MNI ASIA MARKETS ANALYSIS: Trump Temperes Tariff Talk

HIGHLIGHTS

• Treasuries retreated Monday as the Trump Admin segued from universal tariffs to narrower, targeted tariffs ahead the April 2 "Liberation Day" deadline.
• Stocks reacted positively to the shift in scenarios, but scaled back slightly in the second half after Trump said he would announce additional tariffs on cars "shortly" and pharmaceuticals at "some point".
• Atlanta Fed Pres Bostic reduced his 2025 rate cut expectations to 1 in March's economic projections versus 2 previously, "because I think we will see inflation be very bumpy".

MNI US TSYS: Targeted Tariffs Helps Buoy Sentiment

• Treasuries look to finish near lows Monday as Trump admin trade policy narrowed from universal tariffs to more targeted approach when the April 2 "Liberation Day" arrives.
• Treasury futures extended lows after S&P Flash PMI services (54.3 bbg cons 51.0) and composite (53.5 cons 50.9) data came out higher then expected while manufacturing declined (49.8 bbg cons 51.7).
• Atlanta Fed Pres Bostic (non-2025 FOMC voter, leans hawk) says in a Bloomberg interview that he has reduced his 2025 rate cut expectations to 1 in March's economic projections versus 2 previously, "because I think we will see inflation be very bumpy", and delayed inflation progress warranted pushing back the path to neutral rates.
• The Jun'25 10Y currently trades 110-17 (-18), just above initial technical support at 110-16.5 (Low Mar 24) followed by 110-12.5 (Low Mar 6 & 13). Resistance above at 111-25 (Mar 11 high), support below at 110-12.5/110-00 (Low Mar 6 & 13 / High Feb 7). Tsy 10Y yield climbs to 4.3346% high, curves still mixed: 2s10s +.014 at 29.406, 5s30s -1.943 at 56.480.
• Late tariff headlines saw risk sentiment cool slightly after Trump said he would announce additional tariffs on cars "shortly" and pharmaceuticals at "some point".

SOFR FIXES AND PRIOR SESSION REFERENCE RATES
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SOFR Benchmark Settlements:

• 1M +0.00092 to 4.32011 (+0.00371/wk)
• 3M -0.00501 to 4.29783 (+0.00278/wk)
• 6M -0.03057 to 4.20466 (+0.00629/wk)
• 12M -0.06551 to 4.02338 (+0.00554/wk)

US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 4.30% (+0.01), volume: $2.444T
• Broad General Collateral Rate (BGCR): 4.29% (+0.01), volume: $954B
• Tri-Party General Collateral Rate (TCR): 4.29% (+0.01), volume: $933B
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $106B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $296B

FED Reverse Repo Operation

RRP usage slips to $196.565B this afternoon from $200.850B last Friday. Compares to $58.770B (lowest level since mid-April 2021) on February 14. The number of counterparties at 43.

US SOFR/TREASURY OPTION SUMMARY

Option desks continued to report better low delta SOFR puts sprds on net Monday, Tsy option flow rotating around 5- and 10Y calls despite continued weakness in underlying futures. Projected rate cuts through mid-2025 consolidate vs. early morning levels (*) as follows: May'25 at -3.9bp (-4.5bp), Jun'25 at -16.7bp (-19.3bp), Jul'25 at -28bp (-31bp), Sep'25 -42.7bp (-46.5bp).

SOFR Options:
10,000 SFRM5 96.00/96.25/96.50 call flys
over 20,000 SFRU5/SFRZ5 95.68/95.81 put spd spds
+20,000 SFRH6 93.75/94.25 put spds, 0.75
+10,000 0QU5 95.50 puts, 3.5 vs. 96.4555/0.10%
1,800 SFRK5 96.00/96.12/96.25/96.37 call spds, ref 95.90
2,000 SFRZ5 96.00/96.25 2x1 put spds 

Treasury Options:
3,250 FVK5 110 calls, 3 ref 107-19.5
2,250 TUM5 103.87/104.37 call spds ref 103-13.12
over 5,000 FVK5 108.5 calls, 14.5 last ref 107-22.25
2,400 TYK5 112/113 call spds ref 110-19.5
4,000 wk4 112.5/114 1x2 call spds
15,000 TYK5 114 calls ref 110-26.5
over 20,000 TYK5 112/TYM5 112.5 call spds, 10 net db/June over vs. 110-31.5/0.05%
3,000 TYK5 109 puts, 11 ref 110-25
2,000 TYM5 111/114 call spds vs. 107.5 puts ref 110-28
over 4,000 FVK5 107 puts

MNI BONDS: EGBs-GILTS CASH CLOSE: Twist Steepening On Mixed PMIs, US Tariff Talk

Gilts outperformed Bunds Monday amid mixed PMIs and US tariff news.

• Core yields rose in early trade following reports that the Trump administration would pursue targeted rather than broad indiscriminate tariffs in its highly-anticipated announcement next week.
• The rest of the session proved mixed. Bunds rallied as Eurozone services PMI disappointed (dragged down primarily by Germany), with manufacturing beating expectations. The UK saw the opposite dynamics (strong services, weak manufacturing), weighing on Gilts.
• Above-expected US Composite PMI (with better services offsetting manufacturing weakness) saw European instruments pull back to session lows.
• Just before the cash close, core FI got a slight safe-haven bid as US Pres Trump announced that tariff announcements on autos and pharmaceuticals would be announced "soon".
• Both the German and UK curves twist steepened modestly on the day, with short-end yields falling. Periphery/semi-core spreads tightened slightly.
• BoE's Bailey speaks after the cash close - it's possible he could offer further insight on the new risks cases for the MPC. Overarching focus this week is on Wednesday's UK inflation data and government's fiscal statement/gilt remit.
• Tuesday brings German IFO data.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.1bps at 2.121%, 5-Yr is unchanged at 2.404%, 10-Yr is up 0.6bps at 2.771%, and 30-Yr is up 0.8bps at 3.111%.
• UK: The 2-Yr yield is down 0.4bps at 4.261%, 5-Yr is down 0.5bps at 4.341%, 10-Yr is up 0.1bps at 4.713%, and 30-Yr is up 1.2bps at 5.322%.
• Italian BTP spread down 1.4bps at 110.1bps / Spanish down 1.1bps at 63.1bps 

MNI EGB OPTIONS: Put Structures Preferred To Call Counterparts Monday

Monday's Europe rates/bond options flow included:

• ERJ5 97.6875p, bought for half and 0.75 in 13.5k total
• ERM5 97.75/97.62ps 1x1.5, bought for 2.25 in 4k
• 2RM5 97.62/97.4375/97.25p ladder, bought for 3.75 in 4k
• SFIM5 95.90/96.10/96.30c fly sold at 1 in 8k
• SFIU5 95.45/95.75/96.05 call fly 10K given at 9.5
• SFIZ5 96.20/96.30cs vs 95.75/95.65ps, sold the cs at half in 5k

MNI FOREX: Post-PMI Greenback Advance Consolidates, USDJPY Rises 0.85%

• The dollar index had been trading close to unchanged levels before the US PMI flash PMIs, however, the firmer than expected readings for both services and composite data propelled the DXY roughly 0.25% higher on the session. This advance has been consolidating as we approach the APAC crossover.
• The majority of the action has been centred around the Japanese yen once more on Monday, negatively impacted by both higher US yields and surging US equity indices. The major US benchmarks have been buoyed by Trump's supposed targeted tariffs blunting the blow of trade measures from the April 02 deadline. USDJPY rose as high as 150.76 and remains +0.84% on the day.
• Overall, the primary trend direction in USDJPY is down and recent gains are considered corrective. Key resistance to watch is 151.01, the 50-day EMA. A clear break of this average would signal scope for a stronger rally. Initial support is found at 148.18, the Mar 20 low. Key support and the bear trigger remain at 146.54, the Mar 11 low.
• Late headlines crossed from Trump on an imminent announcement on car tariffs, knocking the major indices off their best levels. Price action then weighed on the likes of EUR and GBP, keeping the DXY rally underpinned.
• GBPUSD is 0.1% lower at typing but had been an early outperformer on the back of UK flash services PMI surprising to the upside this morning. Bullish technical conditions remain intact for the pair, as a plethora of short-term risk events are awaited this week. Standing out here is the Spring Statement, CPI data and activity data due Friday. Pricing for an GBPUSD straddle expiring on Friday incorporates a move of around +/- 90 pips from current spot levels of 1.2910.
• German IFO is scheduled Tuesday, before US data includes new home sales and consumer confidence.

MNI OPTIONS: Expiries for Mar25 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.0850(E1.2bln), $1.0900(E1.2bln)
• GBP/USD: $1.2835(Gbp578mln)
• AUD/USD: $0.6255-65(A$674mln), $0.6350-60(A$1.1bln)
• USD/CAD: C$1.4550($631mln)

MNI US STOCKS: Late Equities Roundup: Off Highs, Discretionary, IT Stocks Leading

• Stocks remain firmer after the bell, momentum stalled midday after Pres Trump said he would announce additional tariffs on cars "shortly" and pharmaceuticals at "some point". Currently, the DJIA trades up 567.83 points (1.35%) at 42553.43, S&P E-Minis up 97 points (1.7%) at 5815.25, Nasdaq up 399.9 points (2.2%) at 18184.23.
• Consumer Discretionary and Information Technology sectors continued to lead gainers in the second half, retail buyers helping Tesla rally over 10%, outperforming other Discretionary sector shares: Deckers Outdoor +4.58%, Ralph Lauren +4.38%, Royal Caribbean Cruises +4.04% and Darden Restaurants +3.98%.
• Semiconductor makers buoyed the Tech sector in the first half as AI demand for high performance chips continued: Advanced Micro Devices +7.81%, Monolithic Power Systems +6.33%, Palantir Technologies +5.83%, NXP Semiconductors +4.96% and Arista Networks +4.46%.
• On the flipside, Utilities and Consumer Staples continued to underperform in late trade, independent energy providers weighed on the former: AES Corp -1.99%, NextEra Energy -1.17%, FirstEnergy Corp -0.99% and Consolidated Edison -0.68%.
• Meanwhile, Consumer Staples weighed by food producers & distributors: Brown-Forman -2.89%, Hormel Foods -2.70%, Kraft Heinz -1.63%, Bunge Global -1.28% and General Mills -1.26%.

MNI EQUITY TECHS: E-MINI S&P: (M5) Trades Through The 20-Day EMA

• RES 4: 5970.87 61.8% retracement of the Feb 19 - Mar 13 bear leg 
• RES 3: 5929.04 50-day EMA 
• RES 2: 5864.25 Low Jan 13 and a recent breakout level
• RES 1: 5808.00 Intraday high                  
• PRICE: 5803.50 @ 14:41 GMT Mar 24 
• SUP 1: 5650.75/5559.75 Low Mar 18 / 13 and the bear trigger                 
• SUP 2: 5483.50 2.00 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
• SUP 3: 5396.00 2.236 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
• SUP 4: 5341.87 2.382 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing          

The trend condition in S&P E-Minis is bearish and the latest recovery appears corrective. MA studies are unchanged - they remain in a bear-mode set-up, highlighting a dominant downtrend. However, today’s gains have resulted in a breach of the 20-day EMA, at 5801.77. This signals scope for a continuation higher near-term - towards 5864.25, the Jan 13 low. A reversal lower would refocus attention on 5559.75, the Mar 13 low and bear trigger.

MNI AMERICAS OIL: WTI Crude Oil prices are higher after Trump threatened Venz oil

March 24 - Americas End-of-Day Oil Summary: WTI Crude Oil prices are higher on the day after Trump threatened countries that import Venezuelan oil with a 25% tariff. Earlier, reports that a drone targeted a CPC pumping station, raised supply risks and uncertainty around any ceasefire arrangement in Ukraine.

• Trump announced he would impose a 25% tariff on countries that buy Venezuelan crude from April 2.
• OPEC+ is likely to stick to its plan to raise output for a second consecutive month in May, amid steady oil prices and plans to force some members to compensate for past overproduction, Reuters reports citing sources.
• Russia’s defense ministry claims that Ukraine targeted the CPC Kropotkinskaya pumping station again on March 24 according to a statement on Telegram but the drone was shot down.
• Attacks on Russian infrastructure are still being seen as peripheral to the global oil supply picture according to RBC’s head of commodity strategy Helima Croftt.
• Following US-Ukraine talks in Saudi Arabia on the weekend, U.S. and Russian officials have held talks on Monday in Saudi Arabia about progressing ceasefire efforts with Ukraine.
• Oil markets have been concerned that increased trade protectionism will weigh on global growth with heightened tension amid uncertainty over the details of the tariffs.
  • WTI May futures were up 1.2% at $69.11
  • WTI June futures were up 1.1% at $68.67
  • RBOB Apr futures were up 0.6% at $2.21
  • ULSD Apr futures were up 0.5% at $2.26

TUESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
25/03/2025	0700/0800	**	SE	PPI
25/03/2025	0800/0900	**	ES	PPI
25/03/2025	0900/1000	***	DE	IFO Business Climate Index
25/03/2025	1000/1000	**	GB	Gilt Outright Auction Result
25/03/2025	1100/1100	**	GB	CBI Distributive Trades
25/03/2025	1230/0830	**	US	Philadelphia Fed Nonmanufacturing Index
25/03/2025	1240/0840		US	Fed Governor Adriana Kugler
25/03/2025	1255/0855	**	US	Redbook Retail Sales Index
25/03/2025	1300/0900	**	US	S&P Case-Shiller Home Price Index
25/03/2025	1300/0900	**	US	FHFA Home Price Index
25/03/2025	1300/0900	**	US	FHFA Home Price Index
25/03/2025	1305/0905		US	New York Fed's John Williams
25/03/2025	1400/1500	**	BE	BNB Business Confidence
25/03/2025	1400/1000	***	US	New Home Sales
25/03/2025	1400/1000	***	US	Conference Board Consumer Confidence
25/03/2025	1400/1000	**	US	Richmond Fed Survey
25/03/2025	1700/1300	*	US	US Treasury Auction Result for 2 Year Note
26/03/2025	0030/1130	***	AU	CPI Inflation Monthly