
12/03/2025	1700/1300	**	US	US Note 10 Year Treasury Auction Result
12/03/2025	1800/1400	**	US	Treasury Budget