MNI ASIA MARKETS ANALYSIS: Tariff Headline Risk Saps Sentiment

Apr-15 19:53By: Bill Sokolis

APAC+ 3

HIGHLIGHTS

Treasuries look to finish modestly higher for the most part Tuesday, curves flatter (2s10s -3.888 at 48.575) with short end rates underperforming.
Cautious early optimism over tariff relief (or delay) for autos buoyed rates and stocks in early trade, sentiment evaporated in the second half, markets wary of tariff related headline risk.
Overall, the USD index is firmer on Tuesday as global markets trade in a relatively more stable manner compared to the significant swings last week.
Focus on midweek data: Retail Sales, Industrial Production, Capacity Utilization, NAHB Housing Market Index while Fed Chair Powell will discuss his outlook at the Economic Club of Chicago (text, Q&A) at 1330ET.

MNI US TSYS: Sentiment Cools Ahead Wednesday Data, Tariff Headline Risk

Treasuries look to finish modestly higher for the most part Tuesday, curves flatter (2s10s -3.888 at 48.575) with short end rates underperforming. Cautious early optimism over tariff relief (or delay) for autos buoyed rates and stocks in early trade, evaporated in the second half, markets wary of tariff related headline risk.
Treasuries inch off lows earlier after Empire Mfg comes out less negative than expected, both import & export price index figures lower than expected, prior import prices down revised while prior export prices are up-revised.
The Empire manufacturing survey improved by more than expected in April to -8.1 (cons -13.5) after a weak -20.0 in March although forward-looking aspects in particular make for sour reading.
Overall import prices fell -0.1% M/M (cons 0.0%) in March after a downward revised 0.2% (initial 0.4%) in February. For a better idea of underlying price pressures, imports ex petroleum prices saw a larger miss with 0.0% M/M (cons 0.3) after 0.1% (initial 0.4%).
Jun'25 10Y futures currently +7.5 at 110-31.5, nearing initial technical resistance at 111-00+/111-20 (20-day EMA / High Apr 9). Cross asset: Bbg US$ index mear highs: +3.84 at 1233.90, stocks weaker w/ SPX eminis -8.75 at 5432.00.
Focus on midweek data: Retail Sales, Industrial Production, Capacity Utilization, NAHB Housing Market Index while Fed Chair Powell will discuss his outlook at the Economic Club of Chicago (text, Q&A) at 1330ET.

SOFR FIXES AND PRIOR SESSION REFERENCE RATES

SOFR Benchmark Settlements:

1M +0.00720 to 4.32813 (+0.00627/wk)
3M +0.01925 to 4.27979 (+0.02369/wk)
6M +0.02896 to 4.14224 (+0.04424/wk)
12M +0.01303 to 3.90182 (+0.05052/wk)

US TSYS: Repo Reference Rates

Secured Overnight Financing Rate (SOFR): 4.33% (+0.00), volume: $2.561T
Broad General Collateral Rate (BGCR): 4.33% (+0.01), volume: $1.042T
Tri-Party General Collateral Rate (TCR): 4.33% (+0.01), volume: $1.002T
(rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $99B
Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $266B

FED Reverse Repo Operation

RRP usage retreats below $100B again to $88.878B this afternoon from $102.838B Monday. Usage had surged to the highest level since December 31, 2024 last Monday, March 31: $399.167B. Compares to $58.770B (lowest level since mid-April 2021) on February 14. The number of counterparties at 23.

US SOFR/TREASURY OPTION SUMMARY

Two-way SOFR & Treasury call spd interest and put structure selling since the open. Lowest volumes since prior to the Liberation day tariff announcement. Underlying futures firmer off second half highs, short end lagging; projected rate hike pricing mixed vs. this morning's levels (*) as follows: May'25 at -4.4bp (-5bp), Jun'25 at -20.7bp (-20.2bp), Jul'25 at -38.4bp (-38.4bp), Sep'25 -56.9bp (-56.7bp).

SOFR Options:
-5,000 0QU5 96.62 puts, 29.0 vs 96.74/0.42%
-5,000 3QU5 95.00 puts, 4.0 vs. 96.31/.06%
+5,000 0QM5 95.25/3QM 95.12 put spds, 1.5 net/3QM over
-10,000 SFRN5 96.25 calls, 24-23.5 ref 96.27
+40,000 SFRZ5 98.00/99.00 call spds 5.0 vs. 96.52 to -.50/0.05%
4,000 SFRH5 95.62/0QU5 96.37 put spds
4,300 SFRM5 96.62 calls, 3.75 bid ref 95.91
14,000 SFRU5 95.50/95.75 put spds ref 96.25 to -.255
2,000 SFRM5 95.62/95.68/95.75 put flys ref 95.92
2,800 0QU5 95.75/96.00 put spds

Treasury Options:
2,500 TYM5 110 puts, 46 ref 110-28.5
5,000 TYM5 107/108 put spds ref 110-26.5
2,500 TYK5 110.75/111.75 call spds ref 110-23.5
3,500 TYM5 110 puts, 50 ref 110-22
11,500 FVM5 107.5/108.75 strangles, 101.5
2,000 USK5 107/107.5 call spds ref 114-05
over 12,700 TYK5 111.75 calls, 15 last
-5,400 TYK5 111.75 calls, 15 ref 110-24
+4,500 TYK5 108/109/110 put flys, 9 ref 110-21.5
-3,000 TYK5 111 puts, 48 vs 110-21.5/0.58%
+20,000 FVM5 110/111.5 call spds, 8.5 ref 108-01 to 107-31.5
+5,000 FVM5 108.5/109.5/110 broken call flys, 12 ref 108-02

MNI BONDS: EGBs-GILTS CASH CLOSE: Gilts Strengthen Pre-UK CPI

Gilts handily outperformed Bunds Tuesday.

Softer-than-expected elements of the UK labour market report saw Gilts get off on the front foot across the curve.
Gilts rallied into the close, potentially in anticipation of tomorrow's CPI data, unlike Bunds which were unmoved.
On the day, the UK curve twist steepened with a notable rally at the short end, with Germany's bear steepening.
Italy and Greece underperformed on the EGB periphery.
Wednesday's data includes UK CPI - MNI's preview is here. And Thursday brings the ECB decision - preview here.

Closing Yields / 10-Yr EGB Spreads To Germany

Germany: The 2-Yr yield is up 0.7bps at 1.766%, 5-Yr is up 1.6bps at 2.09%, 10-Yr is up 2.2bps at 2.534%, and 30-Yr is up 3.8bps at 2.915%.
UK: The 2-Yr yield is down 5.6bps at 3.962%, 5-Yr is down 4.3bps at 4.11%, 10-Yr is down 1.2bps at 4.648%, and 30-Yr is up 4.3bps at 5.427%.
Italian BTP spread up 1.7bps at 118.2bps / Greek up 2.9bps at 92.4bps

MNI OPTIONS: Mixed Plays In Both UK And Euro Rates Tuesday

Tuesday's Europe rates/bond options flow included:

RXM5 140c, bought for 3 in 4k.
DUK5 107.60/108.00cs, bought for 7.5 in ~12.75k.
ERM5 98.1875/98.0625ps 1x1.5, bought for 3.25 and 3.5 in 9k.
ERM5 98.12/98.25/98.37c fly, bought for half in 4k.
ERU5 98.06/98.18cs vs 2RU5 97.93/98.06cs, bought the front for 1.75 in 3k.
0RM5 98.12/97.87ps 1x2, bought for 3.5 in 4k.
SFIN5 95.70/95.60/95.50/95.40 put condor 17.5K given at 0.25.
SFIZ5 97.00/97.75cs, bought for 7.75 in 10k.
SFIQ5 96.30/96.45cs vs 96.00/95.90ps, bought the cs for 2.5 in 6k.

MNI FOREX: EURUSD Slips Back Below 1.13, Antipodeans Outperform

Overall, the USD index is firmer on Tuesday as global markets trade in a relatively more stable manner compared to the significant swings last week. Amid this dynamic, EURUSD has slipped back below 1.1300 and trades 0.75% lower at 1.1270 as we approach the APAC crossover.
The single currency move may have intensified following news that the EU and US have made scant progress bridging trade differences this week as officials from the Trump administration indicated that the bulk of the US tariffs imposed on the bloc will not be removed. With a bull cycle firmly still in play, markets will eye initial support at the 1.1144 breakout level. Key support remains unchanged at the 20-day EMA, now intersecting at 1.0972.
EUR weakness has been even more evident in the crosses, with a notable 0.87% decline for EURGBP. This has been assisted by GBPUSD breaking above 1.3207 to fresh six-month highs, highlighting a resumption of the medium-term uptrend. Sights are on 1.3274 next, the Oct 3 ‘24 high.
Even more notable across FX, has been the advances for AUD and NZD, which comfortably outperform in the G10 space. The more stable tone for risk this week continues to foster a more constructive backdrop for higher beta currencies. For NZDUSD specifically, the pair has rallied as high as 0.5944, briefly breaching the late November highs in the process. In just 5 sessions, NZDUSD has bounced over 8% from its cycle lows.
Canada CPI came in lower than expected, which alongside the greenback bid has prompted a solid bounce for USDCAD. Importantly, this comes ahead of tomorrow’s Bank of Canada decision, where analysts remain divided over whether the BOC will opt for a 25bp cut or an unchanged decision.
Elsewhere tomorrow, China GDP, UK CPI and US retail sales are highlights of a busy economic calendar. Fed Chair Powell is also due to speak on the economic outlook at the Economic Club of Chicago.

MNI OPTIONS: Expiries for Apr16 NY cut 1000ET (Source DTCC)

EUR/USD: $1.1100(E1.1bln), $1.1200(E1.2bln), $1.1240-60(E1.0bln), $1.1280-00(E831mln), $1.1340-55(E738mln)
USD/JPY: Y145.00-20($1.1bln)
EUR/JPY: Y161.80-00(E605mln)
EUR/GBP: Gbp0.8650(E1.3bln)
AUD/USD: $0.6350(A$1.3bln), $0.6360(A$780mln), $0.6400(A$2.0bln)
NZD/USD: $0.5950($1.2bln)
USD/CAD: C$1.4000($500mln), C$1.4335($1.1bln)
USD/CNY: Cny7.3000($1.4bln), Cny7.3100($582mln), Cny7.3700($1.2bln)

MNI US STOCKS: Late Equities Roundup: Pharmaceuticals, Discretionary Stocks Lagging

Stocks cling to marginally lower levels late Tuesday, no particular headline driver, just profit taking in late trade, markets wary of trade related headline risk. Consumer Discretionary, Health Care (pharmaceuticals) and Communication services sectors underperforming.
Currently, the DJIA trades down 85.47 points (-0.21%) at 40438.18, S&P E-Minis down 6 points (-0.11%) at 5435.75, Nasdaq down 15.4 points (-0.1%) at 16816.91.
The Health Care sector underperformed in early trade after Pres Trump target pharmaceuticals for trade probes late Monday: Albemarle Corp -5.59%, Molina Healthcare -3.59%, Zimmer Biomet Holdings -4.01%, Moderna -3.81%. Elsewhere, Meta declined 2.11% while Alphabet -2.05%.
A mix of banks, interactive media and tech stocks led gainers in the first half: Netflix gained 5.4% in late trade. Financial sector gainers included Bank of America +4.28%, Citigroup +3.46%, Huntington Bancshares +2.51% and Wells Fargo +2.73%.
Tech stocks followed with Hewlett Packard Enterprise +4.9%, Palantir Technologies +5.57% and Crowdstrike Holdings +4.45%.
Earnings expected late Tuesday include: Interactive Brokers, JB Hunt Transport, United Airlines and Omnicom Group. The following are expected to announce Wednesday: First Horizon Corp, Citizens Financial, Progressive Corp, US Bancorp, Prologis, Abbott Laboratories, Kinder Morgan, CSX Corp and Alcoa.

MNI EQUITY TECHS: E-MINI S&P: (M5) Corrective Cycle Still In Play

RES 4: 5906.75 High Mar 6
RES 3: 5837.25 High Mar 25 and the reversal trigger
RES 2: 5713.01 50-day EMA
RES 1: 5505.38 20-day EMA
PRICE: 5441.75 @ 1515 ET Apr 15
SUP 1: 5098.16 61.8% retracement of the Apr 7 - 10 bounce
SUP 2: 4832.00 Low Apr 7 and the bear trigger
SUP 3: 4760.88 1.618 proj of the Feb 19 - Mar 13 - 25 price swing
SUP 4: 4663.75 1.764 proj of the Feb 19 - Mar 13 - 25 price swing

A short-term reversal higher in S&P E-Minis last week highlights the start of a corrective cycle. The trend condition has been oversold following recent weakness and the move higher is allowing this set-up to unwind. Initial resistance to watch is 5505.38, the 20-day EMA. Resistance at the 50-day EMA is at 5713.01. On the downside, key support and the bear trigger has been defined at 4832.00, the Apr 7 low.

MNI COMMODITIES: Gold Holds Near Record High, Crude Edges Down

Gold has traded in a relatively tight range for much of today, with the yellow metal holding close to yesterday’s record high amid continued tariff uncertainty.
Spot gold is currently up by 0.5% at $3,228/oz, less than $20 below Monday’s all-time high of $3,245.7.
Goldman Sachs expects gold to rally to $3,700 by the end of this year and $4,000 by mid-2026, while UBS sees it reaching $3,500 by year-end, supported by continued central bank demand, recession risks and trade and geopolitical uncertainties.
From a technical perspective, the trend condition in gold remains bullish, with sights on $3,291.8 next, a Fibonacci projection.
Meanwhile, crude has held relatively steady through the day as the market weighs global oil demand risks.
Both OPEC and the IEA have cut their demand forecasts, while sentiment that Europe will reach a deal with the US on tariffs has weakened. Ongoing discussions between the US and Iran adds further uncertainty.
WTI May 25 is down by 0.4% at $61.3/bbl.
A bearish theme in WTI futures remains intact and recent weakness has resulted in the breach of a number of important support levels, reinforcing a bearish threat.
A resumption of the bear cycle would open $54.26, a Fibonacci projection. Initial firm resistance is seen at $64.85, the Mar 5 low and a recent breakout level.

WEDNESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
16/04/2025	0600/0700	***	GB	Consumer inflation report
16/04/2025	0800/1000	**	EU	EZ Current Account
16/04/2025	0800/1000	**	IT	Italy Final HICP
16/04/2025	0900/1100	***	EU	HICP (f)
16/04/2025	1000/1100	**	GB	Gilt Outright Auction Result
16/04/2025	1100/0700	**	US	MBA Weekly Applications Index
16/04/2025	1230/0830	***	US	Retail Sales
16/04/2025	1315/0915	***	US	Industrial Production
16/04/2025	1345/0945	***	CA	Bank of Canada Policy Decision
16/04/2025	1400/1000	*	US	Business Inventories
16/04/2025	1400/1000	**	US	NAHB Home Builder Index
16/04/2025	1430/1030	**	US	DOE Weekly Crude Oil Stocks
16/04/2025	1430/1030		CA	BOC press conference
16/04/2025	1600/1200		US	Cleveland Fed's Beth Hammack
16/04/2025	1700/1300	**	US	US Treasury Auction Result for 20 Year Bond
16/04/2025	1730/1330		US	Fed Chair Jerome Powell
16/04/2025	2000/1600	**	US	TICS
17/04/2025	2245/1045	***	NZ	CPI inflation quarterly
17/04/2025	-		EU	European Central Bank Meeting
16/04/2025	2300/1900		US	Dallas Fed's Lorie Logan, KC Fed's Jeff Schmid
17/04/2025	0130/1130	***	AU	Labor Force Survey