MNI ASIA OPEN: Dollar Gains On Auto Tariff Anticipation
EXECUTIVE SUMMARY:
- US: Trump to Announce Auto Tariffs Today, White House Says
- US: CBO Eyes Potential For "X-Date" As Early As May
- BOC: Minutes - Tariff Effects May Be Slow To Emerge
- US DATA: Durable Goods Another Strong "Hard" Data Point For Manufacturing
NEWS
US (BBG): Trump to Announce Auto Tariffs Today, White House Says
President Donald Trump will announce tariffs on the auto industry on Wednesday, according to the White House, a move that would escalate his fight with global trading partners ahead of a broader tariff push next week. White House Press Secretary Karoline Leavitt said Trump would speak from the Oval Office at 4 p.m. to detail his moves, adding that she would allow him to announce the specifics. The tariffs are poised to apply to finished vehicles but not auto parts, according to people familiar with the matter, who cautioned that the president’s plans remained fluid ahead of the announcement.
US (MNI): CBO Eyes Potential For "X-Date" As Early As May
The Congressional Budget Office reports that per its estimates "if the debt limit [$36.1T] remains unchanged, the government's ability to borrow using extraordinary measures will probably be exhausted in August or September 2025." But it also warns that the so-called "x-date" could happen as soon as May - "If the government's borrowing needs are significantly greater than CBO projects"
FED (MNI): Minneapolis' Kashkari Eyes "Extended" Wait Before Moving On Policy
Minneapolis Fed President Kashkari (non-2025 FOMC voter but votes in 2026) didn't go deeply into current monetary policy considerations at a "Fed Listens" town hall event. But he did make some comments on inflation and policy uncertainty that were consistent with his thinking last month when he said he expected that rates would be "modestly lower" at end-2025.
FED (MNI): Fed's Musalem Calls For Patient Stance, Flexible Response
The Federal Reserve should wait and see how the U.S. outlook and risks evolve before adjusting monetary policy, which could call for more restriction, maintaining restriction, or easing depending on how inflation and the labor market evolves, St. Louis Fed President Alberto Musalem said Wednesday. He outlined three scenarios which would warrant different responses from the Fed in a speech prepared for an event in Paducah, Kentucky, adding that "a patient and vigilant approach" and careful assessment of incoming data will aid the Fed at this time.
US (MNI): Cleveland Fed Staff On PCE Inflation Residual Seasonality
The concept of residual seasonality, whereby data exhibit a seasonal pattern even after adjustment (and seemingly especially so for inflation data), has been a contentious topic. Cleveland Fed's Lunsford finds evidence of residual seasonality across five measures of PCE inflation (headline, core, market-based core, median and trimmed mean) when looking across data from 1987 to Jan 2025.
BOC (MNI): BOC Minutes - Tariff Effects May Be Slow To Emerge
Bank of Canada officials expressed caution about further interest-rate moves when they decided to lower them for a seventh consecutive meeting on March 12, according to minutes published Wednesday, saying it could take time to figure out whether U.S. tariffs will slow economic growth more than they boost inflation. Governing Council members "noted it could take time for these opposing effects to materialize," the Summary of Deliberations showed. Providing forward guidance on interest rates didn't make sense and officials "agreed to proceed carefully with further changes to monetary policy."
UK (MNI): Gov't Risks Backbench Ire w/Spring Statement Welfare Reforms
Following the Spring Statement, Paul Johnson of the IFS has delivered an initial response that the extreme fine-tuning of welfare policy to ensure exactly the same fiscal headroom as October presents risks in the event of economic shocks, concluding "What the Chancellor has all but guaranteed is another six months of damaging speculation and uncertainty over tax policy. That didn't go well between last July's election and October's Budget. I fear a longer rerun this year."
EU/RUSSIA (MNI): SECURITY: Pressure On Russia Is EU's Main Focus - EU Commission Spokesperson
Reuters reporting comments from an EU Commission spokesperson, "taking note" of the outcome of US brokered ceasefire talks in Saudi Arabia and stating that Russia must demonstrate "genuine political will" to ending the war in Ukraine.
MNI: EU Defence Finance Not As Coordinated As Hoped - Official
MNI looks ahead to talks among senior EU officials on defence finance options. -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
MNI EM INTERVIEW: BCB Might Cut Sooner as Activity Slows - Serra
Former Brazil's central bank deputy governor for monetary policy Bruno Serra talks to MNI in an interview. -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
MNI: EU's Sefcovic Offers Trade Compromises To Trump- Official
MNI speaks to an EU source about Trade Commissioner Maros Sefcovic's visit to the U.S. On MNI Policy MainWire now, for more details please contact sales@marketnews.com
MNI INTERVIEW: BRICS Currency A Card For China In U.S. Talks
BHP Billiton's former chief economist shares his view on a potential China-U.S. deal. On MNI Policy MainWire now, for more details please contact sales@marketnews.com
US TSYS: Bear Steepening With Trump Auto Tariffs In Focus
The Treasury curve bear steepened Wednesday, with UK developments and US headlines at the fore.
- Treasuries started the session on the front foot, helped in part by European developments including softer-than-expected UK CPI. Later, UK developments would come to the fore again as the government fiscal announcement first brought Gilts (and Treasuries alongside) first lower and then back higher.
- Headlines emerging through the day that President Trump planned an imminent announcement on auto tariffs (confirmed to be announced by the White House for 4pm ET Wednesday) weighed on risk appetite, with major equity aggregates down 1+% and the US dollar index rising to 3 week highs. That in turn helped Treasuries off late morning lows.
- The 5Y Treasury Note auction was the weakest since at least October, tailing 0.5bp and drawing a slightly negative reaction in the broader Treasury market.
- In a limited data slate, durable goods orders/shipments surprised to the upside, another positive on the "hard" data front compared with the softer survey data seen elsewhere.
- Regional Fed presidents Musalem and Kashkari echoed the recent FOMC theme of patience in making any future rate decisions, amid high levels of govenrment policy uncertainty.
- Latest cash levels: The 2-Yr yield is down 0.9bps at 4.0043%, 5-Yr is up 1.1bps at 4.0789%, 10-Yr is up 2.1bps at 4.3345%, and 30-Yr is up 2.5bps at 4.6833%. The Jun 25 T-Note future is down 5.5/32 at 110-18.5, having traded in a range of 110-12.5 to 110-23.
- Thursday's data slate is on the heavy side, with the third reading of Q4 GDP, Feb trade balance, and initial jobless claims among other items on the docket, while we also hear from Boston Fed's Collins and Richmond's Barkin.
OVERNIGHT REFERENCE RATES / REPO
US TSYS/OVERNIGHT REPO: SOFR Pressures Pick Up Early Ahead Of Quarter-End
Secured rates have begun to pick up ahead of month/quarter end, with SOFR up 2bp to 4.33% Tuesday - highest since March 10. That puts the spread to effective Fed funds also at zero for the first session since that date (it had been trading below EFFR in the interim - the latter printed 4.33% as usual on Tuesday).
- That said, the uptick was something of a surprise given large Treasury bill redemptions on Tuesday which should have put a lid on secured rates.
- Further Tbill paydowns Thursday likewise should help contain rates somewhat but will almost certainly be further increases late this week and on Monday's quarter-end date.
- Wrightson ICAP for one pencils in SOFR of 4.47% on Mar 31, which would be the highest since Jan 1 (ie year/quarter/month-end).
REPO REFERENCE RATES (rate, change from prev. day, volume):
* Secured Overnight Financing Rate (SOFR): 4.33%, 0.02%, $2460B
* Broad General Collateral Rate (BGCR): 4.31%, 0.01%, $966B
* Tri-Party General Collateral Rate (TGCR): 4.31%, 0.01%, $939B
New York Fed EFFR for prior session (rate, chg from prev day):
* Daily Effective Fed Funds Rate: 4.33%, no change, volume: $107B
* Daily Overnight Bank Funding Rate: 4.33%, no change, volume: $301B
US TSYS/OVERNIGHT REPO: ON RRP Takeup Hits 2025 Highs With Quarter-End Ahead
Takeup of the Fed's overnight reverse repo facility picked up the most in a week Wednesday, by $26.6B, to the highest level this year so far of $241.4B.
- Takeup of ON RRP is likely to pick up even more sharply at the end of this week and early next, amid the usual quarter-end dynamics.
SOFR FIX - Source BBG/CME
- 1M 4.32719 0.00556
- 3M 4.30267 -0.00014
- 6M 4.22358 0.00791
- 12M 4.06494 0.00862
DATA
US DATA: Durable Goods Another Strong "Hard" Data Point For Manufacturing
Headline durable goods orders greatly exceeded expectations with growth of 0.9% M/M in February (-1.0% expected, 3.3% prior upwardly rev by 0.1pp). Ex-transportation orders also impressed, at 0.7% M/M (0.2% expected, 0.1% prior upwardly rev by 0.1pp).
- Core capital goods orders - nondefence and excluding aircraft - were on the other hand disappointing, contracting 0.3% M/M (+0.2% expected, 0.9% prior upwardly rev by 0.1pp).We tend to put more emphasis on the latter as aircraft orders tend to be extremely volatile month-to-month.
- But the strong headline/ex-transport orders are notable. And the February pullback in core, while a 7-month low, largely reflected a payback from January's 17-month fastest pace of growth.
- And even then, multi-month metrics are a better signal than the month-to-month, and they appear solid: core orders were up 5.0% 3M/3M SA annualized for a second month.
- That's the strongest pace of growth on that basis since mid-2022 and reflective of other "hard" data suggesting that manufacturing/industrial production has been strong in the early part of the year.
- This of course could be related to orders front-running the impact of tariffs, and with "soft" indicators of sentiment turning sharply negative in the last couple of months it could mean we will see a dropoff in demand later in the year that may already be reflected in slower core orders in February.
- For the moment though it's still a sign that Q1 will overall be one of the strongest quarters in the last couple of years for manufacturing, and should portend solidity in business investment.
US DATA: GDPNow Unrevised At -1.8%, Gold-Adjusted +0.2%
- The Atlanta Fed’s GDPNow is unrevised at a rounded -1.8% annualized for Q1 from -1.8% with the Mar 18 update (technically revised down from -1.76% to -1.81%).
- The first formal estimate of the gold-adjusted figure came in at +0.2%, maintaining a 2pp gap seen in LinkedIn estimates from GDPNow’s Higgins earlier in the month as we suspected would be the case.
- A reminder that final sales to domestic purchasers are seen adding 1.55pps to GDP growth, no way near the deterioration seen in tracked GDP growth but still a notable moderation after a strong 3.0pp in Q4 and a particularly firm 3.7pp in Q3.
- The private version of this domestic demand measure tells a similar story, currently tracking a 1.2pp contribution after 2.6pp in Q4 and 2.9pp in Q3.
- Tomorrow’s advance trade data can give an idea of latest gold adjustment tweaks but we don’t think they can be actually factored into calculations until the full release on Apr 3.
- The next GDPNow update will be on Fri, Mar 28.
- As noted earlier, looking through some of these impacts rather than the more mechanical Atlanta Fed GDPNow approach, GS for example see Q1 real GDP tracking at 1.3% annualized. That’s still a sizeable moderation from the 2.35% in Q4 and 3.1% in Q3.
US DATA: Mortgage Applications Track Sideways With Rates
- MBA composite mortgage applications drifted 2% lower last week (sa), building on the -6% the week prior that chipped away at a 34% two-week increase before that.
- Refis have led the modest pullback (-5% after -13% following 59%) whilst new purchase applications have largely paused (0.7% after 0.1% following 17%).
- The 30Y conforming rate inched 1bp lower to 6.71%, broadly consolidating around the 6.7% level for the past four weeks now having eased from a recent high of 7.09% in early January. It's a move that stoked a relatively modest uplift in activity when looking at broader trends.
US 10YR FUTURE TECHS: (M5) Support Remains Intact
- RES 4: 113-01+ 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: 111-17+/25 High Mar 20 / 11
- PRICE: 110-17+ @ 16:57 GMT Mar 26
- SUP 1: 110-06 50-day EMA
- SUP 2: 110-00 High Feb 7 and a key support
- SUP 3: 109-13+ Low Feb 24
- SUP 4: 109-03 Low Feb 21
Treasury futures faded across the Wednesday session, despite bouncing well off the week’s lows. From a trend perspective, the outlook is bullish and moving average studies continue to reinforce this theme - they remain in a bull-mode position. Recent gains have resulted in a print above 111-22+, the Dec 3 ‘24 high. A clear breach of this level would open 112-02 and 112-13, Fibonacci projections. Firm support is unchanged at 110-00, the Feb 7 high.
BONDS: EGBs-GILTS CASH CLOSE: Gilts Resolve Stronger After Spring Statement
Gilt yields resolved lower after volatile trading around the UK government's highly-anticipated fiscal statement, outperforming Bunds in a bull flattening move.
- Core instruments strengthened in early trade, with Gilts benefiting from a softer-than-expected inflation report.
- Gilt yields jumped to session highs on the Spring Statement release, but rebounded sharply after the release of the Gilt Remit showed a slightly lower than expected total (GBP299.2B vs. median GBP303B). The UK curve would close bull flatter.
- Core FI rallied through the cash close, as the White House confirmed President Trump would announce auto tariffs later in the day.
- ECB commentary was mixed but not unexpected given the sources: dove Centeno said he saw no reason not to cut in April; hawk Holzmann conversely said he wouldn't vote to cut rates in April.
- The German curve bull steepened; periphery EGB spreads closed slightly wider of Bunds following a late risk-off move.
- Thursday's calendar is lighter, with appearances by BoE's Dhingra and multiple ECB officials, Spanish retail sales and ECB monetary aggregates data, and the Norges Bank decision bearing attention.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 1.8bps at 2.119%, 5-Yr is down 1.3bps at 2.414%, 10-Yr is down 0.3bps at 2.795%, and 30-Yr is up 0.6bps at 3.137%.
- UK: The 2-Yr yield is down 1.1bps at 4.29%, 5-Yr is down 1.6bps at 4.37%, 10-Yr is down 2.5bps at 4.728%, and 30-Yr is down 6bps at 5.309%.
- Italian BTP spread up 0.6bps at 110.2bps / Spanish up 0.2bps at 62.5bps
FOREX: EURUSD Slides Further Below 1.08 as Tariff Headlines Weigh
- Headlines suggesting that President Trump is preparing a statement on automotive import tariffs for Wednesday afternoon have weighed on major equity indices, in turn boosting the USD index to a three-week high. Specific headlines regarding the EU suggesting that its top trade negotiator expects President Trump to hit the bloc with tariffs of about 20% next week have also dampened sentiment for the single currency.
- As such, EURUSD has slipped further below 1.0800, and is notably tracking below the 20-day exponential moving average for the first time since March 03. This threatens a deeper pullback for the pair, potentially towards more significant support at 1.0631, a key short-term pivot level.
- In similar vein, GBPUSD trades on the backfoot and is below 1.29, however, sterling’s underperformance is mainly due to a softer set of inflation data from the UK, that prompted an early shunt lower for cable. The Spring Statement from Chancellor Reeves had little effect overall, as GBPUSD consolidates 0.42% losses as we approach the APAC crossover.
- Price action narrows the gap to firm support at 1.2869, the 20-day EMA. A sustained clearance of this level would signal scope for a deeper retracement towards the 50-day EMA, at 1.2731.
- AUDJPY remains higher on the session, but the latest equity weakness is helping its key 50-day EMA resistance cap the topside for the cross. Today’s high of 95.19 matched closely with the average, which has proved significant in recent months, having not closed above it since January.
- The firmer dollar theme is trumping the softer sentiment for equities, emphasised by USDJPY rising 0.42% to 150.55. The focus continues to be on 150.95, which represents both the recovery high and the 50-day EMA, a break above which would be the latest counter-trend signal and could signal scope for a stronger rally.
- US final GDP, weekly jobless claims and pending home sales highlight a relatively light economic calendar on Thursday.
| Date | GMT/Local | Impact | Country | Event |
| 27/03/2025 | - |  NO | NorgesBank Meeting | |
| 27/03/2025 | 0830/0830 |  GB | BOE's Dhingra on inflation targeting in the UK post pandemic period | |
| 27/03/2025 | 0900/1000 | *** | NO | Norges Bank Rate Decision |
| 27/03/2025 | 0900/1000 | ** |  EU | M3 |
| 27/03/2025 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 27/03/2025 | - |  FR | Insee publishes General Govt balance | |
| 27/03/2025 | 1230/0830 | * |  CA | Payroll employment |
| 27/03/2025 | 1230/0830 | *** |  US | Jobless Claims |
| 27/03/2025 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 27/03/2025 | 1230/0830 | *** | US | GDP |
| 27/03/2025 | 1230/0830 | ** | US | Advance Trade, Advance Business Inventories |
| 27/03/2025 | 1300/1400 | EU | ECB's De Guindos at 2025 IIF European Summit | |
| 27/03/2025 | 1400/1000 | ** | US | NAR Pending Home Sales |
| 27/03/2025 | 1430/1030 | ** | US | Natural Gas Stocks |
| 27/03/2025 | 1500/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 27/03/2025 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 27/03/2025 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 27/03/2025 | 1700/1300 | ** | US | US Treasury Auction Result for 7 Year Note |
| 27/03/2025 | 1740/1840 | EU | ECB's Schnabel lecture on MonPol Transmission | |
| 27/03/2025 | 1805/1905 | EU | ECB's Lagarde prerecorded message for Women in Finance conference | |
| 27/03/2025 | 1900/1500 | *** |  MX | Mexico Interest Rate |
| 27/03/2025 | 2030/1630 | US | Richmond Fed's Tom Barkin | |
| 27/03/2025 | 2030/1630 | US | Boston Fed's Susan Collins | |
| 28/03/2025 | 2330/0830 | ** |  JP | Tokyo CPI |
