MNI ASIA OPEN: Challenger Job Cut Surge, Trump Delays Tariffs

EXECUTIVE SUMMARY

• MNI BRIEF: Intl Economic System Unsustainable- US's Bessent
• MNI US: Trump Confirms Postponement Of Mexico Tariffs Until April 2
• MNI BRIEF: ECB Cuts 25BP, Policy Meaningfully Less Restrictive
• MNI US DATA: Initial Claims Reverse Spike; No Standout Driver Again
• MNI US DATA: Paring Of Hugely Negative Q1 GDP Tracking, On Auto Sales Of All Things
• MNI US DATA: Challenger Job Cuts Surge On DOGE And More

US

MNI BRIEF: Intl Economic System Unsustainable- US's Bessent

U.S. Treasury Secretary Scott Bessent said Thursday the international economic system is unsustainable and President Trump is working to reorder the system to advance the interests of the American people. "This is not just a security issue. The United States also provides reserve assets, serves as a consumer of first and last resort, and absorbs excess supply in the face of insufficient demand in other country’s domestic models," he said in prepared remarks. "This system is not sustainable." 

• "Access to cheap goods is not the essence of the American Dream. The American Dream is rooted in the concept that any citizen can achieve prosperity, upward mobility, and economic security," Bessent said in a wide-ranging speech at the Economic Club of New York. "The administration's identifying bad actors across a range of criteria – not just tariffs applied to our exports, but non-tariffs barriers, laws which unfairly apply fines to our exporters, government policies which undercut global competition and suppress wages, and currency manipulation that enables persistent trade surpluses," he added. 

NEWS

MNI US: Trump Confirms Postponement Of Mexico Tariffs Until April 2

US President Donald Trump has issued a statement on Truth Social confirming that all Mexican goods subject to duty-free trade under the US-Mexico-Canada Trade Agreement (USMCA) will be exempted from tariffs until April 2, when Trump's reciprocal tariffs go into effect.  Trump: "After speaking with President Claudia Sheinbaum of Mexico, I have agreed that Mexico will not be required to pay Tariffs on anything that falls under the USMCA Agreement. This Agreement is until April 2nd.

MNI SECURITY: US Delegation To Meet Ukrainians On Tues Or Weds In Saudi Arabia

The European Central Bank cuts its benchmark deposit rate by 25 basis points to 2.50% on Thursday, but stated policy is becoming "meaningfully less restrictive." In a statement , the ECB also said the rates on the refinancing rate and the marginal lending rate had also been cut by 25bp.

MNI ECB: Growing Chance Of April Pause - Reuters Sources

"European Central Bank policymakers see a growing chance of a pause in their easing cycle at their next meeting before rates come down again, once they have greater clarity about trade and fiscal policy, four sources told Reuters." The story has only added about 0.5bp to implied April rates, considering it was already at 11-12bp of cuts priced for April after the decision and Lagarde's press conference vs nearer 13bp yesterday. 

MNI ECB: Bloomberg Sources Highlight Tension Between Hawks and Doves Ahead of April

Bloomberg are next to send out their post-ECB meeting sources piece. At first glance, the piece screens very similarly to Reuters around an April cut being in the balance. "European Central Bank officials are bracing for tough negotiations over whether to cut interest rates further or hold fire when they next set borrowing costs in April, according to people familiar with their thinking."

MNI US TSYS: Tsys Weaker/Off Lows, Challenger Job Cut Surge, USMCA Tariff Deferral

• Treasuries look to finish moderately lower for the most part, off lows, curves broadly steeper with short end rates outperforming (2s10s +4.720 at 31.684, off early high of 35.666).
• Busy session as rates see-sawed off early highs, heavy volumes (TYM5 near 3M after the bell) as rates rallied after Challenger job cut announcements surged in February to 172k, a 103% YoY increase largely tied to government layoffs.
• Rates pared gains after weekly jobless claims: Initial claims were lower than expected at 221k (sa, cons 233k) in the week to March 1, after an unrevised 242k.
• Treasury futures see-sawed lower after Commerce Sec Lutnick floated that the USMCA tariff will "likely" be delayed to April 2", but rebounded after President Trump confirmed the deferral, stocks falling to mid-September lows.
• Speaking at a WSJ event after the bell, Fed Gov Waller said wasn't thinking of a rate cut at the March 19 meeting - but "sees no problem with forecast of 2 rate cuts this year".
• Focus squarely on Friday morning's February employment report release at 0830ET, while Fed Chair Powell will discuss his economic outlook (text, Q&A) at Chicago Booth's Monetary Policy Forum at 1230ET.

OVERNIGHT DATA

MNI US DATA: Initial Claims Reverse Spike; No Standout Driver Again

• Initial claims were lower than expected at 221k (sa, cons 233k) in the week to March 1, after an unrevised 242k.
• The seasonally adjusted decrease came as the 4k nsa uptick offered a smaller rise than the adjustment factor was looking for.
• As previously, there has been no material influence from Maryland, Virginia and Washington DC states from a federal government layoff angle (in addition to the deferred redundancy program that won't show until Oct).
• Back to the seasonally-adjusted data, the four-week average remained unchanged at 224k for its joint highest since last December, remaining a little higher than the 218k averaged in 2019.
• Continuing claims meanwhile rose more than expected, to 1897k (cons 1874k) in the week to Feb 22 after a slightly downwardly revised 1855k (initial 1862k).
• It's back near recent highs although doesn't alter what was a somewhat more supportive payrolls reference period of 1855k for Feb after 1850k in Jan but 1897k in both Dec and Nov. 

MNI US DATA: Challenger Job Cuts Surge On DOGE And More

• Challenger job cut announcements surged in February to 172k, the highest for a February since 2009, and a 103% Y/Y increase from 85k in Feb 2024 – see charts.
• Government layoffs played a significant role as they jumped to 62k vs just 27 (not 000s). It’s highly likely to be linked to the start of DOGE cuts but it’s a noisy series having seen 36k of layoff announcements back in Mar 2024.
• Other notable industries include retail (39k), tech (15k) and consumer products (11k). 

MNI US DATA: Paring Of Hugely Negative Q1 GDP Tracking, On Auto Sales Of All Things

• Atlanta Fed’s GDPNow for Q1 real GDP growth has been lifted to -2.4% after -2.8% in the Mar 3 update.
• Interestingly, the details that the upward revision was primarily driven by Tuesday's auto sales where a strong ISM services report on Wednesday had no net impact.
• Recall that Monday’s -2.8% estimate saw a heavy downward revision following a weak ISM manufacturing survey and construction spending, building on the slide seen the Friday after the goods trade deficit ballooned and personal consumption disappointed.  
• This tracker was running at +2.3% on Feb 19 and +3% through much of early February.
• As for drivers for the mechnically projected change from the 2.35% realized GDP growth in Q4, the largest drag remains net exports (tracking at -3.6pps vs +0.1pp in Q4) but it also sees a sharp slowdown from a strong Q4 for personal consumption (at 0.4pp vs 2.8pp in Q4).
• The next GDPNow update is due on Mar 17. 

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 500.27 points (-1.16%) at 42499.64
S&P E-Mini Future down 112.25 points (-1.92%) at 5738.25
Nasdaq down 520 points (-2.8%) at 18031.15
US 10-Yr yield is up 0.2 bps at 4.2803%
US Jun 10-Yr futures are down 2/32 at 110-26
EURUSD down 0.0001 (-0.01%) at 1.0787
USDJPY down 1.12 (-0.75%) at 147.76
WTI Crude Oil (front-month) up $0.02 (0.03%) at $66.32
Gold is down $5.83 (-0.2%) at $2913.54

European bourses closing levels:
EuroStoxx 50 up 31.35 points (0.57%) at 5520.47
FTSE 100 down 73 points (-0.83%) at 8682.84
German DAX up 338.45 points (1.47%) at 23419.48
French CAC 40 up 23.92 points (0.29%) at 8197.67

US TREASURY FUTURES CLOSE

3M10Y +1.201, -2.389 (L: -4.819 / H: 3.045)
2Y10Y +5.148, 32.112 (L: 27.108 / H: 35.666)
2Y30Y +5.635, 61.939 (L: 55.59 / H: 67.317)
5Y30Y +2.962, 52.297 (L: 48.104 / H: 55.995)
Current futures levels:
Jun 2-Yr futures up 1.25/32 at 103-17.375 (L: 103-12.25 / H: 103-20.5)
Jun 5-Yr futures steady at at 107-26.25 (L: 107-16.5 / H: 107-30.5)
Jun 10-Yr futures down 2/32 at 110-26 (L: 110-12.5 / H: 110-30) 
Jun 30-Yr futures down 14/32 at 117-3 (L: 116-12 / H: 117-14)
Jun Ultra futures down 16/32 at 122-23 (L: 121-20 / H: 123-03)

MNI US 10YR FUTURE TECHS: (M5) Corrective Pullback

• RES 4: 112-24  2.0% 10-dma envelope
• RES 3: 112-13  1.500 proj of the Jan 13 - Feb 7 - Feb 12 price swing
• RES 2: 112-01/02 High Mar 4 / 1.382 proj of Jan 13-Feb 7-12 swing
• RES 1: 111-15   High Mar 5
• PRICE:‌‌ 110-24 @ 1509ET Mar 6
• SUP 1: 110-12+/110-00 Intraday low / High Feb 7       
• SUP 2: 109-21   50-day EMA and a key near-term support
• SUP 3: 108-21   Low Feb 19
• SUP 4: 108-03+ Low Dec 12 and a bear trigger  

The trend condition in Treasury futures remains bullish and the latest pullback appears corrective. The contract has pierced resistance at 111-22+, the Dec 3 ‘24 high. A clear break of this level would strengthen a bullish theme and open 112-02 and 112-13, Fibonacci projection points. Note that the daily trend condition is overbought, a pullback is allowing the overbought set-up to unwind. Firm support is at 110-00, the Feb 7 high.

SOFR FUTURES CLOSE

Mar 25 +0.020 at 95.733
Jun 25 +0.060 at 96.015
Sep 25 +0.050 at 96.250
Dec 25 +0.035 at 96.370
Red Pack (Mar 26-Dec 26) +0.010 to +0.030
Green Pack (Mar 27-Dec 27) -0.01 to +0.005
Blue Pack (Mar 28-Dec 28) -0.02 to -0.015
Gold Pack (Mar 29-Dec 29) -0.025 to -0.02

SOFR FIXES AND PRIOR SESSION REFERENCE RATES
​​​​​​​
SOFR Benchmark Settlements:

• 1M +0.00761 to 4.32158 (-0.00313/wk)
• 3M +0.00895 to 4.29481 (-0.02197/wk)
• 6M +0.01462 to 4.19027 (-0.06648/wk)
• 12M +0.02136 to 3.99535 (-0.13137/wk)

US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 4.34% (+0.01), volume: $2.525T
• Broad General Collateral Rate (BGCR): 4.33% (+0.01), volume: $962B
• Tri-Party General Collateral Rate (TCR): 4.33% (+0.01), volume: $936B
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $112B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $284B

FED Reverse Repo Operation

RRP usage slips to $129.269B this afternoon from $139.493B Wednesday. Compares to $58.770B (lowest level since mid-April 2021) on February 14. The number of counterparties at 35 from 32 prior.

MNI PIPELINE: Corporate Bond Update: $5B CBA 5Pt Launched

$17.1B to Price Thursday:

• Date $MM Issuer (Priced *, Launch #)
• 03/06 $5B Commonwealth Bank of Australia $750M 3Y +45, $1B 3Y SOFR+64, $500M 5Y +55, $1.5B 5Y SOFR+81, $1.25B 21NC20 +132
• 03/06 $2.6B #GlaxoSmithKline 00M $2Y +35, $600M 2Y SOFR+50, $850M 5Y +55, $750M 10Y +70
• 03/06 $1.8B *Celanese $700M 5NC2 6.5%, $1.1B 8NC3 6.75% (E750M 6NC2.5 also priced)
• 03/06 $1.5B #First Citizens $500M 6NC5 +117, $1B 15NC10 +197
• 03/06 $1.5B #Dominion Energy $800M 5Y +95, $700M 10Y +120
• 03/06 $1.2B #Diamondback Energy 10Y +128
• 03/06 $1B #PSEG $600M 5Y +87, $400M 10Y +112
• 03/06 $700M #Verisk Analytics 10Y +100
• 03/06 $600M #Evergy Kansas $300M WNG 3Y +73, $300M WNG 10Y +100
• 03/06 $600M #IADB 5Y SFOR+39
• 03/06 $600M #CSX 10Y +80

MNI FOREX: USD Index Tests US Election Levels Below 104

• The USD index sits lower for a fourth consecutive session as we approach the APAC crossover, although daily ranges have been relatively contained on Thursday compared to the aggressive price action seen earlier in the week. Weak dollar sentiment tipped the DXY below 104.00, for the first time since the November 05 presidential election vote.
• Moderately hawkish tweaks to the ECB’s language and inflation forecasts prompted a brief bout of Euro strength, which saw EURUSD rise to a fresh recovery high of 1.0853, although the pair has slipped back to 1.08 in latest dealings. At its peak, the week’s rally totalled 4.5%, as technical and fundamental drivers continue to underpin the renewed optimism for the pair.
• Elsewhere, a surprisingly weak Challenger job cuts number helped front-end US yield extend their decline, which weighed substantially on USDJPY in early US trade. The pair fell to a session low of 147.32, the lowest level since early October last year. USDJPY had already been trading heavy as markets digest the latest Rengo pay tally data, which was an upside surprise in Japan. Price dynamics keep the trend needle firmly pointing south for USDJPY. Today’s resumption of the downtrend paves the way for an extension towards 146.95, a Fibonacci retracement. Below here, 145.92 is the level of note, the Oct 4 ’24 low.
• Late headlines from US Commerce Secretary Lutnick and then President Trump provided a more sanguine tariff narrative, as all goods tied to the USMCA were granted another month extension to April 02, as dialogue between US, Canada and Mexico officials continues. This boosted the likes of MXN and CAD, while underpinning a recovery in stocks. Although this remained brief and subsequently equities have headed lower, keeping risk sentiment in the spotlight as we approach tomorrow’s US employment report.
• SEK continues a streak of outperformance as a solid set of data outturns drives the currency higher still. Prelim inflation data covering February came in well ahead of expectations, further pinching Riksbank pricing across 2025. As a result, EUR/SEK has broken lower, consolidating comfortably through the 11.00 handle to print the lowest levels since late 2022.

FRIDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
07/03/2025	0700/0800	**	DE	Manufacturing Orders
07/03/2025	0745/0845	*	FR	Foreign Trade
07/03/2025	0800/0900	**	ES	Industrial Production
07/03/2025	0930/1030		EU	Lagarde Address at ECB International Women's Day 2025 conf
07/03/2025	0940/1040		EU	ECB International Women's Day conf. incl. Lagarde, Nagel, Panetta
07/03/2025	1000/1100	***	EU	GDP (final)
07/03/2025	1000/1100	*	EU	Employment
07/03/2025	-	***	CN	Trade
07/03/2025	1330/0830	***	CA	Labour Force Survey
07/03/2025	1330/0830	***	US	Employment Report
07/03/2025	1515/1015		US	Fed Governor Michelle Bowman
07/03/2025	1545/1045		US	New York Fed's John Williams
07/03/2025	1720/1220		US	Fed Governor Adriana Kugler
07/03/2025	1730/1230		US	Fed Chair Jerome Powell
07/03/2025	1800/1300	**	US	Baker Hughes Rig Count Overview - Weekly
07/03/2025	1800/1300		US	Fed Governor Adriana Kugler
07/03/2025	2000/1500	*	US	Consumer Credit