MNI ASIA OPEN: Fed Barkin Remains Open Minded on Cuts

EXECUTIVE SUMMARY

• MNI FED: Richmond's Barkin: Last Mile In Bringing Inflation To Target
• MNI IRAN: RTRS-Iranian Diplo 'Neither Optimistic Nor Pessimistic' On US Talk
• US Plans to Issue License for Companies to Pump Venezuelan Oil - Bbg
• MNI US DATA: Redbook Retail Sales Remain Robust Through Stormy January

US

MNI FED: Richmond's Barkin: Last Mile In Bringing Inflation To Target

Richmond Fed Pres Barkin (an FOMC voter in 2027) is as usual very noncommittal on his rate outlook in a speech Tuesday. Here's the concluding paragraph which reinforces MNI's view that Barkin is a little more hawkish than the overall FOMC median participant, but unlike some outright hawks remains relatively open-minded to rate cuts should the data make a compelling case: "We raised rates three years ago to bring inflation under control. As the inflation rate has fallen, we have been bringing rates back down toward neutral levels, reducing the fed funds rate 175 basis points over the last year and a half.

NEWS

MNI IRAN: RTRS-Iranian Diplo 'Neither Optimistic Nor Pessimistic' On US Talks

Reuters reports comments from an unnamed Iranian diplomatic source, saying that Tehran's view on the upcoming talks with the US in Istanbul on Friday, 6 Feb are "neither optimistic nor pessimistic". Says that the meeting will show whether the US "intends to conduct serious and result-oriented talks". Claims that Tehran is "at maximum defensive readiness and is prepared for any scenario". In the talks, they say Tehran's defensive capabilities (likely referring to its ballistic missile programme) are non-negotiable.

US/IRAN: Iranian Officials Threaten to Pull Out of Talks w/US - WSJ - "Iranian officials threatened to pull out of the talks with U.S. special envoy Steve Witkoff and President Trump's son-in-law Jared Kushner that were poised to take place Friday in Turkey, people familiar with the matter said. It wasn't immediately clear what triggered the threats. Regional powers have worked to set up the talks over Tehran's nuclear program in hopes of opening a diplomatic pathway to avert a possible war."

OVERNIGHT DATA

MNI US DATA: Redbook Retail Sales Remain Robust Through Stormy January

Retail sales rose 6.3% Y/Y in January per the Johnson Redbook index, with sales in the final week of the month up 6.7% Y/Y. While the latter was a bit of a slowdown from the 7.1% increase prior, this largely represents a pullback from weather-related purchases (as we had suggested last week would likely be the case). It's also a slowdown from a 36-month best 6.8% in December but nevertheless the index is consistent with very robust retail activity continuing into 2026, including Johnson Redbook's 6.3% Y/Y growth projection for February.

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 134.65 points (-0.27%) at 49264.41
S&P E-Mini Future down 62.75 points (-0.9%) at 6938.75
Nasdaq down 365.9 points (-1.6%) at 23219.35
US 10-Yr yield is down 1.2 bps at 4.2655%
US Mar 10-Yr futures are up 1/32 at 111-20
EURUSD up 0.0028 (0.24%) at 1.1819
USDJPY up 0.13 (0.08%) at 155.76
WTI Crude Oil (front-month) up $1.84 (2.96%) at $63.96
Gold is up $277.94 (5.96%) at $4939.71

European bourses closing levels:
EuroStoxx 50 down 12.16 points (-0.2%) at 5995.35
FTSE 100 down 26.97 points (-0.26%) at 10314.59
German DAX down 16.73 points (-0.07%) at 24780.79
French CAC 40 down 1.67 points (-0.02%) at 8179.5

US TREASURY FUTURES CLOSE

Curve update:
3M10Y -1.93, 58.674 (L: 58.217 / H: 62.131)
2Y10Y -0.787, 69.588 (L: 69.554 / H: 71.385)
2Y30Y -0.941, 132.87 (L: 132.574 / H: 134.848)
5Y30Y -1.001, 106.508 (L: 106.009 / H: 108.378)
Current futures levels:
Mar 2-Yr futures down 0.375/32 at 104-5.125 (L: 104-03.875 / H: 104-05.875)
Mar 5-Yr futures steady at at 108-24.25 (L: 108-20.25 / H: 108-25.25)
Mar 10-Yr futures up 1.5/32 at 111-20.5 (L: 111-13.5 / H: 111-21.5)
Mar 30-Yr futures up 3/32 at 114-23 (L: 114-07 / H: 114-24)
Mar Ultra futures up 4/32 at 116-30 (L: 116-11 / H: 116-31)

MNI US 10YR FUTURE TECHS: (H6) Trend Needle Points South

• RES 4: 112-31   High Dec 18 and key short-term resistance
• RES 3: 112-22   High Jan 7
• RES 2: 112-07+ 50-day EMA
• RES 1: 112-02   High Feb 02
• PRICE:‌‌ 111-17 @ 11:52 GMT Feb 03
• SUP 1: 111-09   Low Jan 20 and the bear trigger
• SUP 2: 111-00   Round number support
• SUP 3: 110-30+ 1.618 proj of the Oct 17 - Nov 5 - 25 price swing 
• SUP 4: 110-22+ 1.764 proj of the Oct 17 - Nov 5 - 25 price swing

The sharp pullback in Treasuries from yesterday’s high reinforces the overarching bearish trend condition. The next important resistance to watch is 112-07+, the 50-day EMA. A clear break of the 50-day average is required to signal scope for a stronger recovery. Until then, gains are considered corrective and for bears, sights are on key support at 111-09, the Jan 20 low. A break of this level would confirm a resumption of the downtrend. 

SOFR FUTURES CLOSE

Current White pack (Mar 26-Dec 26):
Mar 26 -0.005 at 96.365
Jun 26 -0.010 at 96.530
Sep 26 -0.005 at 96.710
Dec 26 steady at 96.780
Red Pack (Mar 27-Dec 27) -0.005 to steady
Green Pack (Mar 28-Dec 28) -0.005 to +0.005
Blue Pack (Mar 29-Dec 29) +0.010 to +0.015
Gold Pack (Mar 30-Dec 30) +0.020 to +0.025

REFERENCE RATES
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US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 3.69% (+0.01), volume: $3.307T
• Broad General Collateral Rate (BGCR): 3.66% (+0.00), volume: $1.342T
• Tri-Party General Collateral Rate (TCR): 3.66% (+0.00), volume: $1.299T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 3.64% (+0.00), volume: $93B
• Daily Overnight Bank Funding Rate: 3.64% (+0.01), volume: $170B

FED Reverse Repo Operation

RRP usage retreats to $1.785B with 18 counterparties this afternoon vs. $10.415B Monday. 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.

MNI PIPELINE: Corporate Bond Update: $7B Bank of America 3Pt Debt Launched

• Date $MM Issuer (Priced *, Launch #)
• 02/03 $7B #Bank of America $2.75B 6NC5 +63, $500M 6NC5 SOFR+108, $3.75B 11NC10 +78
• 02/03 $4B *EIB 10Y SOFR+43
• 02/03 $2.75B #Lloyds $1.25B 4NC3 +60, $500M 4NC3 SOFR+77, $1B 21NC20 +82
• 02/03 $2B *New Development Bank 3Y SOFR+49
• 02/03 $2B Black Pearl Compute 5NC2
• 02/03 $1.3B #NextEra Energy $700M 5Y +57, $600M 30Y +97
• 02/03 $1.2B #National Rural Utilities 1.5Y SOFR+43, 3Y +43
• 02/03 $1.1B #PacifiCorp 30.5NC5.25 7.125%
• 02/03 $1B #Deutsche Bank 6NC5 +90
• 02/03 $1B United Airlines 3NC 4.875%
• 02/03 $500M #McCormick 3Y +53
• 02/03 $Benchmark American Express 3NC2 +45, 3NC2 SOFR+59, 6NC5 +63, 15NC10 +115
• 02/03 $Benchmark Visa 3Y +20, 5Y +30, 7Y +40, 10Y +45PIPELINE

MNI BONDS: EGBs-GILTS CASH CLOSE: Supply Weighs

European yields rose modestly Tuesday.

• Bonds started on the back foot following overnight weakness in US Treasuries and a hawkish rate hike by the RBA.
• A softer-than-expected French flash January inflation helped EGBs consolidate briefly, while the ECB's Q4 BLS indicated a relatively muted credit-led growth impulse.
• Supply was a theme all day on both sides of the Atlantic, with multiple European sales (UK/ESM/Italy/German Green) and US corporate supply weighing in the early afternoon.
• Bunds underperformed Gilts which benefited from a solid 4.75% Oct-35 auction amid only limited UK-centric headlines, with most focus remaining on this week's BOE meeting.
• OATs modestly outperformed in the EGB space, following the passage of the 2026 French budget after the cash close Monday.
• Wednesday brings Italy/Eurozone flash January inflation data, with final PMIs. Attention remains on Thursday's ECB and BOE decisions. MNI's ECB meeting preview went out today - PDF here.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.9bps at 2.123%, 5-Yr is up 1.5bps at 2.463%, 10-Yr is up 2.3bps at 2.891%, and 30-Yr is up 3.4bps at 3.55%.
• UK: The 2-Yr yield is up 0.5bps at 3.708%, 5-Yr is up 1.7bps at 3.953%, 10-Yr is up 1.1bps at 4.517%, and 30-Yr is up 1.5bps at 5.288%.
• Italian BTP spread down 0.7bps at 60.7bps / French OAT down 1bps at 57.6bps

MNI FOREX: AUD Consolidates 1% Rally Post RBA & Amid Metals Recovery

• AUD is the main outperformer on Tuesday, rising 1% against the dollar after the hawkish hike from the RBA overnight. AUDUSD has also been supported by a more stable metals backdrop, with gold prices consolidating a 6% boost on the session. Softer equity sentiment (driven by IT Services lagging) did little to hamper the renewed Aussie optimism, with AUDUSD consolidating back above the 0.7000 mark, continuing to operate between well-defined short-term technical parameters of 0.7094 (cycle highs) and 0.6846 (20-day EMA).
• AUD outperformance has been very notable in the crosses, leading AUDJPY to pierce key resistance of the 2024 highs, placing the cross at its highest level since 1990. Meanwhile, the likes of EURAUD and GBPAUD have extended their most recent selloffs, significant considering the upcoming ECB and BOE decisions on Thursday.
• There has been some regional spillover from the Aussie move, with NZD screening as the second best performer in G10 ahead of Wednesday’s NZ Q4 employment report. Meanwhile, the Swiss Franc is also bouncing back well. This has resulted in EURCHF falling to within 10 pips of yesterday’s cycle lows at 0.9140. In EMFX the likes of MXN and ZAR have rallied around 0.7%, reflective of the supportive price action for precious metals.
• Despite a moderate dip for the dollar, the DXY is broadly consolidating the bounce from last week’s lows, which has helped USDJPY maintain a resilient profile over most of the session. The pair briefly rose to a fresh recovery high of 156.08 before fading in late US trade. Overall, the recent recovery continues to erode USDJPY’s sharp January pullback, with the pair rebounding more than 50% of the impressive 4.6% selloff from the recent cycle highs. Supportive price action has led USDJPY to pierce the 50-day EMA, intersecting at 155.75. A clear break would signal a possible bullish reversal, turning the focus to the next topside level of 157.43, the Jan 19 low.
• Despite the BLS data delays, both US ADP and ISM Services are scheduled on Wednesday’s calendar.

WEDNESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
04/02/2026	0815/0915	**	ES	S&P Global Services PMI (f)
04/02/2026	0815/0915	**	ES	S&P Global Composite PMI (final)
04/02/2026	0830/0930		SE	Riksbank Minutes
04/02/2026	0845/0945	**	IT	S&P Global Services PMI (f)
04/02/2026	0845/0945	**	IT	S&P Global Composite PMI (final)
04/02/2026	0850/0950	**	FR	S&P Global Services PMI (f)
04/02/2026	0850/0950	**	FR	S&P Global Composite PMI (final)
04/02/2026	0855/0955	**	DE	S&P Global Services PMI (f)
04/02/2026	0855/0955	**	DE	S&P Global Composite PMI (final)
04/02/2026	0900/1000	**	EU	S&P Global Services PMI (f)
04/02/2026	0900/1000	**	EU	S&P Global Composite PMI (final)
04/02/2026	0930/0930	**	GB	S&P Global Services PMI (Final)
04/02/2026	0930/0930	***	GB	S&P Global/ CIPS UK Final Composite PMI
04/02/2026	1000/1100	**	EU	EZ PPI
04/02/2026	1000/1100	***	EU	EZ HICP Flash
04/02/2026	1000/1100	***	EU	EZ HICP Flash
04/02/2026	1000/1100	***	EU	EZ HICP Flash
04/02/2026	1000/1100	***	EU	EZ HICP Flash (2dp)
04/02/2026	1000/1100	***	IT	Italy Flash Inflation
04/02/2026	1000/1100	***	IT	HICP (p)
04/02/2026	1000/1100	***	IT	Italy Flash Inflation
04/02/2026	1200/0700	**	US	MBA Weekly Applications Index
04/02/2026	1315/0815	***	US	ADP Employment Report
04/02/2026	1330/0830	***	US	Treasury Quarterly Refunding
04/02/2026	1445/0945	***	US	S&P Global Services Index (final)
04/02/2026	1445/0945	***	US	S&P Global US Final Composite PMI
04/02/2026	1500/1000	***	US	ISM Non-Manufacturing Index
04/02/2026	1500/1000		US	Treasury Secretary Scott Bessent
04/02/2026	1530/1030	**	US	US DOE Petroleum Supply
04/02/2026	1530/1030	**	US	DOE Weekly Crude Oil Stocks
04/02/2026	1700/1200		US	Richmond Fed's Tom Barkin
04/02/2026	2330/1830		US	Fed Governor Lisa Cook
05/02/2026	0030/1130	**	AU	Trade Balance