MNI ASIA MARKETS ANALYSIS: Risk Off Pauses for Moment

HIGHLIGHTS

• Treasuries consolidated after nearly breaching the highest levels since mid-December this morning, US trade policy still murky but some clarification over who and when tariffs deadlines end mollified somewhat.
• Rates trade weaker, curves steeper after this morning's post-claims and pending home sales data-driven volatility, volumes moderating with June futures taking lead Friday.
• Pending home sales in January fell much more sharply than expected while Initial claims were higher than expected at 242k (sa, cons 221k).
• The USD index gapped higher on Thursday as President Trump announced that the proposed tariffs scheduled to go into effect on March 04 will be implemented as scheduled.

MNI US TSYS: Risk-Off Pauses While Risk Factors Remain

• The steady risk-off support in Treasuries since mid-February paused Thursday, curves rebounding off two-week lows (partially tied to late 5Y/30Y Ultra steepener Block). Treasuries nearly breached the highest levels since mid-December but quickly retreated following this morning's data:
• Initial claims were higher than expected at 242k (sa, cons 221k) in the week to Feb 22, after an upward revised 220k (initial 219k); Core PCE inflation was revised up in the second Q4 release, although at 2.65% annualized from an initial 2.50%, it was exaggerated on screens by rounding to 2.7%; Pending home sales in January fell much more sharply than expected (-4.6% vs -0.9% expected, -4.1% prior rev from -5.5%).
• Pres Trump confirmed a March 4 timeline for tariffs on Canada, Mexico and China, with the latter including an additional 10% tariff on top of the already in place 10%.
• The Jun'25 10Y contract trades -4.5 at 110-24 after the bell, inside technicals: resistance at 110-29.5 (High Feb 26), support below at 110-00 (High Feb 7 and a recent breakout point).
• Cross asset: Stocks retreated, weighed by tech stocks (SPX eminis -94.50 at 5876.25); Gold plummeted (-41.61 at 2874.780); Crude rallied (WTI +1.53 at 70.15). Bbg US$ index clung to session highs for much of the session: BBDXY +7.74 at 1294.13.

SOFR FIXES AND PRIOR SESSION REFERENCE RATES
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SOFR Benchmark Settlements:

• 1M +0.00032 to 4.32384 (+0.00454/wk)
• 3M -0.00528 to 4.31324 (-0.00829/wk)
• 6M -0.01887 to 4.25155 (-0.03921/wk)
• 12M -0.05207 to 4.12001 (-0.10341/wk)

US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 4.33% (+0.00), volume: $2.487T
• Broad General Collateral Rate (BGCR): 4.31% (+0.00), volume: $945B
• Tri-Party General Collateral Rate (TCR): 4.31% (+0.00), volume: $929B
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $108B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $297B

FED Reverse Repo Operation

RRP usage climbs to $182.044B this afternoon from $126.058B on Wednesday. Compares to $58.770B (lowest level since mid-April 2021) on February 14. The number of counterparties at 41 from 37 prior.

US SOFR/TREASURY OPTION SUMMARY

SOFR and Treasury options leaned toward downside puts Thursday, fading the steady move off mid-February lows - even as uncertainty around US trade policy continues. Underlying futures weaker but off lows, curves off lowest levels since Feb 7 (2s10s +2.076 at 20.331). Projected rate cuts through mid-2025 have receded from late Wednesday levels (*) as follows: Mar'25 steady at -0.5bp, May'25 at -7.1bp (-7.1bp), Jun'25 at -19.4bp (-19.4bp), Jul'25 at -27.9bp (-27.9bp).

SOFR Options:
Block, 8,000 SFRU5 96.00/96.37/96.75 call flys, 3.5 wings over ref 96.085
+6,000 SFRH6 93.75/94.25/94.75 put flys, 1.00 ref 96.275
+5,000 0QJ5/2QJ5 96.75 call spds, 0.25 0QJ5 over
over +25,000 SFRM5 95.62 puts, 1.0 vs. 95.87/0.10%
Blocks, 20,000 SFRM5 95.5/96.00/96.50 put flys, 24.0 ref 95.87
+5,000 0QK5 96.75/97.00 call spds, 3.25 ref 96.315
-5,000 0QK5 96.62/96.93 call spds, 5.25 ref 96.335
-5,000 0QM5 96.62/97.12 call spds, 7.5 ref 96.30
-2,000 0QJ5 95.68 straddles 31.0 ref 96.32
+12,000 SFRJ5 96.25/96.75 call spds vs -2,000 SFRJ5 95.93 calls, 1.5-2.0 ref 95.87
+2,000 SFRU5 98.00/99.00 2x3 call spds, 2.0 ref 96.045
+8,000 SFRM5 95.62/95.68/95.75 put trees, 2.0 vs. 95.865/0.05%
+10,000 SFRU5 96.25/96.37 call spds, 2.75 ref 96.06
+12,300 SFRK5 95.75/95.81/95.87 put trees, 0.75 ref 95.88 to -.865
Block/screen over 53,000 SFRH6 93.75/94.25 put spds, 1.0 ref 96.26
2,000 0QK5 95.93/96.00 put spds vs. 96.50/96.62 call spds ref 96.295
6,000 SFRM5 95.68/95.75/95.81/95.87 put condors ref 95.87
2,000 0QJ5 96.31/96.62 call spds, ref 96.33

Treasury Options:
6,500 TYK5 112 calls, 35 ref 110-18, total volume over 15,200
appr +32,000 TYJ5 110/111 strangles, 61 ref 110-19.5 to -19
+50,000 wk4 FV 107.25 puts, 1.5
10,000 Wednesday wkly 10Y 110.5/110.75 strangle, 33 ref 110-19 (exp 3/5)
8,000 TYJ5 109.5/112.5 put over risk reversals, 9 ref 110-18.5
2,000 TYM5 108/110 2x1 put spds 18 ref 110-15
over 8,500 wk4 TY 110.25 puts, 6 ref 110-16
5,000 TYJ5 111 calls, 32 ref 110-17
appr 7,000 wk1 10Y 109.5/110 put spds ref 110-21.5 (exp 3/07)
-25,000 TYJ5 112 calls, 17-15 ref 110-21.5 to -19/0.24%
-5,000 TYJ5 111.75 calls, 18 ref 110-18.5/0.26%
-5,000 TYJ 112.5 calls, 9 ref 110-18.5/0.15%

MNI BONDS: EGBs-GILTS CASH CLOSE: Bunds Outperform As Tariff Threats Linger

Bunds easily outperformed Gilts Thursday in a broader curve steepening move, as US tariff concerns and weakness in equities remained dominant themes.

• Core instruments traded weakly in the early going, with heavy Italian supply and a rebound in gas prices weighing.
• US President Trump's repetition (and clarification) of tariff implementation on trading partners, with the EU (and not necessarily UK) in the crosshairs helped Bunds outperform versus both Treasuries and Gilts.
• Renewed weakness in European equities also helped the core rally.
• Spain kicked off the February Eurozone flash inflation round with core CPI below expectations.
• The German curve leaned bull steeper (slightly twist steepening with Buxl yields higher) with the UK's bear steepening.
• Spreads on the periphery widened toward the cash close in tandem with a pullback in equities.
• Flash February inflation data from Italy/France/Germany are Friday's scheduled highlights.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 3.3bps at 2.035%, 5-Yr is down 3.1bps at 2.165%, 10-Yr is down 2bps at 2.413%, and 30-Yr is up 0.2bps at 2.698%.
• UK: The 2-Yr yield is up 0.4bps at 4.179%, 5-Yr is up 0.5bps at 4.187%, 10-Yr is up 1bps at 4.512%, and 30-Yr is up 2bps at 5.114%.
• Italian BTP spread up 2bps at 113.2bps / Spanish bond spread up 2bps at 63.3bps

MNI EGB OPTIONS: Multiple Put Spread Purchases Across Bund, Euribor Thursday

Thursday's Europe rates/bond options flow included:

• RXJ5 130.50/129.50 put spread, bought for 16.5 on 10k
• RXJ5 130.50/129.50 put spread bought for  18.5 on 10K vs. 58s.
• ERJ5 97.75/97.685 put spread vs. ERM5 97.75/97.685 put spread paper paid 0.75 on 5K for the M5.
• ERH5 97.56/97.50 1x2 put spread paper paid 0.5 on 2K.
• ERJ5 97.81/97.75/97.68 put ladder, paper paid 1.25 on 4K.
• ERZ5 97.93/98.18/98.43/98.68c condor vs 97.50p, bought the condor for 4.25 in 5k.
• 2RM5 97.875^ paper paid 33 on 4K

MNI FOREX: Greenback Shoots Higher as Tariff Headlines Spur Volatility

• The USD index gapped higher on Thursday as President Trump announced that the proposed tariffs scheduled to go into effect on March 04 will be implemented as scheduled. The announcement came just one day after the US president hinted that the Canada and Mexico tariffs could be delayed again, indicating that they were scheduled for April 2.
• Furthermore, details that China will be charged an additional 10% Tariff from March 04 has weighed on global sentiment, while impacting the Chinese Yuan negatively.
• USDCNH has risen 0.4% and USDCAD remains 0.6% higher on the session, both notably underperforming the advance for the USD index, which currently stands at 0.78% as we approach the APAC crossover.
• The lingering global concerns from US trade policy developments have weighed on risk sensitive currencies in G10, with both AUD and NZD the weakest in G10, declining close to 1%. For AUDUSD, the pair has pulled further away from 0.6400 resistance, and has substantially narrowed the gap to 0.6231, the Feb 10 low.
• Amid the firmer stance on tariffs, and the subsequent pessimism for major equity benchmarks, EURUSD (-0.70%) has moved sharply lower to a fresh weekly low of 1.0400 in recent trade. Trump’s comments yesterday on the imminent details for EU tariffs will be lingering, helping EURUSD to extend its pullback from a key resistance zone between 1.0525/33 that has been building in significance in recent sessions.
• The Feb 19 low at 1.0401 represents initial support, which has been tested. A break below here would signal a potential reversal threat, opening 1.0373 and 1.0317 as initial targets below.
• Despite the headlines, USDMXN remains in a familiar holding pattern, continuing to respect the short-term technical parameters of 20.30-20.55. President Sheinbaum saying there have been no conflicts that could derail a possible deal ahead of the deadline next week appears to be helping the peso resilience.
• German, France and Italy inflation data back in focus tomorrow, ahead of US PCE and Canada GDP.

MNI FX OPTIONS: Expiries for Feb28 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.0390-00(E4.0bln), $1.0430-50(E912mln), $1.0460-65(E651mln), $1.0500(E1.2bln), $1.0550(E1.7bln), $1.0600(E1.0bln)
• USD/JPY: Y149.50($800mln), Y150.00($1.2bln), Y151.30($749mln)
• AUD/USD: $0.6400-20(A$985mln), $0.6500-10(A$1.2bln)
• NZD/USD: $0.5615(N$627mln)
• USD/CAD: C$1.4290-00($1.5bln), C$1.4360-80($1.3bln), C$1.4400($1.4bln), C$1.4495-00($1.5bln)
• USD/CNY: Cny7.2500($769mln)

MNI US STOCKS: Late Equities Roundup: Consolidating, Chip Stocks Underperforming

• Stocks consolidated late Thursday, the Dow reversing course after outperforming much of the session while the Nasdaq continues to lead the sell-off as semiconductor makers weigh on the Tech sector. NBo obvious headline driver but more likely position squaring ahead of Friday's PCE data.
• Currently, the DJIA trades down 31.36 points (-0.07%) at 43409.79, S&P E-Minis down 51.5 points (-0.86%) at 5919, Nasdaq down 316.2 points (-1.7%) at 18759.14.
• Information Technology and Utility sectors underperformed in late trade, chip makers weighing on the former as noted after Nvidia late Wednesday earnings failed to wow markets (despite a 4.3% rise in sales and 6% earnings): Super Micro Computer -13.72%, First Solar -6.82% and Monolithic Power Systems -6.00%. Meanwhile, NVIDIA declined -4.91%.
• Independent power and electricity providers weighed on the Utility sector: Vistra Corp -10.76%, FirstEnergy -9.57%, Constellation Energy -5.86% and NRG Energy -4.64%.
• On the positive side, Energy and Financial sectors continued to outperform late Thursday, oil and gas names buoyed the Energy sector as crude prices moved higher (WTI +1.75 at 70.37): Diamondback Energy +2.59%, Devon Energy +2.37%, Texas Pacific Land +2.33% and Phillips 66 +2.12%.
• Insurance names supported the Financial sector: Allstate +3.30%, Arch Capital Group +3.00%, Cincinnati Financial +2.69% and MetLife +2.51%.
• Corporate earnings expected to be announced after the close by: Dell Technologies, AES Corp, Edison International, EOG Resources, Autodesk, NetApp, Duolingo, Rocket Lab USA, HP Inc, Mosaic, Redfin, Archer Aviation, Rocket Cos, QVC Group, Monster Beverage and Globalstar.

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

• RES 4: 6205.38 0.764 proj of the Jan 13 - 24 - Feb 3 price swing    
• RES 3: 6200.00 Round number resistance
• RES 2: 6178.75 High Dec 6 and key resistance
• RES 1: 6060.01/6166.50 20-day EMA / High Jan 24                
• PRICE: 5954.50 @ 1155 ET Feb 27
• SUP 1: 5924.00 Low Feb 25            
• SUP 2: 5892.37 76.4% retracement of the Aug 5 - Dec 6 bull leg
• SUP 3: 5842.50 Low Jan 14
• SUP 4: 5809.00 Low Jan 13 and a reversal trigger  

The latest move down in S&P E-Minis still appears corrective, however, price has breached 6014.00, the Feb 10 low. This exposed a key support at 5935.50, the Feb 3 low, that was pierced on Tuesday. A clear break of it would allow for a deeper retracement. MA studies are in a bull-mode condition that suggests the trend direction remains up. A resumption of gains would refocus attention on key resistance at 6178.75, the Dec 6 ‘24 high.

MNI COMMODITIES: Crude Rises, Precious Metals Fall As Tariff Threats Increase

• Crude is higher today after news that Trump would revoke Chevron’s license in Venezuela and on his comments that tariffs on Mexico and Canada, and China, would go into effect on March 4.
• WTI APR 25 is up by 2.5% at $70.3/bbl.
• Meanwhile, OPEC+ is hesitant on going ahead with the planned April oil output hike due to uncertainty over sanctions and tariffs, Reuters sources said.
• For WTI futures, key short-term resistance has been defined at $74.06, the Feb 3 high. On the downside, initial support is at $68.36, the Feb 26 low.
• Spot gold has slipped by a further 1.3% today to $2,879/oz, as the dollar gapped higher following Trump’s remarks on tariffs.
• The move leaves the yellow metal 1.9% lower on the week, and on course for its first weekly loss of the year.
• This pullback has brought gold below first key support at $2,882.6, the 20-day EMA. A clear break of this level would open next support at $2,834.3, the Feb 6 low.
• Silver has underperformed again today, with the precious metal falling by 1.8% to $31.3/oz.
• The sharp move down in silver this week still appears corrective. However, a clear break of the 50-day EMA at $31.409, which has been pierced, would open $30.691, the Feb 3 low.

FRIDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
28/02/2025	0700/0800	***	SE	GDP
28/02/2025	0700/0800	**	SE	Retail Sales
28/02/2025	0700/0800	**	DE	Import/Export Prices
28/02/2025	0700/0800	**	DE	Retail Sales
28/02/2025	0700/0700		GB	BOE's Ramsden speech on MonPol in geopolitical fragmentation
28/02/2025	0700/0700	*	GB	Nationwide House Price Index
28/02/2025	0730/0830	**	CH	Retail Sales
28/02/2025	0745/0845	***	FR	HICP (p)
28/02/2025	0745/0845	**	FR	Consumer Spending
28/02/2025	0745/0845	***	FR	GDP (f)
28/02/2025	0800/0900	**	CH	KOF Economic Barometer
28/02/2025	0855/0955	**	DE	Unemployment
28/02/2025	0900/1000	***	DE	North Rhine Westphalia CPI
28/02/2025	0900/1000	***	DE	Bavaria CPI
28/02/2025	0900/1000	**	EU	ECB Consumer Expectations Survey
28/02/2025	0900/1000	***	DE	Baden Wuerttemberg CPI
28/02/2025	1000/1100	***	IT	HICP (p)
28/02/2025	1300/1400	***	DE	HICP (p)
28/02/2025	1330/0830	***	CA	GDP - Canadian Economic Accounts
28/02/2025	1330/0830	***	CA	Gross Domestic Product by Industry
28/02/2025	1330/0830	***	CA	CA GDP by Industry and GDP Canadian Economic Accounts Combined
28/02/2025	1330/0830	***	US	Personal Income and Consumption
28/02/2025	1330/0830	**	US	Advance Trade, Advance Business Inventories
28/02/2025	1445/0945	***	US	MNI Chicago PMI
28/02/2025	1600/1100		CA	Finance Dept monthly Fiscal Monitor (expected)
28/02/2025	1800/1300	**	US	Baker Hughes Rig Count Overview - Weekly
01/03/2025	0130/0930	***	CN	CFLP Manufacturing PMI
01/03/2025	0130/0930	**	CN	CFLP Non-Manufacturing PMI