MNI ASIA MARKETS ANALYSIS: Late Risk-Off Ahead Tariff Deadline

HIGHLIGHTS

• Treasuries crossed a couple lines of resistance to finish near December 6 highs, risk-off sentiment surged after Pres Trump said there was "no room left" for Canada/Mexico deal ahead Tuesday tariff deadline.
• Trump signed 20% tariff action on China after the bell.
• Stocks tumbled as yields retreated, Canadian Dollar, Mexico Peso marked session lows, VIX vol index surged to 24.31 high, 23.18 (+3.55) late.
• Treasuries rebounded this morning extending session highs after latest round of data: ISM Prices Paid surge while Mfg, Orders and Employment figures lower than expected.
   

MNI US TSYS: Risk Sentiment Chills, "No Room Left" For Canada, Mexico Deal

• Treasuries look to finish near late session highs, stocks weaker - after Pres Trump's late "investment announcement" press conference weighed on risk sentiment. While Trump annc'd large $100B investment by Taiwan Semiconductor (TSMC), comments that there is "no room left for deal on Canada, Mexico" ahead of Tuesday's deadline.
• Prior, Trump posted on Truth Social: "To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold INSIDE of the United States. Tariffs will go on external product on April 2nd. Have fun!"
• Tsy Jun'25 10Y futures climbed to 111-19.5 (+16.5), through a couple rounds of resistance with focus on 111-22.5 (High Dec 3 ‘24 and a key resistance). Curves mixed, 2s10s -1.317 at 20.206, 5s30s +2.056 at 48.822.
• Morning data helped Treasurys rebound off lows after ISM Prices paid surge: 62.4 (cons 56.0, 7 responses vs 59 for the headline index) after 54.9 - highest prices paid since Jun 2022 having increased since Nov (when Trump won the presidential election).
• VIX vol index surged to 23.76 high (23.29 +3.66 after the bell) as stocks fell below Friday's lows (SPX Eminis -134.25 to 5829.0), Bbg US$ index weaker but off lows (BBDXY -5.0 aty 1293.12).

SOFR FIXES AND PRIOR SESSION REFERENCE RATES
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SOFR Benchmark Settlements:

• 1M -0.00332 to 4.32139 (+0.00541 total last wk)
• 3M -0.00707 to 4.30971 (-0.00302 total last wk)
• 6M -0.02447 to 4.23228 (-0.03401 total last wk)
• 12M -0.05179 to 4.07493 (-0.09670 total last wk)

US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 4.39% (+0.06), volume: $2.684T
• Broad General Collateral Rate (BGCR): 4.36% (+0.02), volume: $939B
• Tri-Party General Collateral Rate (TCR): 4.36% (+0.02), volume: $938B
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $95B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $234B

FED Reverse Repo Operation

RRP usage retreats by nearly 50% to $119.987B from $234.442B on Friday's month end. Compares to $58.770B (lowest level since mid-April 2021) on February 14. The number of counterparties falls to 32 from 50 prior.

US SOFR/TREASURY OPTION SUMMARY

Large SOFR and Treasury option volumes carried over from overnight, flow leaning towards downside puts - some targeting over 50bp in rate hikes by year end - fading the move higher in  underlying futures. Projected rate cuts through mid-2025 gained some traction vs. this morning's levels (*) as follows: Mar'25 at -1.8bp (-1.4bp), May'25 at -10.2bp (-7.9bp), Jun'25 at -26.0bp (-22.7bp), Jul'25 at -35.3bp (-32.4bp).

SOFR Options:
over 42,700 SFRZ5 95.12/95.62/96.12 put flys, 15-16.0 ref 96.285
+25,000 0QM5/0QU5 97.50 call spds, 4.0-4.25 
+6,000 SFRZ5 95.75/96.00 put spds, 9.75 ref 96.275
+2,500 SFRM5 96.00 calls, 11.5 vs. 95.92/0.42%
-40,000 0QM5 96.37/97.00 call spds 16.0 to 15.0 over 0QM 95.37/95.62 put spds
+6,000 SFRZ5 96.25/96.75 call spds, 14.5
2,000 0QM5/2QM5 96.75/97.75 call spd spd
Block, 10,000 SFRH5 95.68/95.75 2x1 put spds 3.0 ref 95.7025
3,000 SFRH5 95.62 puts vs. 95.81/95.87 call spds
1,900 0QZ5 93.75/94.37/95.00 put flys ref 96.39
6,500 SFRH5 95.68/95.75 call spds ref 95.7025
10,000 SFRM5 95.62/95.68 put spds ref 95.925
Block/screen, 4,000 SFRJ5 95.62/95.75/95.81/95.87 broken put  condors
Block, 18,966 SFRJ5 96.12/96.31/96.56/96.75 call condors, 1.25

Treasury Options:
+10,000 TYK5 109 puts, 20
over +75,000 TYJ5 107/108 put spds, 1 vs. 111-07.5/0.02%
Block, -22,000 TYJ5 112 calls, 19 vs. +25,000 TYJ5 112 calls, 4 and +7,500 TYJ5 109 puts, 7 vs. +2,200 TYM5 110-30 
2,500 TYK5 109/111 strangles 
2,000 FVK5 109/110 call spds ref 107-23.75
10,000 Wednesday wkly 10Y 110.75 put vs. wk2 TY 111 calls, 24 net/wk2 over
over +45,600 TYK5 112 calls, mostly 43
over 9,900 TYJ5 109 puts, 7 last 
1,500 TYK5 112/114 call spds 29 ref 110-31
2,500 Wednesday Wkly 10Y 112/112.25 call spds ref 110-28.5, exp 3/5
+2,500 TYJ5 109/109.5/110.5 broken put fly, 13

MNI FOREX: Weak US Data Weighs on Greenback, NOKSEK Breaches Multi-Year Support

• Weaker-than-expected growth and employment metrics in Monday’s release of ISM manufacturing data has weighed heavily on the greenback, culminating in the USD index declining over 1%. Gains across G10 have been broad based, although tariff sensitive currencies such as MXN, CAD and CNH are underperforming as the looming tariff deadlines maintain a sense of trepidation.
• The Japanese yen saw another volatile session, with the late European risk-on tone prompting a near 1% rally from the lows in USDJPY. Even more notable were the ~1.65% recoveries for the likes of EURJPY and GBPJPY which are now consolidating 0.85% advances on the session.
• Data today has supported a strong rally for EURUSD, which has risen 1.15%. Eurozone flash readings of CPI and core CPI coming in a tenth above consensus estimates helped boost the Euro, and the more constructive price action for European equities exacerbated the risk-on momentum.
• Today’s 1.15% advance has swiftly erased the majority of the three session decline seen late last week, and in the process we are flirting once again with the 1.05 handle. This leaves spot just 30 pips away from a cluster of resistance, a collection of daily highs between 1.0520/33 which will provide the key focus ahead.
• Also standing out in the G10 currency space on Monday has been the significant weakness for NOKSEK, following the breach of multi-year support at 0.9500. The cross is now 1.45% lower today at 0.9432 as we approach the APAC crossover. The likely close below 0.9500 represents an important bearish development and signals scope for a more protracted selloff towards the November 2020 low at 0.9274. EURSEK (-1.14%) meanwhile is through a cluster of support around 11.14 and is rapidly approaching the December 2023 low at 11.0030, another important chart point.
• On Tuesday, BOJ Governor Ueda is scheduled to deliver opening remarks at an event hosted by the IMF, in Tokyo. Elsewhere, the RBA minutes and Australia Jan retail sales will be released. 

MNI FX OPTIONS: Expiries for Mar04 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.0300(E1.0bln), $1.0375-85(E1.3bln), $1.0400(E691mln), $1.0450-55(E873mln), $1.0480(734mln), $1.0520-30(E1.9bln), $1.0545-50(E884mln)
• USD/JPY: Y148.30($686mln), Y148.90-00($555mln)
• AUD/USD: $0.6335(A$1.2bln)
• USD/CAD: C$1.4315-25($1.2bln), C$1.4395-10($2.0bln), C$1.4425($529mln)
• USD/CNY: Cny7.2610($574mln)

MNI US STOCKS: Late Equities Roundup: Energy & Tech Stocks Underperforming

• Stocks remain weaker in late Monday trade, near second half lows amid some position squaring. Stocks consolidated after this morning's data, higher than expected ISM Prices Paid while ISM Mfg, Orders and Employment figures were lower than expected as Treasuries reversed early losses to new session highs.
• Currently, the DJIA trades down 304.55 points (-0.69%) at 43540.85, S&P E-Minis down 39.5 points (-0.66%) at 5925, Nasdaq down 202.6 points (-1.1%) at 18648.99.
• Energy and Information Technology sectors continued to underperform in late trade, the Energy sector weighed by falling crude prices (WTI -1.46 at 68.30 - following OPEC+ headlines announcing production hikes): laggers included APA -6.43%, ConocoPhillips -5.24%, Devon Energy -4.36% and Diamondback Energy -4.09%.
• Semiconductor makers continue to weigh on the Tech sector: Nvidia -6.97% (reportedly as "Singapore is investigating whether Dell Technologies Inc. and Super Micro Computer Inc. servers shipped to Malaysia housed Nvidia Corp. chips barred from China" Bloomberg reprted). Meanwhile, Enphase Energy -5.77%, First Solar -4.91% andf Broadcom -4.32%.
• On the positive side, Real Estate and Health Care sectors continued to outperform in late trade, investment trusts buoyed the former with Weyerhaeuser +4.68%, Welltower +2.14% and American Tower +2.02%. Viatris +3.30%, Stryker +2.42% and Medtronic +2.40%led gainers in the Health Care sector.
• Expected earnings announcements for Tuesday include Target Corp and AutoZone Inc before the open while Crowdstrike Holdings and Ross Stores report after the close.

MNI EQUITY TECHS: E-MINI S&P: (H5) Monitoring Resistance

• RES 4: 6200.00 Round number resistance   
• RES 3: 6178.75 High Dec 6 ‘24 and key resistance
• RES 2: 6035.99/6166.50 50-day EMA / High Jan 19
• RES 1: 6000.50 Intraday high                 
• PRICE: 5905.00 @ 13:45 ET Mar 3 
• SUP 1: 5848.00 Low Feb 28              
• SUP 2: 5809.00 Low Jan 13 and a reversal trigger
• SUP 3: 5784.00 Low Nov 4 ’24 
• SUP 4: 5730.00 Low Sep 18 ‘24   

Recent weakness in the S&P E-Minis contract resulted in a breach of a number of important supports; 6014.00, the Feb 10 low, and 5935.50, the Feb 3 low. The sharp move down signals scope for a deeper retracement and has exposed the next key support at 5809.00, the Jan 13 low. The contract is trading higher today, extending Friday’s bounce. Initial firm resistance to watch is 6038.96, the 50-day EMA. 

MNI COMMODITIES: Oil End of Day Summary: Crude Plunges on OPEC Supply Hike

WTI has plunged to its lowest level since early December after OPEC confirmed it will proceed with its planned output hike of 138k b/d in April.

• WTI APR 25 down 1.9% at 68.42$/bbl
• OPEC+ said in a statement that considered healthy market fundamentals and the positive market outlook. this gradual increase may be paused or reversed subject to market conditions, OPEC added.
• it could pause or reverse its decision based on market conditions and that it currently sees.
• OPEC’s crude production rose to the highest level in over a year in January, ahead of the bloc’s planned supply revival, a Bloomberg survey showed.

TUESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
04/03/2025	0700/1500		CN	Chinese People's Political Consultative Conference
04/03/2025	1000/1000	**	GB	Gilt Outright Auction Result
04/03/2025	1000/1100	**	EU	Unemployment
04/03/2025	1355/0855	**	US	Redbook Retail Sales Index
04/03/2025	1630/1130	*	US	US Treasury Auction Result for Cash Management Bill
04/03/2025	1920/1420		US	New York Fed's John Williams
05/03/2025	2200/0900	*	AU	S&P Global Final Australia Services PMI
05/03/2025	2200/0900	**	AU	S&P Global Final Australia Composite PMI
05/03/2025	0030/0930	**	JP	S&P Global Final Japan Services PMI
05/03/2025	0030/0930	**	JP	S&P Global Final Japan Composite PMI
05/03/2025	0030/1130	***	AU	Quarterly GDP
05/03/2025	0100/0900		CN	National People's Congress opens
05/03/2025	0145/0945	**	CN	S&P Global Final China Services PMI
05/03/2025	0145/0945	**	CN	S&P Global Final China Composite PMI