MNI ASIA MARKETS ANALYSIS: Yields Climbing Ahead Thursday Data

HIGHLIGHTS

• Treasuries look to finish near late Wednesday lows, no obvious headline driver and Fed speakers that offered little insight in current conditions.
• Markets focused on heavy round of data Thursday: Retail Sales, PPI, Weekly Claims, Industrial Production and Capacity Utilization.
• Projected rate cut pricing steady in the near term while longer dates retreated vs. this morning levels (*) as follows: Jun'25 steady at -2.1bp, Jul'25 steady at -9.8bp, Sep'25 at -22.8bp (-24.7bp), Oct'25 at -34.8bp (-37.3bp), Dec'25 at -49.6bp (-52.9bp).

MNI US TSYS: Projected Rate Cut Pricing Continues to Cool

• Treasuries look to finish near late Wednesday session lows, curves mixed (2s10s +1.654 at 47.722; 5s30s -.065 at 80.592) as 10s retreated to the lowest level in four weeks.
• Jun'25 10Y futures trade 109-21 (-10), session lows strengthens a bearish theme and exposes a key support at 109-08, the Apr 24 low and a bear trigger.
• Projected rate cut pricing steady in the near term while longer dates retreat vs. this morning levels (*) as follows: Jun'25 steady at -2.1bp, Jul'25 steady at -9.8bp, Sep'25 at -22.8bp (-24.7bp), Oct'25 at -34.8bp (-37.3bp), Dec'25 at -49.6bp (-52.9bp).
• No obvious headline or Block trade driver for the decline, it appeared markets were gearing up for higher inflation signals from tomorrow's heavy round of economic data: Retail Sales, PPI, Weekly Claims, Industrial Production and Capacity Utilization.
• Fed VC Jefferson continues describes the current level of rates as "moderately restrictive" (Chair Powell reiterated last week that policy was modestly or moderately restrictive, with Gov Kugler Monday also using the term "restrictive").
• Stocks trade near steady to mixed after the bell, the tech heavy Nasdaq outperforming as chip stocks outperformed for the second consecutive session.
• Cross Asset roundup: Bbg US$ index gradually recovered from early morning lows (BBDXY +1.03 at 1232.32 vs. 1224.24 low); broad decline for Gold to 3177.75 (-72.26); crude lower (WTI -.83 at 62.84.)

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

• Secured Overnight Financing Rate (SOFR): 4.30% (+0.02), volume: $2.565T
• Broad General Collateral Rate (BGCR): 4.29% (+0.02), volume: $1.075T
• Tri-Party General Collateral Rate (TCR): 4.29% (+0.02), volume: $1.035T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $113B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $299B

FED Reverse Repo Operation

RRP usage climbs to $165.024B this afternoon from $144.214B yesterday, total number of counterparties at 36. 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.

US SOFR/TREASURY OPTION SUMMARY

SOFR & Treasury options look two-way/paired as underlying futures continued to gradually extend lows after the bell. Projected rate cut pricing steady in the near term while longer dates retreat vs. this morning levels (*) as follows: Jun'25 steady at -2.1bp, Jul'25 steady at -9.8bp, Sep'25 at -22.8bp (-24.7bp), Oct'25 at -34.8bp (-37.3bp), Dec'25 at -49.6bp (-52.9bp).

SOFR Options:
+5,000 SFRU5 96.62/97.12 call spds, 1.62 ref 95.905
+5,000 SFRQ5 95.62/95.75/95.81/95.87 put condors, 0.75 ref 95.905
+30,000 SFRZ5 95.62/96.00 put spds vs. 0QZ5 95.87/96.25 put spds, 1.75-2.0 db bear curve flattener
+20,000 SFRU5 97.50 calls, 1.5
-4,000 2QM5 96.12/96.37 put spds, 5.5 ref 96.495
Block, 10,000 SFRM6 96.37/98.25 call spds, 42.0 vs. 96.505/0.42%
-15,000 SFRU5/SFRZ5 95.68/95.81 put spd spd, 2.0 Sep over
+5,000 SFRN5 95.50/95.62/95.68/95.81 put condors, 3.0 ref 95.93
-4,000 SFRZ5 95.75/96.00 put spds, 9
3,000 SFRV5 95.62/95.81/95.87 put trees ref 96.205
Block, 2,500 SFRM5 95.75/95.81/95.93/96.00 put condors, 0.25 ref 95.705
-4,000 SFRU5 96.25/96.75 call spds, 4.5 ref 95.94
4,000 OQK5 96.62/96.87 2x1 put spds ref 96.53

Treasury Options:
4,500 TUN5 103.75/104 2x3 call spds, 1.5 net ref 103-15.5
3,000 TYN5 108/108.5 put spds 5 ref 110-02.5
+5,000 TYU5 133 calls, 33 ref 110-00 to -00.5
+1,000 TYM5 110.25/110.75/111.25 2x3x1 call flys, 16
-2,000 TYM5 110.25 straddles, 53
-7,500 TYM5 109.5 puts, 11
4,200 FVM5 108.75 calls, 2 last
3,200 FVM5 107.5 puts, 18 last
-1,250 FVM5 107.5/107.75/108.25 broken put flys, 15 vs. 107-19.5/0.05%
+1,000 FVM5 108.25/108.75 call spds, 3.5

MNI BONDS: EGBs-GILTS CASH CLOSE: Weakness Persists

European yields rose Wednesday for the third session this week, with periphery EGB spreads narrowing.

• Core FI as well as periphery EGBs turned lower in the afternoon session after a mixed morning, despite relatively limited macro and news flow.
• US Treasuries set the tone, trading heavily throughout the day, while also potentially weighing was US President Trump's hint at potential news on the Russia-Ukraine conflict at some point today.
• BoE hawkish dissenter Mann pointed to a more resilient labour market than had been expected, along with concerns that inflation expectations have increased.
• Though Mann's commentary didn't move markets, Gilts underperformed on the day as the UK curve bear flattened; the German curve bear steepened.
• Periphery EGBs' early outperformance faded, with the 10-year BTP/Bund spread briefly moving below 100bp handle for the first time since September 2021, but closing above that mark. GGBs outperformed overall.
• Thursday's calendar includes preliminary Q1 UK GDP data.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.4bps at 1.94%, 5-Yr is up 2.4bps at 2.269%, 10-Yr is up 1.9bps at 2.699%, and 30-Yr is up 2bps at 3.146%.
• UK: The 2-Yr yield is up 4.4bps at 4.024%, 5-Yr is up 5.3bps at 4.184%, 10-Yr is up 4.3bps at 4.713%, and 30-Yr is up 4.2bps at 5.469%.
• Italian BTP spread down 0.6bps at 101.2bps /Greek down 2.3bps at 76.5bps 

MNI EGB OPTIONS: Varied Sonia/Euribor Structures Trade Wednesday

Wednesday's Europe rates/bond options flow included:

• ERZ5 98.0625/97.9375/97.8125p fly, bought for 2 in 3k
• ERH6 98.0625/97.9375/97.8125p fly 1x2.5x1.5p fly, bought for flat in 4.8k
• SFIM5 95.90/95.85/95.80p ladder, bought for 1.5 in 3.88k
• SFIQ5 95.90/96.00/96.40/96.50c condor, bought for 6.5 in 5k
• SFIU5 96.20/96.35 call spread paper paid 3.5 on 12K

MNI FOREX: Dollar Index Fully Reverses Monday Surge Before Stabilising

• Tuesday’s theme of a weakening US dollar initially extended today, helped lower by major equity benchmarks consolidating their recent strength and headlines surrounding trade talks providing an additional greenback headwind. The US and South Korea agreed to share a mutual understanding of the principles they hold for operating foreign exchange markets and to continue discussions on FX policy. The headlines spurred some USDKRW weakness, which then filtered through to a broader dollar move against G10 peers.
• Later in the session, an article dropped on Bloomberg countering this theme, and suggesting US officials are not seeking to include currency policy pledges in trade deals, according to a person familiar with the matter.
• Overall, the USD index is broadly unchanged, despite initially bridging the gap to last Friday’s close, and eroding the entirety of the US/China tariff reprieve inspired rally to start the week.
• Hardest hit on Wednesday was USDJPY, which has traded in an impressive 206 pip range. The Japanese yen had been trading in a relatively weak manner amid the risk sentiment surge, however, discussions on FX policy being discussed between other administrations prompted some speculative yen appreciation. USDJPY traded as low as 145.61, and was down as much as 1.27% before stabilising. USDJPY has pared over half the move and stands around 146.70 as we approach the APAC crossover.
• Elsewhere, the likes of AUD and NZD are underperforming (down around 0.45%), although they still remain among the best performers in G10 this week. For AUDUSD, Monday’s move lower was considered corrective and another test above 0.6500 today reinforces the underlying bullish tone. Further strength would open 0.6528, the Nov 29 high, although there appears scope for a more protracted recovery towards the US election related highs at 0.6688.
• Thursday’s APAC session will be highlighted by the Australian unemployment report, before the focus turns to UK GDP. In the US, PPI and Retail Sales data are scheduled, which will be followed by Fed Chair Powell speaking.

MNI FX OPTIONS: Expiries for May15 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.1000(E1.0bln), $1.1090-00(E3.6bln), $1.1385-90(E1.2bln), $1.1410(E1.0bln)
• USD/JPY: Y140.00($3.4bln), Y145.00($2.1bln), Y146.95-05($1.3bln)
• GBP/USD: $1.3500(Gbp658mln)
• AUD/USD: $0.6475(A$1.3bln)
• NZD/USD: $0.5880(N$1.0bln)
• USD/CNY: Cny7.3000($883mln)

MNI US STOCKS: Late Equities Roundup: Tech Heavy Nasdaq Outperforms

• Stocks remain near steady (SPX eminis) to mixed in late Wednesday trade, tech-heavy Nasdaq outperforming as semiconductor makers led gainers for the second consecutive session.
• Stocks have bounced off recent Wednesday session lows after Pres Trump "signed an agreement with Qatar to generate an economic exchange worth at least $1.2 trillion," according to a fact sheet issued by the White House.
• Currently, the DJIA trades down 68.36 points (-0.16%) at 42070.86, S&P E-Minis up 4.25 points (0.07%) at 5908.75, the Nasdaq up 103.6 points (0.5%) at 19113.34.
• Information Technology and Communication Services sectors continued to outperform in late trade, leading gainers included: Super Micro Computer +17.51%, Advanced Micro Devices +4.31%, NVIDIA +3.92%, Enphase Energy +5.71% and Dell Technologies +2.72%.
• Interactive media and entertainment shares continued to support the Communication Services sector: Alphabet +3.4%, Take-Two Interactive Software +1.51%, Match Group +2.05% and Meta +0.66%.
• On the flipside, Health Care and Utilities continued to underperform, pharmaceuticals weighing on the former: Bio-Techne -6.38%, Revvity -5.09%, Moderna -4.96% and AbbVie -4.76%.
• Shares weighing on the Utility sector included: Eversource Energy -2.45%, Exelon -1.73%, WEC Energy Group -1.37%, Consolidated Edison -1.38% and Constellation Energy -1.62%.

MNI EQUITY TECHS: E-MINI S&P: (M5) Bulls Remain In The Driver’s Seat 

• RES 4: 6080.75 High Feb 26   
• RES 3: 6057.00 High Mar 3 
• RES 2: 6000.00 Round number resistance     
• RES 1: 5927.00 High May 13                                 
• PRICE: 5905.50 @ 14:33 ET May 14
• SUP 1: 5648.28 50-day EMA                       
• SUP 2: 5455.50 Low Apr 30
• SUP 3: 5355.25 Low Apr 24
• SUP 4: 5127.25 Low Apr 21 and a key support 

A bullish trend condition in S&P E-Minis remains intact and this week’s appreciation reinforces current conditions. The contract has cleared an important resistance at 5837.25, the Mar 25 high and a bull trigger. This strengthens the bullish theme, paving the way for a continuation near-term. Sights are on the 6000.00 handle next. Initial firm support to watch lies at 5648.28, the 50-day EMA.

MNI COMMODITIES: Precious Metals Fall Amid Easing Of Trade Tensions

• Spot gold has fallen by 2.2% to $3,178/oz today as the moderation in US/China trade tensions continues to support global risk sentiment, weighing on the yellow metal.
• The move breaches initial support at $3,202.0, the May 1 low, signalling scope for a deeper retracement towards $3,164.3, 61.8% of the Apr 7 - Apr 22 upleg.
• The 50-day EMA, another key support, is also at $3,164.9. A breach of both would undermine a short-term bullish theme, opening round number support at $3,100.0. Initial resistance is $3,267.9, the 20-day EMA.
• Silver is also weaker today, with the precious metal currently 2.3% lower on the session at $32.2/oz.
• The gold/silver ratio thus remains stable around 98.7, off from last month’s multi-year highs of 107. Initial support is the April 4 low at 97.4.
• Meanwhile, crude is softer on the day with an unexpected US crude stock build adding pressure.
• WTI Jun 25 is down by 0.7% at $63.2/bbl.
• Expectations are growing that a further increase in OPEC+ supply for July is to be announced at the June 1 meeting.
• A downtrend in WTI futures remains intact, with initial support seen at $54.67, the Apr 9 low and bear trigger.
• On the upside, a clear break of key resistance at $63.55, the 50-day EMA, would highlight a stronger reversal, opening $66.41, the Apr 4 high.

THURSDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
15/05/2025	0600/0700	**	GB	UK Monthly GDP
15/05/2025	0600/0700	**	GB	Index of Services
15/05/2025	0600/0700	***	GB	Index of Production
15/05/2025	0600/0700	**	GB	Output in the Construction Industry
15/05/2025	0600/0700	***	GB	GDP First Estimate
15/05/2025	0600/0800	**	NO	Norway GDP
15/05/2025	0600/0700	**	GB	Trade Balance
15/05/2025	0645/0845	***	FR	HICP (f)
15/05/2025	0700/0900		CH	Flash GDP
15/05/2025	0700/0900		EU	ECB's Cipollone at Payments Forum
15/05/2025	0750/0950		EU	ECB's Elderson At Green Finance Conference
15/05/2025	0900/1100	**	EU	Industrial Production
15/05/2025	0900/1100	***	EU	GDP (p)
15/05/2025	1015/1215		EU	ECB's De Guindos At ISDA Meeting
15/05/2025	1130/1330		EU	ECB's Cipollone In Digital Currency Fireside Chat
15/05/2025	1215/0815	**	CA	CMHC Housing Starts
15/05/2025	1230/0830	***	US	Jobless Claims
15/05/2025	1230/0830	**	US	WASDE Weekly Import/Export
15/05/2025	1230/0830	**	CA	Monthly Survey of Manufacturing
15/05/2025	1230/0830	**	CA	Wholesale Trade
15/05/2025	1230/0830	***	US	Retail Sales
15/05/2025	1230/0830	***	US	PPI
15/05/2025	1230/0830	**	US	Empire State Manufacturing Survey
15/05/2025	1230/0830	**	US	Philadelphia Fed Manufacturing Index
15/05/2025	1240/0840		US	Fed Chair Jerome Powell
15/05/2025	1300/0900	*	CA	CREA Existing Home Sales
15/05/2025	1315/0915	***	US	Industrial Production
15/05/2025	1400/1000	*	US	Business Inventories
15/05/2025	1400/1000	**	US	NAHB Home Builder Index
15/05/2025	1400/1500		GB	BOE Dhingra At New Economics Foundation conference
15/05/2025	1430/1030	**	US	Natural Gas Stocks
15/05/2025	1530/1130	*	US	US Bill 08 Week Treasury Auction Result
15/05/2025	1530/1130	**	US	US Bill 04 Week Treasury Auction Result
15/05/2025	1800/1400	***	MX	Mexico Interest Rate
15/05/2025	1805/1405		US	Fed Governor Michael Barr
16/05/2025	2350/0850	***	JP	GDP
16/05/2025	0430/1330	**	JP	Industrial Production