MNI ASIA MARKETS ANALYSIS: US$ Up, Metals Crushed, Warsh Pick

Jan-30 20:38By: Bill Sokolis

APAC+ 4

HIGHLIGHTS

Warsh's nomination, not confirmation: Republican Senator Tillis - who has said he'd block any Trump Fed nominees until the Powell/Fed DOJ investigation is resolved - reiterated that position in a post on X.com early Friday.
St Louis Fed's Musalem (not a 2026 FOMC voter but a hawkish-leaning member) on Friday echoed comments he made prior to the December meeting in suggesting that it would be "unadvisable" to cut rates at this time.
Gov Waller explained his dissent at the January FOMC meeting in favor of a 25bp rate cut (link) by arguing "monetary policy is still restricting economic activity, and economic data make it clear to me further easing is needed".
The USD index is trading around half a percent in the green as metals fell sharply (Gold appr $700 off highs), with the late de-risking leaving the Australian dollar as the worst performing currency in the G10.

US TSYS

MNI US TSYS: Rate Up With US$ Recovery on Fed Chair Nomination: Kevin Warsh

Treasuries look to finish mixed, curves twisting steeper with 2s-5s outperforming weaker 10s-30s by the bell. Rather decent volumes (TYH6 over 2.1M) as markets price in Pres Trumps nomination for Fed Chairman: Kevin Warsh, with multiple Fed speakers fresh out of Blackout voicing their opinion on policy.
TYH6 is currently -1 at 111-26.5 (111-17.5 low / 111-28 high), Initial firm resistance to watch is at the 20-day EMA, currently at 111-31+. The 50-day EMA is at 112-09. The area between the 20- and 50-day averages represents a key resistance zone.
Fed Gov Miran initmated a lot of Warsh's views "are really right". Miran had dissented against this week's rate hold in favor of a 25bp cut (smaller than the 50bp he called for at the prior 3 meetings) - continued to argue for easier policy in a CNBC appearance Friday.
St Louis Fed's Musalem (not a 2026 FOMC voter but a hawkish-leaning member) on Friday echoed comments he made prior to the December meeting in suggesting that it would be "unadvisable" to cut rates at this time. That said, if the data were to align, then he is open to the possibility of cuts in future.
Warsh's nominated, not confirmed: Republican Senator Tillis - said he'd block any Trump Fed nominees until the Powell/Fed DOJ investigation is resolved - reiterated that position in a post on X.com: "Kevin Warsh is a qualified nominee with a deep understanding of monetary policy. However, I will oppose the confirmation of any Federal Reserve nominee, including for the position of Chairman, until the DOJ’s inquiry into Chairman Powell is fully and transparently resolved."
PPI details offered a slightly stronger readthrough to core PCE inflation for December than was the case in November. Our best guess is that analysts will continue to expect core PCE inflation around 0.4% M/M in Dec after the 0.16% M/M in Nov (potentially revised up marginally).
Cross-Asset update: Friday's broad rally in the US dollar (BBDXY +9.55 at 1187.45) prompted as extreme sell-off in metals prices, particularly precious metals which have plunged sharply: Spot gold fell to a low of $4,690/oz in recent trade, down more than $700 on the day, before bouncing slightly.
Look ahead: US ISM Manufacturing PMI data will take focus on Monday, while markets will be attentive to developments over the US government shutdown and any potential comments from both Fed’s Powell and Warsh ahead. The employment report for January next Friday.

REFERENCE RATES

US TSYS: Repo Reference Rates

Secured Overnight Financing Rate (SOFR): 3.65% (+0.01), volume: $3.166T
Broad General Collateral Rate (BGCR): 3.63% (+0.01), volume: $1.324T
Tri-Party General Collateral Rate (TCR): 3.63% (+0.01), volume: $1.294T
(rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

Daily Effective Fed Funds Rate: 3.64% (+0.00), volume: $104B
Daily Overnight Bank Funding Rate: 3.63% (-0.01), volume: $187B

FED Reverse Repo Operation

RRP usage climbs to $9.629B with 8 counterparties this afternoon vs. $2.852B Thursday. Compares to December 12 low of $0.838B (lowest level since mid-March 2021); this years highest excess liquidity measure: $460.731B on June 30.

US SOFR/TREASURY OPTION SUMMARY

SOFR & Treasury option flow remained mixed, with better two-way SOFR calls and Treasury put interest in the second half (note 10Y midcurve unwinds ahead today's expiration, highlighted below). Underlying futures curves twist steeper with the short end outperforming after Pres Trump announced Kevin Warsh as his Fed Chair pick this morning. That said, projected rate cut pricing gained vs. late Thursday levels (*): Mar'26 at -4.3bp (-3.5bp), Apr'26 at -8.5bp (-7.5bp), Jun'26 at -21.1bp (-19.7bp), Jul'26 at -31bp (-27.5bp).

SOFR Options:
+15,000 SFRM6 96.43/96.62/96.75 call trees, 3.5
+10,000 SFRH6 97.00/97.75 call strip 0.75
-16,000 0QU6 97.50 calls, 5.0 ref 96.73
+5,000 SFRM6 96.31/96.43 put spd, 6.5
Block, 5,000 SFRM6 96.31/96.43/96.50 broken put flys, 1.0 net, belly over vs. 96.56/0.10%
+15,000 SFRU6/SFRZ6 96.31/96.43 put spd spd, 0.0 flattener
+5,000 SFRM6 96.62/96.75/96.87 2x2x1 call trees, 0.75 ref 96.565
over 3,400 SFRZ6 97.25 calls, 10.25 last
1,400 0QG6 96.75/96.87/97.06 call flys ref 96.81
1,250 2QM6 96.06/96.31/96.81/97.06 iron condors
5,000 SFRZ6 96.00/96.25/96.50 put flys ref 96.815
1,250 SFRH6 96.31/96.37/96.50 broken call flys ref 96.385
-4,000 0QH6 97.00/97.25 1x2 call spds, .5
-3,000 2QH6 96.62 puts, 10.5
2,000 SFRZ6 97.37/97.68/97.93 broken call flys ref 96.795
+2,000 SFRU6 96.68/96.81/96.87/97.00 call condors, 2.5 ref 96.715

Treasury Options:
over 37,400 TYH6 108 puts, 1 ref 111-27.5 to -27 remains well offered
over -27,800 USH6 106 puts, 1 ref 115-03
-15,000 TYH6 111.75/112 straddle strips, 141
+3,500 TYM6 111.5 straddles, 209
Block, -10,000 TYH6 111.25/112.75 put over risk reversal, 4.0 net
32,300 wk5 TY 111.5 puts, 5 down to 1 (+50,000 wk5 TY 111.5 puts, paying 7 on Wednesday, OI 88,981)
over 12,300 wk5 TY 112 calls, 1 last (open interest 46,444)
+4,000 FVJ6 109.75 calls, 11.5 ref 108-27
3,000 TUH6 104.37 calls, 3 ref 104-06.38
-4,000 Wednesday wkly TY 111.75 calls, 7 (exp 2/04)
2,200 TYJ6 111 puts, 33 ref 111-15
1,760 TYH6/TYM6 114.5 call spds on 3:1 ratio
-2,500 USH6 111.5/112.5 put spds, 9 ref 114-25/0.09%
+10,000 TYH6 110.5/111 put spds, 8 ref 111-13.5/0.12%
-1,500 TYH6 110.5/112.5 call over risk reversals, 3 ref 111-19.5
-1,750 TYH6 111.5 calls, 35 ref 111-20
2,800 FVH6 107/109 put spds, 26.5-27 ref 108-24.5

MNI BONDS: EGBs-GILTS CASH CLOSE: Week Closes On A Mixed Note Ahead Of ECB, BOE

EGB and Gilt yields closed Friday little change, sealing Bund outperformance of Gilts for the week.

Most of the session's price action was dictated by movements in US Treasuries as opposed to anything Europe-centric.
Specifically, the White House naming Kevin Warsh as the nominee to lead the Federal Reserve triggered some bear steepening, the logic appearing to be: he is seen as less dovish on short rates than some of his competitors for the role, but he has long been vocal in calling for a smaller Fed balance sheet.
That said, European data was on the hawkish side, with slightly firmer-than-expected Eurozone Q4 GDP (0.3%) and ECB inflation expectations, as well as an upside surprise in German and Spanish flash January inflation.
The German curve leaned bear flatter on the day with the UK's bear steepening. Periphery/semi-core EGB spreads closed mixed but little changed overall.
For the week the German curve bull flattened (2Y -4bp, 10Y -6bp), with Gilts twist steepening lightly (2Y -1bp, 10Y +1bp).
S&P is scheduled to review Italy's sovereign rating after the cash close; an upgrade in the outlook to Positive is seen possible. Next week's calendar is packed, with the BOE and ECB decisions and the conclusion of the Eurozone January flash inflation round.

Closing Yields / 10-Yr EGB Spreads To Germany

Germany: The 2-Yr yield is up 0.6bps at 2.089%, 5-Yr is down 0.1bps at 2.417%, 10-Yr is up 0.3bps at 2.843%, and 30-Yr is up 0.5bps at 3.494%.
UK: The 2-Yr yield is up 0.4bps at 3.718%, 5-Yr is up 0.4bps at 3.95%, 10-Yr is up 1.1bps at 4.522%, and 30-Yr is up 1.5bps at 5.285%.
Italian BTP spread up 0.4bps at 61.3bps / French OAT down 0.3bps at 58.5bps

MNI OPTIONS: Euribor Call Structure Buying And Weekly Bund Put Spread Buying

Friday's Europe rates/bond options flow included:

OEH6 114p, bought for half in 4k
RX (6th Feb) 125.5/125ps, bought for flat in 3k
RX (6th Feb)127.5/127ps bought for 5.5 in 8k
RXH6 127.00 puts 4K given at 13/12.5 vs. 128.10
ERU6 98.37/98.62/98.87c fly, bought for 0.75 in ~12.4k
ERU6 97.5625/97.4375ps, bought for half in 4k
ERZ6 97.93/98.00/98.06 call fly paper paid 0.5 on 10K
ERZ6 97.9375/98.00/98.0625c fly, bought for 0.25 in 4k
ERZ6 98.00/98.12cs vs 97.8125p, bought the cs for 2 in 5k
0RH6 97.87/97.75ps 1x1.5, bought for 2 in 10k

MNI FOREX: USD Recovers Amid Precious Metals Crash

Despite some notable moves across the G10 on Friday, all the action was a bit of a sideshow compared to the aggressive moves seen in the precious metals space. Spot silver dropped as much as 36%, while gold followed suit by declining 12.75% at its worst point of the session. Headlines suggesting Iran want to make a deal, and the confirmation of Kevin Warsh as President trump’s nomination for the new Fed Chair have driven the dramatic corrections, providing a more constructive backdrop for the USD to recover.
The USD index is trading around half a percent in the green as a result, with the late derisking leaving the Australian dollar as the worst performing currency in the G10. Declines for AUDUSD total around 1% and look set to end the consecutive winning streak for the pair, having reached as high as 0.7094 this week and trading around 0.6980 as we approach the weekend close. Profit taking dynamics may also be coming into play as we approach next week’s expected RBA hike.
In similar vein, the likes of EURUSD and GBPUSD are roughly 0.7% lower on the session, while USDJPY has rallied back to 154.50. The removal of Fed Chair noise and intervention speculation may place the spotlight back on Japanese politics as we approach next month’s election. Indeed, the USDJPY recovery is also allowing an oversold position to unwind, with initial firm resistance intersecting at 155.80, the 50-day EMA.
A 2.3% decline for the South African rand against the dollar is the best reflection of today’s turnaround/correction for precious metals. Today’s recovery has seen USDZAR completely erase the week’s selloff, with the 20-day EMA providing initial resistance around 16.20.
US ISM Manufacturing PMI data will take focus on Monday, while markets will be attentive to developments over the US government shutdown and any potential comments from both Fed’s Powell and Warsh ahead.

MNI FX OPTIONS: Expiries for Feb02 NY cut 1000ET (Source DTCC)

EUR/USD: $1.1800(E1.7bln), $1.1850(E2.0bln), $1.1900(E5.0bln), $1.1925(E2.1bln), $1.1950(E1.3bln)
USD/JPY: Y153.00($1.2bln), Y156.00($1.3bln)
EUR/JPY: Y181.00(E500mln), Y183.00(E520mln)
GBP/USD: $1.3500(Gbp557mln)
USD/CAD: C$1.3500($1.7bln)

MNI US STOCKS: Late Equities Roundup: Early Losses Pared, Comm Services Outperform

Still weaker, stocks are climbing off early Friday session lows as markets digested Pres Trump's nomination of Kevin Warsh as the replacement for Fed Chairman Powell, followed by the return of Fed speakers voicing their opinions on this week's policy announcement and the potential appointment of Kevin Warsh.
Currently, the DJIA trades down 239.18 points (-0.49%) at 48,831.63 vs. 48,459.88 low, S&P E-Mini futures down 29.75 points (-0.43%) at 6,963.75 vs. 6,917.50 low, Nasdaq down 199.6 points (-0.8%) at 23,487.44 vs. 23,351.55 low.
A combination of IT, Materials and Consumer Discretionary sector shares continued to lead declines in late trade, software/services and chip makers weighed on the IT sector after Microsoft's broad decline yesterday tied to weak cloud and software guidance: KLA Corp -14.17%, AppLovin Corp -13.77%, Western Digital -11.34%, Take-Two Interactive Software -9.70% and Seagate Technology -8.11%.
Miners (and chemical) stocks weighed on the Materials sector with Gold falling appr $475.0 to $4,900.0 the day after setting a new record high of 5,590.10: Newmont Corp -10.51%, Freeport-McMoRan -7.03% and Albemarle Corp -5.72%. Meanwhile, travel stocks led declines in the Discretionary sector: Royal Caribbean Cruises -6.96%, Norwegian Cruise Line -4.32%.
On the positive side, better than expected earnings (or at least less bad as in the case of Charter Communications) helped the following lead advances throughout the session: Deckers Outdoor +17.49%, Verizon Communications +11.55%, Sandisk Corp +8.80%, Charter Communications +7.69%, AT&T +3.88% and T-Mobile US +3.74%.

MNI EQUITY TECHS: E-MINI S&P: (H6) Candle Patterns Highlight A Top

RES 4: 7141.7 1.236 proj of the Dec 18 - Jan 13 - 21 price swing
RES 3: 7100.00 Round number resistance
RES 2: 7080.92 0.764 proj of the Nov 21 - Dec 11 - 18 price swing
RES 1: 7043.00 High Jan 28 and the bull trigger
PRICE: 6964.25 @ 14:26 GMT Jan 30
SUP 1: 6916.79 50-day EMA
SUP 2: 6879.00 Low Jan 26
SUP 3: 6814.50 Low Jan 21 and the bear trigger
SUP 4: 6771.50 Low Dec 18 and a key support

The trend structure in S&P E-Minis remains bullish and the pullback from Wednesday’s high is for now, considered corrective. However, note that a doji candle pattern on Wednesday followed by a hammer candle formation yesterday, does signal scope for a deeper retracement near-term. A continuation lower would expose key short-term support at 6814.50, the Jan 21 low. The bull trigger has been defined at 7043.00, the Jan 28 high.

MNI COMMODITIES: Precious Metals Slump Amid USD Recovery

The broad rally in the US dollar on Friday has prompted a further extreme sell-off in metals prices, particularly precious metals which have plunged sharply.
Headlines suggesting that Iran want to make a deal and the confirmation of Kevin Warsh as President Trump's nomination for the new Fed Chair have driven the dramatic corrections.
Spot gold fell to a low of $4,690/oz in recent trade, down more than $700 on the day, before bouncing slightly. At typing, gold is down by 9.0% around $4,891/oz.
Today’s correction has allowed an overbought trend to unwind. Price has pierced firm support at $4,840, the 20-day EMA, as well as $4,756.1, the Jan 21 low. A clear break of these levels would expose $4,546.3, the 50-day EMA.
Silver has seen an even more extreme correction, falling to a low of $73.96/oz in recent trade, almost 40% below yesterday’s record high.
Currently, silver is down by over 27% on the session around $84.3/oz.
The move lower has seen price break below the 20-day EMA at $93.75, and briefly pierce the 50-day EMA at $79.36, before bouncing slightly.
Elsewhere, crude markets flipped into daily losses following Trump’s comments on Iran looking to make a deal. However, the continued geopolitical risk premium provides WTI with a gain of around 6.5% on the week.
WTI Mar 26 is down by 0.5% at $65.1/bbl.
A bull cycle in WTI futures remains intact and a clear break of key resistance at $66.49, the Jul 30 2025 high, would open $69.80, the Jun 23 high ‘25 high.

MONDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
02/02/2026	0700/0800	**	DE	Retail Sales
02/02/2026	0815/0915	**	ES	S&P Global Manufacturing PMI (f)
02/02/2026	0845/0945	**	IT	S&P Global Manufacturing PMI (f)
02/02/2026	0850/0950	**	FR	S&P Global Manufacturing PMI (f)
02/02/2026	0855/0955	**	DE	S&P Global Manufacturing PMI (f)
02/02/2026	0900/1000	**	EU	S&P Global Manufacturing PMI (f)
02/02/2026	0930/0930	**	GB	S&P Global Manufacturing PMI (Final)
02/02/2026	1145/1145		GB	BOE Breeden on Payments
02/02/2026	1445/0945	***	US	S&P Global Manufacturing Index (final)
02/02/2026	1500/1000	***	US	ISM Manufacturing Index
02/02/2026	1630/1130	*	US	US Treasury Auction Result for 26 Week Bill
02/02/2026	1630/1130	*	US	US Treasury Auction Result for 13 Week Bill
02/02/2026	1730/1230		US	Atlanta Fed's Raphael Bostic
03/02/2026	0030/1130	*	AU	Building Approvals
03/02/2026	0330/1430	***	AU	RBA Rate Decision