MNI ASIA OPEN: Inflation Progress Slows, Bostic Sees One Cut

EXECUTIVE SUMMARY

• MNI FED: Atlanta's Bostic Sees One Less 2025 Rate Cut Amid Slow Inflation Progress
• MNI US TSYS: Targeted Tariffs Helps Buoy Sentiment
• MNI US: Tariffs Will Keep Taxes Low - Trump
• MNI US DATA: Services Flash PMI Surprises Stronger, Peak In Mfg Tariff Front-Running

US

MNI FED: Atlanta's Bostic Sees One Less 2025 Rate Cut Amid Slow Inflation Progress

Atlanta Fed Pres Bostic (non-2025 FOMC voter, leans hawk) says in a Bloomberg interview that he has reduced his 2025 rate cut expectations to 1 in March's economic projections versus 2 previously, "because I think we will see inflation be very bumpy", and delayed inflation progress warranted pushing back the path to neutral rates. This puts him among the 8 most hawkish FOMC members for 2025 (of 19 participants, 4 saw 1 cut, 4 saw none). We'd pointed out last week that Bostic may have taken a slightly more hawkish outlook after the Atlanta Fed's Business Inflation Expectations (BIE) survey for March showed a pickup in inflation expectations.

NEWS

MNI US: Tariffs Will Keep Taxes Low - Trump

Wires carrying select comments from US President Donald Trump and other administration officials, speaking to reporters ahead of a Cabinet meeting at the White House. There is no live footage available of the meeting, likely reflecting a change in protocol following a slightly acrimonious Cabinet meeting earlier in the month. Trump says he, “will be announcing tariffs on autos, aluminum and pharmaceuticals in the very near future”. He adds that “tariffs will keep US taxes low”.

MNI US: Ukraine Rare Earth Agreement To Be Signed "Shortly" - Trump

US President Donald Trump has told reporters during a Cabinet meeting at the White House that an agreement with Ukraine on rare earths will be signed "shortly", per Reuters. Trump said: "We made a deal on rare earths... agreement on rare earths to be signed shortly... We will sign soon."

MNI SOUTH KOREA: PM Han's Impeachment Dismissed, Country Awaits Yoon Verdict

As noted earlier (see 'SOUTH KOREA: Country Wrap: PM's Impeachment Overturned', 0543GMT) the Constitutional Court has voted to dismiss the impeachment of PM Han Duck-soo. Han has been restored to the position of acting president, which he held for several weeks in December 2024 following the impeachment of President Yoon Suk-yeol after the abortive imposition of martial law. 

MNI RUSSIA: Kremlin Spox-Black Sea Initiative On Agenda In US Talks

Wires reporting comments from Kremlin spox Dmitry Peskov on the day of 'technical talks' taking place in the Saudi capital Riyadh between US and Russian negotiators. The comments focus primarily on the situation in the Black Sea, which was discussed in last week's call between Presidents Vladimir Putin and Donald Trump. The readouts following that call highlighted the difficulty the US will have in reconciling its own (and Ukraine's) stances with those of Russia. The US readout and US National Security Advisor Mike Waltz, talked of a 'maritime ceasefire'. However, Kremlin readouts spoke only of the resumption of the "so-called Black Sea initiative", which sought to allow the safe passage of grain and fertiliser shipments in the Black Sea.

MNI US TSYS: Targeted Tariffs Helps Buoy Sentiment

• Treasuries look to finish near lows Monday as Trump admin trade policy narrowed from universal tariffs to more targeted approach when the April 2 "Liberation Day" arrives.
• Treasury futures extended lows after S&P Flash PMI services (54.3 bbg cons 51.0) and composite (53.5 cons 50.9) data came out higher then expected while manufacturing declined (49.8 bbg cons 51.7).
• Atlanta Fed Pres Bostic (non-2025 FOMC voter, leans hawk) says in a Bloomberg interview that he has reduced his 2025 rate cut expectations to 1 in March's economic projections versus 2 previously, "because I think we will see inflation be very bumpy", and delayed inflation progress warranted pushing back the path to neutral rates.
• The Jun'25 10Y currently trades 110-17 (-18), just above initial technical support at 110-16.5 (Low Mar 24) followed by 110-12.5 (Low Mar 6 & 13). Resistance above at 111-25 (Mar 11 high), support below at 110-12.5/110-00 (Low Mar 6 & 13 / High Feb 7). Tsy 10Y yield climbs to 4.3346% high, curves still mixed: 2s10s +.014 at 29.406, 5s30s -1.943 at 56.480.
• Late tariff headlines saw risk sentiment cool slightly after Trump said he would announce additional tariffs on cars "shortly" and pharmaceuticals at "some point".

OVERNIGHT DATA

MNI US DATA: Services Flash PMI Surprises Stronger, Peak In Mfg Tariff Front-Running

The US flash March PMIs from S&P Global US chimed more closely with today’s UK release rather than Eurozone releases, with a solid upside surprise for service activity along with a negative surprise for manufacturing. Early tariff front-running looks to have passed in manufacturing but there was still a sharp acceleration in input cost inflation. The press release does however caution this net improvement in business momentum with “business expectations for the year ahead fell to their second-lowest since October 2022 as companies grew increasingly cautious about the economic outlook, often citing worries over customer demand and the impact of aspects of the new administration's policies.”

• Manufacturing: 49.8 (bbg cons 51.7) in the March flash after 52.7 in February – its first sub-50 reading since Dec.
• Services: 54.3 (bbg cons 51.0) in the March flash after 51.0 in February – highest since Dec.
• Composite: 53.5 (cons 50.9) in the March flash after 51.6 in February.
• The services PMI at 54.3 is up from 51.0 in Feb and 52.9 in Jan as it moves back closer to a strong period through May-Dec 2024 when it averaged 55.5.
• It helps drive the market reaction but a readthrough to ISM services is always difficult: recall that February saw the ISM services index surprise 1pt higher with 53.5 despite the then almost 2pt decline in the S&P Global PMI.
• On the manufacturing side, there were signs that tariff front-running has passed, with manufacturing output declining after February saw a three-year high in output. “New orders growth came close to stalling in the goods-producing sector”.
• More broadly, input cost inflation continues to ramp up but pass-through is limited for now: “Input price inflation accelerated sharply, especially in manufacturing, to a near two-year high, often attributed to the impact of tariff policies. However, competition limited the pass-through of higher costs to selling prices.”

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA up 612.26 points (1.46%) at 42592.79
S&P E-Mini Future up 100.5 points (1.76%) at 5818.75
Nasdaq up 397.1 points (2.2%) at 18180.28
US 10-Yr yield is up 8.5 bps at 4.3307%
US Jun 10-Yr futures are down 17.5/32 at 110-17.5
EURUSD down 0.0018 (-0.17%) at 1.0801
USDJPY up 1.31 (0.88%) at 150.63
WTI Crude Oil (front-month) up $0.93 (1.36%) at $69.21
Gold is down $15.93 (-0.53%) at $3006.45

European bourses closing levels:
EuroStoxx 50 down 8.04 points (-0.15%) at 5415.79
FTSE 100 down 8.78 points (-0.1%) at 8638.01
German DAX down 39.02 points (-0.17%) at 22852.66
French CAC 40 down 20.62 points (-0.26%) at 8022.33

US TREASURY FUTURES CLOSE

3M10Y +8.504, 3.909 (L: -4.038 / H: 4.295)
2Y10Y +0.014, 29.406 (L: 28.615 / H: 30.883)
2Y30Y -1.46, 62.212 (L: 61.046 / H: 64.91)
5Y30Y -2.022, 56.401 (L: 55.345 / H: 58.524)
Current futures levels:
Jun 2-Yr futures down 5.5/32 at 103-12.125 (L: 103-11.75 / H: 103-17.25)
Jun 5-Yr futures down 12.25/32 at 107-20.25 (L: 107-19.25 / H: 108-00)
Jun 10-Yr futures down 17.5/32 at 110-17.5 (L: 110-16 / H: 111-03)
Jun 30-Yr futures down 1-00/32 at 116-12 (L: 116-10 / H: 117-14)
Jun Ultra futures down 1-06/32 at 121-9 (L: 121-07 / H: 122-18)

MNI US 10YR FUTURE TECHS: (M5) Consolidation Mode

• RES 4: 113-04   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: 111-25   High Mar 11 
• PRICE:‌‌ 110-21+ @ 17:00 GMT Mar 24
• SUP 1: 110-16+ Low Mar 24
• SUP 2: 110-12+ Low Mar 6 & 13
• SUP 3: 110-05/00 50-day EMA / High Feb 7 and a key support
• SUP 4: 109-13+ Low Feb 24

Treasury futures are trading in a broad range and this consolidation phase marks a pause in the uptrend. Moving average studies continue to highlight a dominant uptrend - 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, Feb 7 high.  

SOFR FUTURES CLOSE

Jun 25 -0.050 at 95.875
Sep 25 -0.085 at 96.090
Dec 25 -0.10 at 96.250
Mar 26 -0.10 at 96.360
Red Pack (Jun 26-Mar 27) -0.10 to -0.085
Green Pack (Jun 27-Mar 28) -0.08 to -0.075
Blue Pack (Jun 28-Mar 29) -0.08 to -0.075
Gold Pack (Jun 29-Mar 30) -0.075 to -0.075

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

• 1M +0.00155 to 4.32166 (+0.00371 total last wk)
• 3M -0.00199 to 4.29584 (+0.00278 total last wk)
• 6M -0.01017 to 4.19449 (+0.00629 total last wk)
• 12M -0.01959 to 4.00379 (+0.00554 total last wk)

US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 4.30% (+0.01), volume: $2.444T
• Broad General Collateral Rate (BGCR): 4.29% (+0.01), volume: $954B
• Tri-Party General Collateral Rate (TCR): 4.29% (+0.01), volume: $933B
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $106B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $296B

FED Reverse Repo Operation

RRP usage slips to $196.565B this afternoon from $200.850B last Friday. Compares to $58.770B (lowest level since mid-April 2021) on February 14. The number of counterparties at 43.

MNI PIPELINE: Nearly $25B Corporate Bonds to Price Monday

$24.8B Corporate bonds ti price Monday:

• Date $MM Issuer (Priced *, Launch #)
• 03/24 $3.5B #T-Mobile $1.25B 7Y +93, $1B 10Y +98, $1.25B 30Y +123
• 03/24 $3B #RBC $1B 3NC2 +68, $600M 3NC2 SOFR+82, $1B 6NC2 +88, $400M 6NC2 SOFR+113
• 03/24 $3B #Glencore $500M 1.5Y SOFR+75, $550M 3Y +90, $750M 5Y +110, $1.2B 10Y +135
• 03/24 $3B #Hyundail $800M 2Y +85, $650M 2Y SOFR+99, $750M 5Y +110, $450M 5Y SOFR+135, $350M 7Y +122
• 03/24 $2.25B #Verizon 10Y +95
• 03/24 $1.8B #CIBC $1.4B 4NC3 +85, $400M 4NC3 SOFR+103
• 03/24 $1.5B #RELX Capital $750M 5Y +75, $750M 10Y +95
• 03/24 $1B *Korea National Oil $300M 3Y +70, $400M 3Y SOFR+90, $300M 5Y +105
• 03/24 $900M #Harbour Energy 10Y +200
• 03/24 $850M #Avalon Holdings 5Y +138
• 03/24 $850M #San Diego Gas & Electric 10Y +110
• 03/24 $750M #Equitable Financial Life 5Y +95
• 03/24 $750M #Swiss Re 21NC20 +150
• 03/24 $650M #Macquarie Airfinance 3Y +120
• 03/24 $500M #Marubeni 10Y +105
• 03/24 $500M #SMBC Aviation Cap 5Y +103
• Expected Tuesday:
• 03/25 $1b MuniFin WNG 5Y SOFR+49a
• 03/25 $1B IDB 5Y SOFR+50a
• 03/25 $Benchmark NWB 3Y SOFR+38a
• 03/25 $Benchmark JFM 5Y SOFR+68

MNI BONDS: EGBs-GILTS CASH CLOSE: Twist Steepening On Mixed PMIs, US Tariff Talk

Gilts outperformed Bunds Monday amid mixed PMIs and US tariff news.

• Core yields rose in early trade following reports that the Trump administration would pursue targeted rather than broad indiscriminate tariffs in its highly-anticipated announcement next week.
• The rest of the session proved mixed. Bunds rallied as Eurozone services PMI disappointed (dragged down primarily by Germany), with manufacturing beating expectations. The UK saw the opposite dynamics (strong services, weak manufacturing), weighing on Gilts.
• Above-expected US Composite PMI (with better services offsetting manufacturing weakness) saw European instruments pull back to session lows.
• Just before the cash close, core FI got a slight safe-haven bid as US Pres Trump announced that tariff announcements on autos and pharmaceuticals would be announced "soon".
• Both the German and UK curves twist steepened modestly on the day, with short-end yields falling. Periphery/semi-core spreads tightened slightly.
• BoE's Bailey speaks after the cash close - it's possible he could offer further insight on the new risks cases for the MPC. Overarching focus this week is on Wednesday's UK inflation data and government's fiscal statement/gilt remit.
• Tuesday brings German IFO data.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.1bps at 2.121%, 5-Yr is unchanged at 2.404%, 10-Yr is up 0.6bps at 2.771%, and 30-Yr is up 0.8bps at 3.111%.
• UK: The 2-Yr yield is down 0.4bps at 4.261%, 5-Yr is down 0.5bps at 4.341%, 10-Yr is up 0.1bps at 4.713%, and 30-Yr is up 1.2bps at 5.322%.
• Italian BTP spread down 1.4bps at 110.1bps / Spanish down 1.1bps at 63.1bps 

MNI FOREX: Post-PMI Greenback Advance Consolidates, USDJPY Rises 0.85%

• The dollar index had been trading close to unchanged levels before the US PMI flash PMIs, however, the firmer than expected readings for both services and composite data propelled the DXY roughly 0.25% higher on the session. This advance has been consolidating as we approach the APAC crossover.
• The majority of the action has been centred around the Japanese yen once more on Monday, negatively impacted by both higher US yields and surging US equity indices. The major US benchmarks have been buoyed by Trump's supposed targeted tariffs blunting the blow of trade measures from the April 02 deadline. USDJPY rose as high as 150.76 and remains +0.84% on the day.
• Overall, the primary trend direction in USDJPY is down and recent gains are considered corrective. Key resistance to watch is 151.01, the 50-day EMA. A clear break of this average would signal scope for a stronger rally. Initial support is found at 148.18, the Mar 20 low. Key support and the bear trigger remain at 146.54, the Mar 11 low.
• Late headlines crossed from Trump on an imminent announcement on car tariffs, knocking the major indices off their best levels. Price action then weighed on the likes of EUR and GBP, keeping the DXY rally underpinned.
• GBPUSD is 0.1% lower at typing but had been an early outperformer on the back of UK flash services PMI surprising to the upside this morning. Bullish technical conditions remain intact for the pair, as a plethora of short-term risk events are awaited this week. Standing out here is the Spring Statement, CPI data and activity data due Friday. Pricing for an GBPUSD straddle expiring on Friday incorporates a move of around +/- 90 pips from current spot levels of 1.2910.
• German IFO is scheduled Tuesday, before US data includes new home sales and consumer confidence.

TUESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
25/03/2025	0700/0800	**	SE	PPI
25/03/2025	0800/0900	**	ES	PPI
25/03/2025	0900/1000	***	DE	IFO Business Climate Index
25/03/2025	1000/1000	**	GB	Gilt Outright Auction Result
25/03/2025	1100/1100	**	GB	CBI Distributive Trades
25/03/2025	1230/0830	**	US	Philadelphia Fed Nonmanufacturing Index
25/03/2025	1240/0840		US	Fed Governor Adriana Kugler
25/03/2025	1255/0855	**	US	Redbook Retail Sales Index
25/03/2025	1300/0900	**	US	S&P Case-Shiller Home Price Index
25/03/2025	1300/0900	**	US	FHFA Home Price Index
25/03/2025	1300/0900	**	US	FHFA Home Price Index
25/03/2025	1305/0905		US	New York Fed's John Williams
25/03/2025	1400/1500	**	BE	BNB Business Confidence
25/03/2025	1400/1000	***	US	New Home Sales
25/03/2025	1400/1000	***	US	Conference Board Consumer Confidence
25/03/2025	1400/1000	**	US	Richmond Fed Survey
25/03/2025	1700/1300	*	US	US Treasury Auction Result for 2 Year Note
26/03/2025	0030/1130	***	AU	CPI Inflation Monthly