MNI ASIA MARKETS ANALYSIS: Market Awaits Trump Tariffs

HIGHLIGHTS

• Treasuries look to finish higher Tuesday, curves bull flattening off steeper levels as markets await Wednesday's reciprocal tariff announcement from DC (1600ET est).
• Stocks retreated from midday highs as early short cover support was replaced by position squaring ahead of the midweek risk event (not to mention this Friday's employment report for March).
• Similarly global currency markets have lacked momentum on Tuesday, as participants remain wary of entering new positions ahead of the reciprocal tariff announcements, due from President Trump on Wednesday.

MNI US TSYS: Rates Bid/Off Highs Ahead Midweek Tariff Announcement

• Treasury futures are holding decent gains after the bell, off mid-morning highs as accounts square positions ahead of Wednesday afternoon's reciprocal tariff announcement from the White House (1600ET est).
• Washington Post reports that "White House aides have drafted a proposal to impose tariffs of around 20 percent on at least most imports to the United States, three people familiar with the matter said".
• Early FI support after mildly higher than expected S&P Mfg PMI data, lower than expected JOLTS job openings, quits and layoffs higher than expected. ISMs mixed with Mfg, new orders and employment lower than expected while prices paid jumped.
• Tsy Jun'25 10Y contract trades 111-23.5 (+16.5), off earlier high of 111-30.5, just shy of technical resistance at 112-01 (High Mar 4 and a bull trigger). Curves bull flattened off early week highs: 2s10s -2.766 at 29.033, 5s30s -1.289 at 60.651.
• Cross asset update, Bbg US$ index -0.88 at 1273.42, Gold retreats to 3117.09 (-6.50) after making new highs around 3148.0, crude retreating (WTI -.23 at 71.25.).
• Aside from tomorrow's tariff announcement, midweek data includes ADP Employment Change at 0815ET, Factory & Durable goods Orders at 1000ET, while Fed Gov Kugler speaks on inflation expectations (text, Q&A) at 1630ET.

SOFR FIXES AND PRIOR SESSION REFERENCE RATES
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SOFR Benchmark Settlements:

• 1M -0.00041 to 4.31896 (-0.00469/wk)
• 3M -0.00690 to 4.28098 (-0.01663/wk)
• 6M -0.02567 to 4.16692 (-0.04869/wk)
• 12M -0.05270 to 3.95989 (-0.09297/wk)

US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 4.41% (+0.07), volume: $2.636T
• Broad General Collateral Rate (BGCR): 4.36% (+0.03), volume: $945B
• Tri-Party General Collateral Rate (TCR): 4.36% (+0.03), volume: $898B
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $78B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $182B

FED Reverse Repo Operation

RRP usage retreats to $230.063B this afternoon after surging to the highest level since December 31, 2024 yesterday: $399.167B. Compares to $58.770B (lowest level since mid-April 2021) on February 14. The number of counterparties retreats to 36 from 66 prior.

US SOFR/TREASURY OPTION SUMMARY

SOFR and Treasury options favored upside call structures, bullish tone carried over to put selling while others took a stab at selling vol in May 10Y options ahead of tomorrow afternoon's reciprocal tariff announcement from DC. Projected rate cuts through mid-2025 rebounded from late Monday - look steady to mixed vs. this morning's levels (*) as follows: May'25 at -5.3bp (-4.7bp), Jun'25 at -22.1bp (-22.3bp), Jul'25 at -39.1bp (-38.6bp), Sep'25 -56.6bp (-56.1bp).

SOFR Options:
Block, +18,000 SFRM5 96.12/96.50 call spds, 4.0 ref 95.935
-10,000 0QK5 96.75/97.00 call spds, 6.0 vs. 96.60/0.15%
+7,000 SFRJ5 96.25 calls, 1.0 vs. 95.93/0.08%
+3,000 SFRZ5 96.62 calls,26.0 vs. 96.435/0.42%
4,000 SFRQ5 95.50/95.68/95.87 put flys ref 96.225
2,100 SFRM5 95.37/95.62 put spds vs. 96.37/96.62 call spds
3,200 SFRM5 95.75/95.87/95.93 put trees
3,000 SFRU5 96.25/96.50 call spds 
1,500 SFRU5 95.25/95.50/95.75/96.00 put condors ref 96.22
10,000 SFRM5 96.06/96.18 call spds vs. 2QM5 96.75/96.87 call spds
2,000 SFRM5 95.62/95.68 put spds ref 95.925
Block/screen, 6,000 SFRM5 96.12/96.50 call spds, 3.5 ref 95.915
2,000 0QM5 97.00 calls vs. 2,500 97.50 calls ref 96.595
1,500 2QJ5 96.75 calls ref 96.58

Treasury Options:
-12,000 TYK5 111 puts, 27 vs. 111-22.5/0.35%
-5,300 TYK5 111.5 straddles, 134
-10,000 TYK5 111/112.25 strangles, 100 
2,000 TUK5 103.75/103.87/104/104.25 broken call condors ref 103-22.5
5,200 USM5 119 calls vs. wk1 US 119.5/121 call spds ref 118-18
1,000 USK5 120/123/126 call flys ref 118-16
8,000 TYK5 112/112.5/113/113.5 call condors ref 111-24.5
7,000 Wed wkly TY 111.5/wk1 TY 111.75 call spds
over 10,200 TYK5 113 calls, 21 last
10,000 TYM5 113.5/115.5 call spds ref 111-24
over 6,700 each: TYK5 111.5 and 112 calls
over 6,200 TYK5 114 calls 8 last ref 111-22
2,000 FVK5 108.75/109 call spds ref 108-11.25
8,000 TYK5 113.5/115 call spds ref 111-17.5

MNI BONDS: EGBs-GILTS CASH CLOSE: Yields Drop Ahead Of US Tariff Announcement

European curves bull flattened Tuesday.

• There was no clear headline driver of a strong overnight rally whose gains were held through most of the session. Attribution was largely placed on anticipation of the April 2 tariff announcement by US President Trump, though equities remained bid through much of the day and periphery EGBs outperformed.
• Weak-leaning US data toward the cash close (including a contractionary ISM Manufacturing index) saw Bunds and Gilts near session highs again before fading those gains slightly.
• March Eurozone flash inflation and manufacturing PMIs for Italy and Spain came slightly below consensus, though Eurozone labour market readings were solid.
• On the day, Bunds outperformed Gilts, with bull flattening in both curves. Periphery/semi-core EGB spreads tightened.
• Wednesday's calendar highlight is US President Trump's highly anticipated tariff announcement (2100BST, well after the European cash close), while we also get some Spanish labour market data and hear from multiple ECB speakers including Schnabel.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 2.5bps at 2.022%, 5-Yr is down 3.5bps at 2.304%, 10-Yr is down 5.1bps at 2.687%, and 30-Yr is down 6bps at 3.03%.
• UK: The 2-Yr yield is down 2.2bps at 4.174%, 5-Yr is down 3bps at 4.254%, 10-Yr is down 4.1bps at 4.634%, and 30-Yr is down 3.5bps at 5.247%.
• Italian BTP spread down 2.7bps at 110.2bps  / French OAT down 0.9bps at 71.6bps   

MNI OPTIONS: Multiple Call Vs Put Structures In Rates Tuesday

Tuesday's Europe rates/bond options flow included:

• ERK5 97.75/97.6875ps, bought for 1.25 in 6k
• ERM5 97.875/98.00cs, sold at 5.25 in 7k.
• ERZ5 98.0625/98.25cs vs 97.75/97.50ps, bought for 3.5 in 7k.
• ERZ5 98.0625/98.25cs vs 97.75p, bought the cs for 2 in 10.5k vs 3.99k at  98.075.
• ERZ5 98.06/98.25 cs vs 97.75/97.50 ps, bought the cs for 3.5 and 4 in 24k total
• ERM6 98.875/99.00/99.375c ladder, bought for -1 in 2k
• 0RJ5/0RK5 98.00/98.12cs vs 97.5625p, bought the May for 0.25 in 10k
• SFIM5 95.60/95.70/95.95/96.05c condor, sold at 6.5 in 3k
• SFIU5 96.00/96.10cs v 95.50/95.40ps, sold the cs at 3.5 in 4k
• 0NU5 97.00c Bought for 5.75 and 6 in 20k

MNI FOREX: AUD and NZD Recover, DXY Unchanged Ahead of ‘Liberation Day’

• Global currency markets have lacked momentum on Tuesday, as participants remain wary of entering new positions ahead of the reciprocal tariff announcements, due from President Trump on Wednesday. As such, the USD index remains close to unchanged levels as we approach the APAC crossover.
• AUD and NZD have received a moderate boost from more stable equity markets today, recovering a solid portion of the declines seen Monday. For AUD specifically, price action has been assisted by a cautious sounding RBA. Tariff uncertainty ahead of tomorrow’s deadline remains the key risk for higher beta currencies in G10, as AUDUSD continues to consolidate ~6.5% losses from the US election highs.
• Key AUDUSD support remains untested at 0.6187, the Mar 4 low. Importantly, clearance of this level would reinstate a bearish technical theme for the pair. This may coincide with EURAUD testing 1.7419 (Mar 11 high), a breach of which would place EURAUD at levels not seen since the early onset of the pandemic in 2020.
• USDJPY remains volatile, registering a 116-pip range on the session. Spot is around 0.3% lower on the session, reflective of the lower US yields across the curve following the weaker-than expected ISM manufacturing and JOLTS data. As noted, the lack of conviction in either direction keeps the USDJPY well pinned between the short-term technical parameters of 150.86 (50-day EMA), and the first key support at 148.18, the Mar 20 low.
• All eyes will be on the Rose Garden event tomorrow at the adjusted time of 1600ET, for the latest updates regarding the imminent trajectory of the US administration’s trade policy. Elsewhere, US ADP Non-Farm Employment Change is the data highlight.

MNI FX OPTIONS: Expiries for Apr02 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.0790-00(E1.9bln)
• USD/JPY: Y149.80-95($577mln)
• USD/CAD: C$1.3780($1.1bln), C$1.4400-15($924mln)
• USD/CNY: Cny7.3500($1.3bln)

MNI US STOCKS: Late Equities Roundup: Off Midday Highs, Focus on Reciprocal Tariffs

• Stocks have retreated from midday highs as profit taking support evaporates ahead of Wednesday afternoon's reciprocal tariff announcement from the White House Rose Garden (1600ET est). Off morning lows, the DJIA currently trades down 280.75 points (-0.67%) at 41719.65, S&P E-Minis down 21 points (-0.37%) at 5632.25, Nasdaq down 13.8 points (-0.1%) at 17285.42.
• Health Care and Financial sectors continued to underperform in late trade, pharmaceuticals weighing on the the former with Johnson & Johnson -6.45% after courts rejected a $10B bankruptcy plan tied to the company's talc litigation. Meanwhile, Moderna declined -3.99%, Eli Lilly & Co -3.25%, Biogen Inc -3.05% and Merck & Co -2.94%.
• The Financial sector was weighed down by M&T Bank Corp -2.24%, KeyCorp -2.13%, Wells Fargo -1.84%, Citizens Financial Group -1.81% and US Bancorp -1.63%.
• Reminder, banks will kick off the latest earning cycle on Friday, April 11.
• On the positive side Consumer Discretionary and Communication Services sectors continued outperformed in the first half, a mix of autos and apparel buoyed the former with Tesla +4.11%, Tapestry +2.70%, Ralph Lauren +2.63% and NIKE +2.11%.
• Interactive media and entertainment shares supported the Communication Services sector with Alphabet +0.99%, Meta Platforms +0.70% and AT&T +0.60%.

MNI EQUITY TECHS: E-MINI S&P: (M5) Key Support Remains Exposed

• RES 4: 5886.86 50-day EMA
• RES 3: 5837.25 High Mar 25 and a key resistance   
• RES 2: 5766.74 20-day EMA
• RES 1: 5672.75 High Mar 31                      
• PRICE: 5645.50 @ 1405 ET Apr 1  
• SUP 1: 5559.75/33.75 Low Mar 13 and the bear trigger / Low Mar 31                  
• SUP 2: 5500.00 Round number support
• SUP 3: 5483.50 2.00 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
• SUP 4: 5396.00 2.236 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing

S&P E-Minis maintain a softer tone following recent bearish price action. Attention is on key support and the bear trigger at 5559.75, the Mar 13 low. It has been pierced, a clear break of it would confirm a resumption of the downtrend that started Feb 19, and open 5483.30, a Fibonacci projection. MA studies are in a bear-mode position, highlighting a dominant downtrend. Key short-term resistance has been defined at 5837.25, the Mar 25 high

MNI COMMODITIES: Crude Ticks Down, Gold Retreats From Fresh Record High

• Crude markets are edging lower, although the market lacks a clear trajectory. Concerns of weaker economic growth from looming US tariffs weigh against sanction threats against buyers of Russian and Iranian oil.
• WTI May 25 is down by 0.5% at $71.1/bbl.
• US reciprocal tariffs are to be announced on Wednesday. Press secretary Leavitt said that there would be “no exemptions at this time”.
• From a technical perspective, the sharp rally in WTI futures yesterday undermines the medium-term bearish condition and instead signals scope for a continuation higher near-term.
• This rally has exposed the next key resistance at $72.91, the Feb 11 high. Clearance of this level would strengthen the bullish theme.
• On the downside, initial firm support to watch lies at $68.99, the 20-day EMA. A breach of this level would signal a potential reversal.
• Meanwhile, spot gold has retreated from a fresh record high, with the yellow metal currently 0.2% lower on the session at $3,118/oz.
• Earlier in the session, gold had risen to a new high of $3,149 ahead of President Trump's trade tariffs announcement tomorrow. Gold remains 19.5% higher YTD, amid concerns over mounting geopolitical and trade tensions.
• The trend condition in gold remains bullish, with sights on $3,151.5 next, a Fibonacci projection. Support to watch lies at $3,015.6, the 20-day EMA. A pullback would be considered corrective.

WEDNESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
02/04/2025	0900/1000	*	GB	Index Linked Gilt Outright Auction Result
02/04/2025	1030/1230		EU	ECB's Schnabel At SciencesPo Conference
02/04/2025	1100/0700	**	US	MBA Weekly Applications Index
02/04/2025	1215/0815	***	US	ADP Employment Report
02/04/2025	1400/1000	**	US	Factory New Orders
02/04/2025	1405/1605		EU	ECB's Lane At AI Conference
02/04/2025	1430/1030	**	US	DOE Weekly Crude Oil Stocks
02/04/2025	2030/1630		US	Fed Governor Adriana Kugler
03/04/2025	2200/0900	*	AU	S&P Global Final Australia Services PMI
03/04/2025	2200/0900	**	AU	S&P Global Final Australia Composite PMI
03/04/2025	0030/1130		AU	Job Vacancies
03/04/2025	0030/1130	**	AU	Trade Balance
03/04/2025	0030/0930	**	JP	S&P Global Final Japan Services PMI
03/04/2025	0030/0930	**	JP	S&P Global Final Japan Composite PMI
03/04/2025	0145/0945	**	CN	S&P Global Final China Services PMI
03/04/2025	0145/0945	**	CN	S&P Global Final China Composite PMI