MNI ASIA MARKETS ANALYSIS: Risk On Over Trade Deal Hopes

HIGHLIGHTS

• Treasuries look to finish at/near highs along with equities Thursday as markets, eager for a rally, reacted positively to trade negotiations with India and South Korea: "nearing an agreement in principle on trade" on the former.
• Stocks have gradually risen to the highest levels since April 9 knee-jerk highs (5528.75) after Pres Trump granted 75 other countries get a 90 day pause and reduction in reciprocal tariffs.
• Fed Gov Waller emphasized concerns over the growth impact of tariffs, vs. what he sees as the likelihood that their inflation impact will only be a one-off.

MNI US TSYS: Trade Negotiation Optimism Spurs Strong Risk-On Support

• Treasuries are holding at/near late Thursday session highs after the bell, as are stocks - in a positive reaction to trade "negotiations" headlines with India and South Korea: "nearing an agreement in principle on trade" on the former.
• Cautious risk-on tone has stocks climbing through the session, SPX eminis are currently (5514.75) at the highest levels since April 9 when Pres Trump granted 75 other countries get a 90 day pause and reduction in reciprocal tariffs.
• Jun'25 10Y futures currently +17 at 111-06 vs. 111-08 high, next resistance to watch remains 111-25, 50.0% of the Apr 7 - 11 bear leg sell-off. Clearance of this level would undermine the bearish theme.
• Treasuries pared gains after latest Durable Goods orders surge high, weekly claims in-line, continuing climbs lower than expected, Chicago Fed activity index lower than expected (prior up-revised). Existing home sales came in well below expectations at 4.02M (4.13M expected, 4.27M prior rev from 4.26M). That's the lowest figure since September, and a 2.4% Y/Y drop, suggesting that activity is slowing again.
• Rates rebounded after Cleveland Fed Hammack sees potential move from Fed in June if data is "convincing". Meanwhile, Fed Gov Waller emphasized concerns over the growth impact of tariffs, vs. what he sees as the likelihood that their inflation impact will only be a one-off.
• Markets will be watching Friday's University of Michigan sentiment and inflation expectations data at 1000ET.

REFERENCE RATES (PRIOR SESSION)
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US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 4.28% (-0.02), volume: $2.475T
• Broad General Collateral Rate (BGCR): 4.27% (-0.02), volume: $1.025T
• Tri-Party General Collateral Rate (TCR): 4.27% (-0.02), volume: $989B
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $107B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $290B

FED Reverse Repo Operation

RRP usage recedes to $130.004B this afternoon from $171.780B yesterday. Usage had fallen to $54.772B last Wednesday, April 16 -- lowest level since April 2021. Conversely, usage had surged to the highest level since December 31, 2024 on Monday, March 31: $399.167B. The number of counterparties at 33.

US SOFR/TREASURY OPTION SUMMARY

Option desks reported some standout trades Thursday on otherwise modest session flow. Notable: over 110,000 SOFR midcurve conditional flatteners, and deep out of the $ Treasury puts: purchase is not really a hedge against movement in the underlying for an option that expires on June 20th, or 57 days from now, but most likely a hedge for some portfolio with risk associated with 10Y yield rising to 5.8% from where it is now: 4.3168%. Underlying futures firmer, at/near late session highs. Projected rate cuts are steady in the near term to slightly higher in longer dates compared to this morning's levels (*) as follows: May'25 steady at -2.1bp, Jun'25 at -16.2bp (-15.1bp), Jul'25 at -35.6bp (-33.6bp), Sep'25 -55.4bp (-52.9bp).

SOFR Options:
+110,000 0QM5 96.81/97.00 call spds vs. 0QU5 97.00/97.25 call spds, 1.0-1.25 net flattener (Sep over)
Block, 5,000 SFRZ5 95.68/96.00 2x1 put spds, 3.0 ref 96.51
-10,000 SFRZ5 95.37/95.50/95.87 1x put flys, 8.0 vs. 96.48/0.17%
Block, 5,000 SFRN5 95.93/96.25 put spds vs. 0QN5 96.50/96.81 put spd spd, 1.0 net 0QN over
2,000 0QN5 97.12/97.37 call spds ref 96.795
Block/screen, 7,000 SFRK5 95.50/95.75/95.87/96.00 put condors, 8.5 vs. 95.895
15,000 2QM5 96.50/96.75 call spds ref 96.665
2,000 SFRU5 96.50/97.25 call spds ref 96.23
2,000 SFRM5 95.68/95.75/95.81 put trees ref 95.87

Treasury Options:
+52,100 TYN5 101.5 puts, 2 open interest only 616
3,100 USK5 113.5/USM5 113 put spds
2,000 TYK5 110.25/110.5 put spds, 1.0
-10,000 TYM5 110/113 strangles, 50-51 ref 111-03
over 9,000 TYM5 113.5 calls, 13 ref 11-03.5
1,000 FVK5 108, 108.25 & 108.5 straddles
1,000 FVK5 108.5/109/109.25 broken call flys ref 108-08
over 5,500 TYK5 111/111.5 call spds, 7 ref 110-26.5

MNI BONDS: EGBs-GILTS CASH CLOSE: ECB Commentary Spurs German Bull Steepening

European yields pulled back Thursday, with the German short-end and UK long-end showing relative strength.

• ECB commentary was a key focus in the session, with Rehn and Lane discussing the possibility of larger-than-25bp rate cuts albeit in more of a "philosophical" sense than guidance to a future move.
• That helped deepen ECB rate cut pricing, in turn spurring front-end EGB outperformance on the curve. UK instruments firmed in sympathy, while broader global core FI benefited from comments by Fed officials perceived as dovish-leaning.
• Data took a back seat: German Ifo data beat expectations but had little lasting impact.
• The German curve bull steepened, with the UK's bull flattening. 10Y Gilts saw their lowest closing level Since Apr 4, with 10Y Bunds 0.5bp off their lowest close since February.
• Periphery / semi-core EGB spreads tightened, with BTPs leading.
• Friday's calendar includes UK retail sales and French confidence indicators, with an appearance by BOE's Greene.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 6.1bps at 1.685%, 5-Yr is down 6bps at 1.988%, 10-Yr is down 4.9bps at 2.448%, and 30-Yr is down 3.4bps at 2.877%.
• UK: The 2-Yr yield is down 3.7bps at 3.879%, 5-Yr is down 4.4bps at 3.995%, 10-Yr is down 5.2bps at 4.5%, and 30-Yr is down 6.5bps at 5.244%.
• Italian BTP spread down 3.6bps at 109.7bps / Spanish down 2.6bps at 64.3bps 

MNI EGB OPTIONS: Multiple Call Structures And Outrights Bought Thursday

Thursday's Europe rates/bond options flow included:

• DUM5 107.80/108.10cs vs 107.00p, bought the cs for 4.25 in 4.6k
• OEM5 118.50/117.50ps sold at 11.5 and 10.5 in 15k
• RXM5 130.50/129ps 1x2, bought for 12 in 2k
• ERM5 98.12/98.25cs, bought for 1 in 8k
• ERM5 98.125 calls paper paid 1.75 & 2 on 35K
• SFIK5 96.20/96.30cs, bought for 1 in 10k

MNI FOREX: Major Pairs Hold Relatively Tight Ranges Despite Equities Surge

• Currency markets were relatively stable for much of Thursday's session, as major pairs held narrow ranges throughout the US session. Bbg US$ index extended lows in late trade, BBDXY -5.29 at 1223.31.
• The more constructive tone for risk sentiment may have been driven by headlines regarding the White House "nearing an agreement in principle on trade with India". This has boosted the likes of AUD and NZD to outperform. Given the surrounding sentiment around the broader dollar, AUDUSD may have a lot of room to appreciate, particularly in the context of AUDUSD remaining 4.5% below the US election related highs, at 0.6688. The significance of 0.6400 as a pivot point on the chart leaves the pair at an important juncture.
• USDCHF highs of 0.8311 overnight fell around 20 pips shy of the prior breakdown point at 0.8333, the 2023 low. With bearish conditions prevailing, spot has reverted back towards 0.8270. We noted yesterday that Danske have updated their 12-month forecast for USDCHF to 0.7500.
• In emerging markets, ZAR (-1%) weakness stands out despite the firmer risk tone. USDZAR is through resistance at the 20-day EMA, and the next level to watch is 19.1531, the Apr 14 high. Implications of the ZAR75bln hole left in the 2025 Budget is clearly in focus for markets.
• Tokyo CPI is due during APAC on Friday, and will be followed by UK and Canadian retail sales data later in the session. Notably, SNB President Schlegel is due to speak at the central bank’s AGM – likely to acknowledge the recent firming of the Swiss Franc, but to not provide a view on nominal CHF valuations.

MNI FX OPTIONS: Expiries for Apr25 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.1390-00(E1.2bln), $1.1440-50(E1.7bln), $1.1500-15(E800mln)
• USD/JPY: Y140.00($959mln), Y145.00($1.6bln)
• AUD/USD: $0.6425($699mln)
• USD/CAD: C$1.3800($2.0bln), C$1.4000($1.7bln)
• USD/CNY: Cny7.3000($606mln), Cny7.4000($700mln)

MNI US STOCKS: Late Equities Roundup: Nearing April 9 Tariff Pause Highs

• Stocks continue to  gradually extend intraday highs in late Thursday trade, SPX eminis nearing the April 9 knee-jerk highs (5528.75) after Pres Trump granted 75 other countries get a 90 day pause and reduction in reciprocal tariffs. Currently, the DJIA trades up 485.58 points (1.23%) at 40093.37, S&P E-Minis up 110.25 points (2.04%) at 5511.5, Nasdaq up 443.9 points (2.7%) at 17151.77.
• Today's tariff-related headlines have underpinned risk on the day, first on second hand media comments that a the White House is "nearing an agreement in principle on trade with India" according to a Fox reporter, followed by Tsy Sec Bessent on a trade "understanding" with South Korea was near as well. A lot of front running stocks on little substance as negotiations continue.
• Information Technology and Communication Services sectors continued to lead gainers in the second half, ServiceNow surged 15.57% higher after reporting better than expected earnings. Other gainers included: Microchip Technology +11.97%, Super Micro Computer +9.48% and Monolithic Power Systems +8.11%.
• Interactive media and entertainment shares buoyed the Communication Services sector with Netflix +4.71% and Take-Two Interactive Software +4.19%. Other leaders included Interpublic Group +3.88%, Omnicom Group +3.48%, TKO Group Holdings +2.99% and Walt Disney +2.70%.
• Conversely, Consumer Staples and Utilities sectors continued to underperform in late trade, weighing on Consumer Staples: PepsiCo -5.19%, Procter & Gamble -3.81%, Dollar Tree -2.58%, Mondelez International -2.20% and Dollar General -2.11%. Meanwhile, alternative energy providers weighed on the Utility sector with NextEra Energy -2.13%, Xcel Energy -1.48%, Exelon -1.00%, Consolidated Edison -0.98% and PG&E -0.77%.
• Earnings expected after today's close include: T-Mobile, Encompass Health Corp, Weyerhaeuser Co, Skechers USA, SS&C Technologies, Republic Services, Digital Realty Trust, Intel Corp, Gilead Sciences and Alphabet.

MNI EQUITY TECHS: E-MINI S&P: (M5) Gains Considered Corrective

• RES 4: 5773.25 High Apr 2   
• RES 3: 5630.01 50-day EMA       
• RES 2: 5528.75 High Apr 10 and the bull trigger
• RES 1: 5514.75 Intraday High April 24
• PRICE: 5508.25 @ 1458 ET Apr 24  
• SUP 1: 5098.16 61.8% retracement of the Apr 7 - 10 bounce                     
• SUP 2: 4996.43 76.4% retracement of the Apr 7 - 10 bounce
• SUP 3: 4832.00 Low Apr 7 and the bear trigger
• SUP 4: 4760.88 1.618 proj of the Feb 19 - Mar 13 - 25 price swing 

The bull cycle in S&P E-Minis that started on Apr 7 is considered corrective. The trend condition has been oversold following recent weakness and gains have allowed this to unwind. Price has traded above the 20-day EMA, at 5423.30. This exposes 5528.75, the Apr 10 high. Note that resistance at the 50-day EMA - a key level too - is at 5630.01. For bears, a resumption of weakness would refocus attention on 4832.00, the Apr 7 low and bear trigger.

MNI COMMODITIES: Gold Rebounds, Support Remains Intact

• Spot gold has rebounded by 1.5% today to $3,339/oz, leaving the yellow metal broadly unchanged on the week but still more than 4.5% below Tuesday’s all-time high.
• The trend needle in gold continues to point north and this week’s fresh cycle high reinforces bullish conditions. Moving average studies are unchanged and remain in a bull-mode position highlighting a dominant uptrend.
• The next objective is $3,547.9, a Fibonacci projection. Initial firm support to watch lies at 3,207.8, the 20-day EMA.
• Meanwhile, crude has risen today, after declines yesterday following uncertainty around Kazakhstan’s commitment to OPEC+ targets, potential June OPEC+ output increases, and ongoing US-Iran nuclear talks.
• Reports today suggest Iran may be seeking an interim deal, rather than a comprehensive deal within 60 days as the US is seeking.
• WTI Jun 25 is up by 0.8% at $62.8/bbl.
• Oil prices may see further downside this year on rising production and with demand limited by China’s faltering growth, according to the IEA Executive Director Fatih Birol, cited by Bloomberg.
• A bearish theme in WTI futures remains intact and the recovery since Apr 9 is - for now - considered corrective.
• A resumption of the bear cycle would open $53.72, a Fibonacci projection. Resistance to watch is $65.84, the 50-day EMA.

FRIDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
25/04/2025	0600/0700	***	GB	Retail Sales
25/04/2025	0645/0845	**	FR	Manufacturing Sentiment
25/04/2025	1230/0830	**	CA	Retail Trade
25/04/2025	1230/0830	**	CA	Retail Trade
25/04/2025	1400/1000	***	US	U. Mich. Survey of Consumers
25/04/2025	1400/1000	**	US	University of Michigan Surveys of Consumers Inflation Expectation
25/04/2025	1500/1100		CA	Finance Dept monthly Fiscal Monitor (expected)
25/04/2025	1700/1300	**	US	Baker Hughes Rig Count Overview - Weekly
25/04/2025	1700/1300	**	US	Baker Hughes Rig Count Overview - Weekly
25/04/2025	1915/2015		GB	BOE's Greene on Inflation, growth and moentary policy
25/04/2025	2000/1600		US	Kevin Warsh