MNI ASIA MARKETS ANALYSIS: No Hurry for Policy Changes

HIGHLIGHTS

• Early Treasury volatility followed a mixed NFP report, which saw headline payrolls growth only slightly below expectations, while the unemployment rate ticked higher to 4.1%.
• Rates reversed midday support to extend session lows after Chairman Powell said the Fed can take its time before considering policy changes as inflation is still above target and policy uncertainty out of Washington remains high.
• Stocks were mollified by Chairman Powell's outlook, bouncing off this morning's mid-September lows to near mid-range for the week. Reminder, the Fed enters policy Blackout at midnight tonight.

MNI US TSYS: Marking Late Session Lows, Chair Powell's No Hurry Comment Settles In

• Treasury futures have gradually extended session lows since Chairman Powell left the podium. Powell said the Fed is paying close attention to a recent spike in some measures of inflation expectations. Powell reiterated the Fed can take its time before considering any further changes to interest rates as inflation is still above target and policy uncertainty out of Washington remains high.
• The Jun'25 10Y contract currently trades -9.5 at 110-16 - session low, with focus on technical support at 110-12.5/110-00 (Intraday low / High Feb 7); resistance above at 111-15 (Wed's high) followed by 112-01/02 (High Mar 4 / 1.382 proj of Jan 13-Feb 7-12 swing).
• Curves mildly flatter: 2s10s -0.674 at 30.848, 5s30s -0.768 at 51.433. As such, projected rate cuts through mid-2025 cooled significantly vs. morning levels (*) as follows: Mar'25 at -1bp (-2.7bp), May'25 at -9.4bp (-13bp), Jun'25 at -26.3bp (-31.1bp), Jul'25 at -37bp (-42.2bp). Dec'25 had priced in three 25bp cuts this morning now show -69.1bp.
• Cross asset update: stocks have recovered and posting modest late session gains (SPX Eminis +17.0 at 5763.0); Crude firmer but off highs (WTI +.63 at 66.99); Bbg US$ index off morning lows (BBDXY -1.22 at 1268.84).
• Reminder, The Federal Reserve enters policy Blackout at midnight tonight through March 20, the day after the next FOMC annc.

SOFR FIXES AND PRIOR SESSION REFERENCE RATES
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SOFR Benchmark Settlements:

• 1M +0.00063 to 4.32221 (-0.00250/wk)
• 3M -0.00245 to 4.29236 (-0.02442/wk)
• 6M -0.00660 to 4.18367 (-0.07308/wk)
• 12M +0.00398 to 3.99933 (-0.12739/wk)

US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 4.35% (+0.01), volume: $2.558T
• Broad General Collateral Rate (BGCR): 4.34% (+0.01), volume: $975B
• Tri-Party General Collateral Rate (TCR): 4.34% (+0.01), volume: $951B
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $115B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $283B

FED Reverse Repo Operation

RRP usage inches up to $136.305B this afternoon from $129.269B Thursday. Compares to $58.770B (lowest level since mid-April 2021) on February 14. The number of counterparties at 33 from 35 prior.

US SOFR/TREASURY OPTION SUMMARY

Option desks reported heavy SOFR and Treasury option position unwinds and two-way vol trades Friday, underlying futures near late session lows after Chairman Powell stated the Fed can take its time before considering any further changes to interest rates as inflation is still above target and policy uncertainty out of Washington remains high. Projected rate cuts through mid-2025 cooled significantly vs. morning levels (*) as follows: Mar'25 at -1bp (-2.7bp), May'25 at -9.4bp (-13bp), Jun'25 at -26.3bp (-31.1bp), Jul'25 at -37bp (-42.2bp). Dec'25 had priced in three 25bp cuts this morning now show -69.1bp.

SOFR Options:
+10,000 SFRU5 95.50/95.62/95.75 put flys 2.0 ref 96.17
over -100,000 SFRU5 96.25 calls, 24.0 vs. 96.26 to -.255/0.50%
-5,000 SFRZ5 96.50/96.87/97.00/97.25 call condors, 6.0 ref 96.385
+5,000 0QJ5 96.00/96.12/96.25/96.37 put condor, 3.0 ref 96.505
36,000 SFRN5 96.06/96.25 2x1 put spds ref 96.265
11,000 SFRM5 95.62/95.68 put spds ref 96.00 to -.005
9,000 SFRH5 95.68/95.75 1x2 call spds ref 95.725
2,000 SFRU5 96.50/97.00 call spds ref 96.25
5,500 SFRH5 95.75/95.81 call spds
3,000 SFRQ5 95.75 puts ref 96.245
2,000 0QK5 95.50/95.75/95.87/96.12 put condors ref 96.485
1,500 SFRZ5 95.50/95.75 put spds 

Treasury Options:
+20,000 TYJ5 112 calls, 9
Block, +9,000 Monday wkly 10Y 111 call, 4
-9,000 TYJ5 110 puts, 10
5,000 TYJ5 112 calls, 19 ref 111-01 to -06 (total volume over 40.8k)
3,500 FVJ5 107.25/109 strangles, 16 ref 107-30.25
+7,500 TYJ5 110 puts, 13-14
-10,000 TYJ5 110/112.5 strangles, 23, appr 6.98% implied vol
+10,000 TYJ5 110.5 straddles, 117-119 vs. 111-03/0.32% (implied appr 6.67-.87
5,000 USK5 122/126 call spds ref 117-22
3,000 TYJ5 110/112 strangles, 29 ref 111-05.5
50,000 FVJ5 108.25/108.75 call spds 10 ref 108-00.75
over 5,000 TYJ5 109/110 put spds ref 110-30 to 111-00
2,000 TYK5 111/112/113.5 broken call flys ref 111-00.5
2,500 TYJ5 108.5/109.5 put spds ref 110-28
4,500 wk1 TY 110/110.5 2x1 put spds, 6 ref 110-29 (exp today)
1,750 FVK5 109.25/110.25/111.25 call flys ref 107-27.5
over 7,000 wk2 TY 112/113 call spds ref 111-01 to 110-28.5

MNI FOREX: Mixed NFP Does Little to Reassure Greenback

• The greenback was sold on the back of a mixed NFP report, which saw headline payrolls growth only slightly below expectations, while the unemployment rate ticked higher to 4.1%. Despite the miss on consensus, Trump's post-jobs report press conference talked up the strength in the underlying data, but did little to overturn the pullback in the dollar: the USD Index consolidates the move to erase the entirety of the election-tripped gains, again favouring EUR/USD to extend the week's winning streak.
• Canadian jobs data came in soft relative to expectations, with the net change in employment at +1.1k vs. Exp. +20.0k, as a sizeable drop in full time employment countered the rise in part time positions. The softer-than-expected report prompted a strong session for USD/CAD, which showed above the 1.4400 handle to partly reverse this week's downside.
• CAD saw another brief phase of additional selling pressure on the back of Trump's post-jobs report comments, who hinted at the possibility of further tariffs - which could come as soon as today, Monday or Tuesday.
• AUD and NZD weakened against most others in G10 as equities spiralled. The tech-led weakness prompted NVIDIA to shed as much as $1 trillion in market cap off the record high, and sees Tesla near half in value off the December high. EUR/NZD rallied sharply - putting the cross north of 1.90 for the first time since the COVID pandemic.
• Focus in the week ahead turns to US inflation, with both CPI and PPI prints due from the US. Importantly, the Fed will be inside their pre-meeting media blackout period, meaning markets could pay greater attention to the prints as a lead-up to the FOMC decision on March 19th.

MNI FX OPTIONS: Expiries for Mar10 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.0815-25(E712mln), $1.0850-55(E520mln), $1.0875(E533mln)
• USD/JPY: Y146.85-00($547mln), Y147.40-55($999mln), Y148.00($1.3bln)
• USD/CAD: C$1.4500($795mln)

MNI US STOCKS: Late Equities Roundup: Fed Powell Calms Stocks - Off Mid-Sep'24 Lows

• Stocks managed to rebound off midday lows Friday, some solace after a punishing week as Fed Chairman Powell stressed patience in making policy changes. Currently, the DJIA trades up 226.92 points (0.53%) at 42809.28, S&P E-Minis up 31.75 points (0.55%) at 5778, Nasdaq up 127.5 points (0.7%) at 18197.14.
• Energy and Utility sectors continued to outperform since midweek, oil refiners and servicers led the Energy sector as crude prices bounced off lows (WTI +0.79 at 67.15): Schlumberger +4.98%, Texas Pacific Land Corp +3.62%, Occidental Petroleum +3.35% and Devon Energy +3.22%.
• Meanwhile, the Utility sector was supported by a mix of water, gas and electricity providers: American Water Works +4.92%, Eversource Energy +4.09%, NextEra Energy +4.06%, AES Corp +3.54% and WEC Energy Group +3.37%.
• Banks and financial services stocks continued to weigh on the Financials sector: Discover Financial Services -4.22%, Arthur J Gallagher -3.97%, S&P Global  -3.33% and Wells Fargo & Co -2.57%.
• Broadline retailers weighed on the Consumer Staples sector: Costco Wholesale -6.80%, and Walmart -2.39%, while Philip Morris International declined 1.32%.

MNI EQUITY TECHS: E-MINI S&P: (H5) Bear Cycle Remains In Play

• RES 4: 6178.75 High Dec 6 ‘24 and key resistance  
• RES 3: 6166.50 High Jan 19
• RES 2: 6002.65 50-day EMA
• RES 1: 5884.00/5924.0 High Mar 4 / Low Feb 25                
• PRICE: 5775.00 @ 1520 ET Mar 7 
• SUP 1: 5720.00 Low Mar 6              
• SUP 2: 5698.25 50.0% retracement of the Aug 5 - Dec 6 ‘24 bull leg
• SUP 3: 5658.00 Low Sep 12 ‘24
• SUP 4: 5584.85 61.8% retracement of the Aug 5 - Dec 6 ‘24 bull leg    

A bear threat in S&P E-Minis remains present and a sharp sell-off this week reinforces a short-term downtrend. The contract traded to a fresh short-term cycle low again, Thursday, marking an extension of the current bear leg. This reinforces a stronger reversal and a double top pattern on the daily scale. The focus is on 5698.25, a Fibonacci retracement. Initial firm resistance to watch is 6002.65, the 50-day EMA.

MNI Oil Summary At European Close: Crude Rises

Crude has risen today after Trump threatened ‘large scale’ sanctions and tariffs on Russia. Prices eased back somewhat after a headline stating Putin was ready to agree to a temporary truce in Ukraine. Prices remain set for a weekly decline amid trade tensions and an OPEC+ supply increase scheduled for April. 

• Brent MAY 25 up 1.8% at 70.69$/bbl
• WTI APR 25 up 1.7% at 67.48$/bbl
• Truth social post from Trump today threatened sanctions/tariffs on Russia due to its current actions against Ukraine on the battlefield.
• Russia is willing to discuss a temporary truce in Ukraine, provided there is progress towards a final peace agreement, Bloomberg reports.
• Saudi Aramco has cut its OSP for Arab Light Crude for April by $0.4/bbl, to $3.50/bbl above the Oman/Dubai benchmark, Bloomberg reports. This has raised the prospect for improved demand in Asia.
• The US delayed its 25% tariffs on Mexico and Canada for goods covered by the USMCA yesterday.
• Volumes of Kazakh crude flowing to Germany via the Druzhba pipeline in February amounted to 100k mt, a 21% drop on the month, Interfax said citing Kaztransoil.
• Expanded oil production at Tengiz is planned for the H2, affording Kazakhstan the opportunity to meet its OPEC+ commitments, the deputy energy minister of Kazakhstan said, cited by Interfax.
• China's crude oil imports fell 5% y/y in the first two months of 2025 to 83.85m tons, or 10.38mbpd, from 10.74mbpd in the same period last year, according to General Administration of Customs data.
• India has made its first crude import deal with Argentina in eight years, aiming to expand its sourcing network and increase ties with non-OPEC suppliers, Platts said.

MONDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
10/03/2025	0600/1500		JP	Economy Watchers Survey
10/03/2025	0700/0800	***	NO	CPI Norway
10/03/2025	0700/0800	**	SE	Private Sector Production m/m
10/03/2025	0700/0800	**	DE	Trade Balance
10/03/2025	0700/0800	**	DE	Industrial Production
10/03/2025	0900/1000	**	IT	PPI
10/03/2025	-	***	CN	New Loans
10/03/2025	-	***	CN	Money Supply
10/03/2025	-	***	CN	Social Financing
10/03/2025	1500/1100	**	US	NY Fed Survey of Consumer Expectations
10/03/2025	1530/1130	*	US	US Treasury Auction Result for 13 Week Bill
10/03/2025	1530/1130	*	US	US Treasury Auction Result for 26 Week Bill
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