MNI ASIA OPEN: FOMC Week, No Change Expected

EXECUTIVE SUMMARY

• MNI FED WATCH: On Hold Until Tariffs Effects Materialize
• MNI US: Tsy Sec Bessent Says Trying to Create Best Environment for Stable Rates
• MNI US TSYS: Focus Remains on Midweek FOMC, ISM Service 2Y Highs

US

MNI FED WATCH: On Hold Until Tariffs Effects Materialize

The Federal Reserve will keep interest rates unchanged Wednesday for a third straight meeting and reaffirm it is well placed to wait for more clarity before reacting to President Donald Trump's barrage of tariffs this month. The target range for the fed funds rate has been maintained at 4.25% to 4.5% so far this year, but markets are pricing in one 25 bp cut by July and three by year-end as the the highest tariffs in a century weigh on growth. But with the latest inflation and employment data still looking solid, the Fed is comfortable staying on hold for now. 

NEWS

MNI US: Tsy Sec Bessent Says Trying to Create Best Environment for Stable Rates

Newswires continuing to pick up on headlines from Treasury Secretary Bessent who emphasises that China is the biggest piece of Trump's trade puzzle. Bessent states he is not going to talk about the Fed, and that the administration are trying to create the best environment for stable rates. “IF WE CAN TAKE AWAY THE CREDIT RISK OF THE U.S. GOVERNMENT, INTEREST RATES WILL COME DOWN” “SAYS WE WANT TO BRING DOWN FEDERAL DEFICIT BY MAYBE 1% PER YEAR” (Reuters)

Netanyahu Warns of ‘Intensive’ Escalation in Gaza Campaign (New York Times) -- 

Prime Minister Benjamin Netanyahu said that a new plan calls for a “forceful entry” into the territory and would involve Palestinians relocating to the south.

Dropping Oil Price Boosts Odds of Ukraine Peace Deal, Trump Says, BBG -- 

President Donald Trump said the sliding price of oil is intensifying pressure on Russia and boosting the odds for a deal to end its war in Ukraine. “I think Russia, with the price of oil right now — oil has gone down — I think we’re in a good position to settle,” Trump told reporters in the Oval Office on Monday. “They want to settle; Ukraine wants to settle. If I weren’t president, nobody would be settling.”

US TSYS

MNI US TSYS: Focus Remains on Midweek FOMC, ISM Service 2Y Highs

• Treasuries look to finish lower Monday, off late session lows as rates bounced in reaction to reversal in stocks that had been climbing steadily off early session lows.
• Generally quiet session on lighter volumes (TYM5 <1M) with multiple Spring holidays around the globe: Japan, China, HK, South Korea, as well as the UK, EU is open however.
• Focus on Wednesday's FOMC rate annc at 1400ET. The FOMC is expected to extend its series of rate holds to a third meeting in May, keeping the Fed funds target rate at 4.25-4.50% while maintaining its forward guidance in the Statement.
• Treasury futures gap lower after higher than expected ISM Services data - climbing to the highest levels since January 2023 (51.6 from 50.8 vs 50.2 est; Employment Index 49.0 Vs Mar 46.2; New Orders Index 52.3 Vs Mar 50.4; Prices Index 65.1 Vs Mar 60.9.
• Jun'25 10Y currently -3 at 111-00 vs. 110-28.5 low (10Y yld at 4.3394%), through technical support at 110-30.5 (50-day EMA). A clear breach of this average would strengthen a bearish threat and expose 110-16+, the Apr 22 low.
• Cross asset: Still weaker BBG US$ index bounces to 1221.48 (-3.03); stocks weaker after paring losses all day: S&P eminis -20.5 at 5688.5.

OVERNIGHT DATA

• MNI US ISM SERVICES PRICE INDEX RISES TO HIGHEST SINCE JAN. 2023
• MNI US APRIL ISM SERVICES PMI RISES TO 51.6 FROM 50.8; EST. 50.2 bbg
• MNI US ISM APR SERVICES COMPOSITE INDEX 51.6
• MNI US ISM APR SERVICES PRICES 65.1

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA up 10.75 points (0.03%) at 41329.93
S&P E-Mini Future down 19 points (-0.33%) at 5690.25
Nasdaq down 68 points (-0.4%) at 17909.14
US 10-Yr yield is up 3.1 bps at 4.3394%
US Jun 10-Yr futures are down 2.5/32 at 111-2.5
EURUSD up 0.002 (0.18%) at 1.1317
USDJPY down 1.14 (-0.79%) at 143.82
WTI Crude Oil (front-month) down $1.18 (-2.02%) at $57.11
Gold is up $96.1 (2.97%) at $3336.75

European bourses closing levels:
EuroStoxx 50 down 2.14 points (-0.04%) at 5283.05
German DAX up 257.89 points (1.12%) at 23344.54
French CAC 40 down 42.55 points (-0.55%) at 7727.93

US TREASURY FUTURES CLOSE

3M10Y +3.678, 1.983 (L: -3.272 / H: 4.914)
2Y10Y +1.659, 49.891 (L: 48.972 / H: 52.404)
2Y30Y +2.401, 98.694 (L: 97.467 / H: 102.61)
5Y30Y +1.76, 88.64 (L: 87.652 / H:91.752) 
Current futures levels:
Jun 2-Yr futures steady at at 103-20.25 (L: 103-19.25 / H: 103-23.37)
Jun 5-Yr futures down 0.75/32 at 108-10.75 (L: 108-07.5 / H: 108-18.25)
Jun 10-Yr futures down 2.5/32 at 111-2.5 (L: 110-28.5 / H: 111-13.5)
Jun 30-Yr futures down 12/32 at 114-17 (L: 114-04 / H: 115-11)
Jun Ultra futures down 21/32 at 118-8 (L: 117-24 / H: 119-11)

MNI US 10YR FUTURE TECHS: (M5) Support Remains Exposed

• RES 4: 113-22   1.382 proj of the Apr 11 - 16 - 22 price swing
• RES 3: 113-04   76.4% retracement of the Apr 7 - 11 bear leg
• RES 2: 112-20+ High MAy 1 and key new-term resistance
• RES 1: 112-01+ High Apr 2
• PRICE:‌‌ 111-07+ @ 11:36 BST May 5
• SUP 1: 111-02   Low Mar 2 / 50-dma
• SUP 2: 110-30+ 50-day EMA
• SUP 3: 110-16+/109-08 Low Apr 22 / 11 and the bear trigger
• SUP 4: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle

A sharp reversal lower in Treasury futures last week undermines the recent bull cycle. The contract has breached the 20-day EMA, and sights are on support at the 50-day EMA, at 110-30+. A clear breach of this average would strengthen a bearish threat and expose 110-16+, the Apr 22 low. For bulls, price needs to trade above key short-term resistance at 112-20+, the May 1 high, to reinstate a bullish theme.

SOFR FUTURES CLOSE

Jun 25 -0.020 at 95.780
Sep 25 -0.035 at 96.120
Dec 25 -0.025 at 96.415
Mar 26 -0.010 at 96.620
Red Pack (Jun 26-Mar 27) steadysteady0 to +0.015
Green Pack (Jun 27-Mar 28) steadysteady0 to +0.005
Blue Pack (Jun 28-Mar 29) -0.015 to -0.005
Gold Pack (Jun 29-Mar 30) -0.03 to -0.02

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

• Secured Overnight Financing Rate (SOFR): 4.36% (-0.03), volume: $2.694T
• Broad General Collateral Rate (BGCR): 4.33% (-0.02), volume: $1.073T
• Tri-Party General Collateral Rate (TCR): 4.33% (-0.02), volume: $1.036T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $111B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $279B

FED Reverse Repo Operation

RRP usage recedes to $124.690B this afternoon from $147.882B Friday. 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. The number of counterparties at 32.

MNI PIPELINE: Corporate Bond Update: $4.5B Apple Inc 4Pt Launched

Low end of the estimate, $4.5B Apple Inc 4pt deal leads today's issuance size:

• Date $MM Issuer (Priced *, Launch #)
• 05/05 $4.5B #Apple Inc $1.5B 3Y +25, $1B 5Y +30, $1B 7Y +40, $1B 10Y +50
• 05/05 $2.5B #Comcast $650M 7Y +85, $850M 10Y +100, $1B 30Y +122
• 05/05 $2B #General Motors $750M 3Y +155, $750M 5Y +170, $500M 10Y +195
• 05/05 $1.3B #DTE Electric $300M 2Y +45, $500M 10Y +93, $500M 30Y +103
• 05/05 $1.25B #American Int Group $625M each: 5Y +95, 10Y +112
• 05/05 $1.25B #Prologis $500M +5Y +85, $750M 10Y +103
• 05/05 $1B #ADP 7Y +63

MNI FOREX: Tale of Two Halves as Greenback Recovers Following US Data

• Initially on Monday, the US dollar traded weaker against all others in G10, as traders were happy to erode a portion of the post-NFP advance and resume the underlying trend of greenback selling. However, firmer-than-expected ISM services data assisted a solid rebound, with dollar indices now only trading in moderately negative territory as we approach the APAC crossover.
• US ISM Services Index data rose to the highest level since January 2023, and the higher-than-expected prices paid component (65.1 vs. 61.4 est.) has provided further impetus for the greenback recovery.
• This has helped the likes of EUR and GBP to edge back towards unchanged on the session, the clear underperformers in G10. For EURUSD, this translates to the pair reversing around 65 pips from session highs to trade back at 1.13. Initial key support to watch is the 20-day EMA, at 1.1264.
• A similar move for GBPUSD has seen spot narrow the gap to overnight lows of 1.3257. A bearish tweezer top formation on the daily candle chart last Monday/Tuesday highlights a short-term top. Support to watch lies at 1.3225, the 20-day EMA. A break of this level would signal scope for a deeper retracement.
• AUD remains among the best performers after an extended period of consolidation, AUDUSD is gaining following the surprisingly strong showing for Anthony Albanese in the weekend's general elections. The price action puts the rate above the 200-dma and a close above would be the first since November last year.
• Despite the dollar rebound, USDJPY remains 0.6% lower on the session at 144.10, with technical resistance levels remaining intact for now. Moving average studies remain in a bear-mode position highlighting a dominant downtrend. Lower-than-forecast inflation data in Switzerland did little to knock the ongoing optimism for the Swiss Franc. Key USDCHF resistance remain intact at 0.8333, the 2023 low and breakdown point.

TUESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
06/05/2025	0545/0745	**	CH	Unemployment
06/05/2025	0645/0845	*	FR	Industrial Production
06/05/2025	0715/0915	**	ES	S&P Global Services PMI (f)
06/05/2025	0715/0915	**	ES	S&P Global Composite PMI (final)
06/05/2025	0745/0945	**	IT	S&P Global Services PMI (f)
06/05/2025	0745/0945	**	IT	S&P Global Composite PMI (final)
06/05/2025	0750/0950	**	FR	S&P Global Services PMI (f)
06/05/2025	0750/0950	**	FR	S&P Global Composite PMI (final)
06/05/2025	0755/0955	**	DE	S&P Global Services PMI (f)
06/05/2025	0755/0955	**	DE	S&P Global Composite PMI (final)
06/05/2025	0800/1000	**	EU	S&P Global Services PMI (f)
06/05/2025	0800/1000	**	EU	S&P Global Composite PMI (final)
06/05/2025	0830/0930	**	GB	S&P Global Services PMI (Final)
06/05/2025	0830/0930	***	GB	S&P Global/ CIPS UK Final Composite PMI
06/05/2025	0900/1100	**	EU	PPI
06/05/2025	-		US	FOMC Meeting
06/05/2025	1230/0830	**	CA	International Merchandise Trade (Trade Balance)
06/05/2025	1230/0830	**	US	Trade Balance
06/05/2025	1255/0855	**	US	Redbook Retail Sales Index
06/05/2025	1400/1000	*	CA	Ivey PMI
06/05/2025	1700/1300	**	US	US Note 10 Year Treasury Auction Result
07/05/2025	0030/0930	**	JP	S&P Global Final Japan Services PMI
07/05/2025	0030/0930	**	JP	S&P Global Final Japan Composite PMI