MNI ASIA OPEN: Middle East Conflict Saps Rate Cut Guidance

EXECUTIVE SUMMARY

• MNI US: Pres Trump Social Media Post on Tanker Risk Insurance
• MNI FED: Minneapolis's Kashkari: Less Confidence On 2026 Rate Cut
• MNI EU: Foreign Ministers To Hold 5 March Call w/Gulf Counterparts
• WALL STREET JOURNAL - Trump Says Iran's Military Has Largely Been 'Knocked Out'
• MNI US DATA: Redbook Retail Sales Close February On A Solid Note

US

MNI FED: Minneapolis's Kashkari: Less Confidence On 2026 Rate Cut

The conflict in the Middle East and its impact on energy prices will possibly lead to a hawkish reassessment of rates by Minneapolis Fed President Kashkari (who is a 2026 FOMC voter). Kashkari told a Bloomberg event audience Tuesday that he felt like policy was in a pretty good place ahead of the Middle East conflict but ..."now, with the geopolitical events that we talked about, I just need to see. We need to get a lot more data."

MNI BRIEF: Fed's Bowman Calls For Liquidity Regulation Reform

Regulation that induce banks to set aside excessive liquidity reduces lending to businesses and forces the Federal Reserve to keep a large balance sheet, Fed Vice Chair of Supervision Michelle Bowman said Tuesday, in remarks previewing potential liquidity reforms later this year. 

MNI BRIEF: Fed’s Williams: Policy Will Return Inflation To 2%

Federal Reserve Bank of New York President John Williams said Tuesday risks to the central bank’s dual mandate goals are in better balance and interest rates are on hold until inflation declines.

MNI: Fed's Schmid Sees Risk Of Inflation From Overheating

The Federal Reserve cannot afford to be complacent on inflation when demand continues to run hot, Kansas City Fed President Jeffrey Schmid said Tuesday, adding AI and other supply-side factors aren't yet offsetting those pressures. 

NEWS

MNI US: Pres Trump Social Media Post on Tanker Risk Insurance

Trump on Truth Social: "Effective IMMEDIATELY, I have ordered the United States Development Finance Corporation (DFC) to provide, at a very reasonable price, political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf. This will be available to all Shipping Lines. If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible. No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD. The United States’ ECONOMIC and MILITARY MIGHT is the GREATEST ON EARTH — More actions to come. Thank you for your attention to this matter! President DONALD J. TRUMP"

BLOOMBERG - IDF: STRUCK COMPOUND WHERE IRAN DEVELOPS NUCLEAR CAPABILITIES

WALL STREET JOURNAL - Trump Says Iran's Military Has Largely Been 'Knocked Out' - President Trump said Iran's military has been largely neutralized, several days after U.S. strikes began. Regarding Iran, he said: "They have no navy, that's been knocked out. They have no air force, that's been knocked out. They have no air detection, that's been knocked out. Their radar has been knocked out...Just about everything's been knocked out."

MNI UK: PM Confirms Naval Deployment To Cyprus, Reiterates 'Defensive' Stance

PM Sir Keir Starmer posts on X: "The UK is fully committed to the security of Cyprus and British military personnel based there. We’re continuing our defensive operations and I've just spoken with the President of Cyprus to let him know that we are sending helicopters with counter drone capabilities and HMS Dragon is to be deployed to the region. We will always act in the interest of the UK and our allies." 

MNI EU: Foreign Ministers To Hold 5 March Call w/Gulf Counterparts

Reuters reports that EU foreign ministers are set to talk to counterparts from the Gulf Cooperation Council (GCC) in a videoconference on Thursday, 5 March, according to a source. There are some signs of division between EU member states on their reaction to the initial US/Israeli strikes and Iran's retaliation. Spain's PM Pedro Sanchez has been the only EU leader to overtly criticise the US/Israeli action, saying Madrid "rejects unilateral military action".

WALL STREET JOURNAL - Goldman Sachs Predicts AI Will Eventually Displace 6% of U.S. Workers

US TSYS

MNI US TSYS: Tanker Insurance Scheme Helps Improve Risk Sentiment

• Treasuries look to finish mildly weaker Tuesday, well off early morning lows as markets continue to revolve oil price & the US/Israel conflict with Iran. US President Donald Trump delivered wide-ranging remarks on Iran ahead of a bilateral meeting with German Chancellor Friedrich Merz earlier.
• Trump says the Iran operation is “going well,” claiming that Iran’s air force, navy, and air detection have all been “knocked out.” Later adds, “their missile count is going way down.” Trump appeared to walk back on Secretary of State Marco Rubio’s suggestion that an imminent Israeli attack on Iran compelled the US to strike the country. “If anything, I might have forced Israel's hand,” Trump says.
• Risk sentiment got a small jolt after Reuters headline reported that the US is "considering oil tanker insurance support to ease Mideast crude shipments".
• Late in session, Pres Trump posted on Truth Social: "Effective IMMEDIATELY, I have ordered the United States Development Finance Corporation (DFC) to provide, at a very reasonable price, political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf. This will be available to all Shipping Lines. If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible.
• Tsys mildly weaker after the bell, TYM6 at 113-00 (-2.5) after wider session range: 112-16.5 low / 113-07.5 high; 10Y yield 4.0575% (+.0230) vs. 4.1151% high.
• Stocks are still weaker but off lows, SPX emini -0.79% in late trade. Discount retail shares outperformed in late trade with Target and Best Buy both up approximately 7%. Financial Services and select IT services shares contributed to the second half rebound.
• Geopol risk dynamics have fostered an extension of US dollar strength, prompting the USD index to briefly rise more than 2% to print fresh three-month highs at 99.68.
• Look ahead: Wednesday Data Calendar: FEB ADP, S&P Services PMI, ISM, Beige Book.

OVERNIGHT DATA

MNI US DATA: Redbook Retail Sales Close February On A Solid Note

Retail sales picked up in the last week of February per the Johnson Redbook index, to 7.0% Y/Y from 6.7% prior. That kept sales elevated at 6.8% for February as a whole, which would mark the joint-highest rate since the end of  2022. Johnson Redbook's initial target for March is  for 6.7% Y/Y growth.

• January Census Bureau retail sales is out Friday; Redbook pointed to a 6.3% Y/Y increase but Chicago Fed CARTS' final estimate of -0.1% M/M (implying roughly 3.6% Y/Y ex-auto retail sales) pointed to a much less solid outcome. Overall, Redbook data have been much more positive than the "official" Census Bureau series over recent months, including a very divergent December.

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 395.6 points (-0.81%) at 48522.34
S&P E-Mini Future down 62.5 points (-0.91%) at 6828
Nasdaq down 233.8 points (-1%) at 22522.36
US 10-Yr yield is up 2.5 bps at 4.0594%
US Jun 10-Yr futures are down 2.5/32 at 113-0
EURUSD down 0.0071 (-0.61%) at 1.1617
USDJPY up 0.22 (0.14%) at 157.61
WTI Crude Oil (front-month) up $2.42 (3.4%) at $73.66
Gold is down $212.12 (-3.99%) at $5109.42

European bourses closing levels:
EuroStoxx 50 down 215.2 points (-3.59%) at 5771.73
FTSE 100 down 295.98 points (-2.75%) at 10484.13
German DAX down 847.35 points (-3.44%) at 23790.65
French CAC 40 down 290.48 points (-3.46%) at 8103.84

US TREASURY FUTURES CLOSE

Curve update:
3M10Y +1.877, 37.542 (L: 34.118 / H: 43.152)
2Y10Y -0.177, 55.551 (L: 50.309 / H: 57.344)
2Y30Y +0.049, 120.292 (L: 111.41 / H: 122.745)
5Y30Y +0.267, 107.029 (L: 99.724 / H: 108.765)
Current futures levels:
Jun 2-Yr futures down 1.125/32 at 104-12 (L: 104-05.875 / H: 104-14.125)
Jun 5-Yr futures down 1.75/32 at 109-18 (L: 109-05.75 / H: 109-22.75)
Jun 10-Yr futures down 2.5/32 at 113-0 (L: 112-16.5 / H: 113-07.5)
Jun 30-Yr futures down 7/32 at 117-7 (L: 116-17 / H: 117-21)
Jun Ultra futures down 5/32 at 120-6 (L: 119-13 / H: 120-22)

MNI US 10YR FUTURE TECHS: (M6) Reversal Extends

• RES 4: 114-19+ 2.236 projection of the Feb 19 - 23 - 25 price swing
• RES 3: 114-14   2.000 projection of the Feb 19 - 23 - 25 price swing
• RES 2: 114-08+ 1.764 projection of the Feb 19 - 23 - 25 price swing
• RES 1: 113-13+/114-06 Low Feb 27 / High Mar 2 and key resistance
• PRICE:‌‌ 112-29+ @ 11:20 ET Mar 3
• SUP 1: 112-18+ Intraday low
• SUP 2: 112-15+ 50-day EMA   
• SUP 3: 112-11   61.8% retracement of the Jan 20 - Mar 2 bull leg
• SUP 4: 111-03+ Low Feb 12

Treasuries have reversed sharply lower today and the contract remains soft. The move down is allowing a recent overbought condition to unwind. Price has traded through 112-25, the 20-day EMA. The clear break of this average exposes the 50-day EMA, at 112-15+. Note that a clear breach of the 50-day average would highlight a stronger reversal threat. Key resistance is at 114-06, the Mar 2 high.

SOFR FUTURES CLOSE

Current White pack (Mar 26-Dec 26):
Mar 26 steady00 at 96.338
Jun 26 -0.005 at 96.475
Sep 26 -0.025 at 96.655
Dec 26 -0.035 at 96.780
Red Pack (Mar 27-Dec 27) -0.03 to -0.005
Green Pack (Mar 28-Dec 28) -0.005 to steady
Blue Pack (Mar 29-Dec 29) steady
Gold Pack (Mar 30-Dec 30) steady

REFERENCE RATES
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US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 3.71% (+0.03), volume: $3.404T
• Broad General Collateral Rate (BGCR): 3.69% (+0.03), volume: $1.380T
• Tri-Party General Collateral Rate (TCR): 3.69% (+0.03), volume: $1.353T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 3.64% (+0.00), volume: $97B
• Daily Overnight Bank Funding Rate: 3.64% (+0.01), volume: $169B

FED Reverse Repo Operation

RRP usage inches up to $1.203B with 5 counterparties this afternoon vs. $0.627B Monday. Compares to last year's highest excess liquidity measure: $460.731B on June 30.

MNI PIPELINE: Corporate Bond Update: Norinchukin Bank 2Pt Upsized to $1B

• Date $MM Issuer (Priced *, Launch #)
• 03/03 $1B #Norinchukin Bank $500M 5Y +105, $500M 10Y +130
• 03/03 $1B Federal Home Loan 2Y +3.5a
• 03/03 $Benchmark UENO Bank 5Y 7%a
• 03/03 $2.15B Applied Digital 5NC2 investor calls

MNI BONDS: EGBs-GILTS CASH CLOSE: Short End Remains Under Pressure On Geopolitics

European bonds sold off for a second day on the Middle East conflict.

• A further surge in energy prices saw European front-end instruments sell off sharply in early trade once again, with 2Y yields up 15-20bp in the UK and Germany at one point.
• Gilts also saw a bit of additional pressure after the UK's Spring Statement brought a slightly higher-than-expected issuance target.
• Yields came off session highs going into the cash close, on a Reuters report that the US was considering supporting insurance for oil tankers in the Mideast, which helped oil prices pull back.
• While intraday losses were pared, on the day the German curve bear flattened, with the UK's seeing broad weakness and Gilts underperforming Bunds overall.
• Periphery/semi-core EGB spreads widened sharply as equities declined, with BTPs underperforming.
• Wednesday's agenda includes final PMIs and multiple ECB speakers including Villeroy and Muller.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 6.6bps at 2.155%, 5-Yr is up 5.2bps at 2.379%, 10-Yr is up 4bps at 2.752%, and 30-Yr is up 2.8bps at 3.386%.
• UK: The 2-Yr yield is up 9.6bps at 3.734%, 5-Yr is up 8.6bps at 3.961%, 10-Yr is up 9.7bps at 4.471%, and 30-Yr is up 9bps at 5.174%.
• Italian BTP spread up 5.9bps at 70.3bps / French OAT up 5.5bps at 64.1bps

MNI FOREX: USD Rally Gains Momentum as Risk Sentiment Further Wanes

• The risk selloff gathered pace on Tuesday, as the ongoing conflict in the Middle East has further boosted oil prices and significantly weighed on equities & precious metals. These dynamics have fostered an extension of US dollar strength, prompting the USD index to briefly rise more than 2% to print fresh three-month highs at 99.68.
• While the dollar strength has been broad based, the likes of AUD, NZD and Scandinavian FX have been notable laggards in G10, while the EM FX basket has also suffered considerable losses.
• EURUSD plumbed new lows on the year below 1.1573 and feel to a session low of 1.1530 before stabilising. Moves this week have been exacerbated by a break of trendline support (drawn from the 2025 lows, bolstering the current bear cycle that remains in play for the pair. 1.1573 was considered a key support and so today’s close will be important for a bearish extension below 1.15.
• Despite the impressive intra-day weakness for AUD, the AUDUSD trend structure is unchanged, it remains bullish and for now, with today’s sell-off appearing corrective. Key support to monitor is around the 50-day EMA, at 0.6920. A clear break of the average would alter the picture.
• EM FX weakness remains pronounced on Tuesday, with high-beta currencies coming under pressure amid the stronger USD, surging energy prices, and renewed steepening in global yield curves. As noted earlier, the HUF is on track for its largest single-session decline in percentage terms since 2010, driven primarily by a roughly 25% jump in natural gas prices.
• Elsewhere, precious metals weakness has assisted the over 3% rally for USDZAR today. Today’s gains are also being amplified by the pair’s break above its 50-day EMA (16.2570) – a level it has not traded above since November last year. Positioning dynamics will likely be providing further headwinds for some other EM currencies – notably in LatAm, both MXN and BRL have declined over 2%, while CLP is down 3.2% as we approach the close.
• Australian GDP and China PMIs are scheduled on Wednesday, before Swiss CPI headlines the European calendar. In the US, ADP employment and ISM Services PMI are scheduled. 

WEDNESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
04/03/2026	0730/0830	***	CH	CPI
04/03/2026	0815/0915	**	ES	S&P Global Services & Composite PMI (f)
04/03/2026	0845/0945	**	IT	S&P Global Composite & Services PMI (f)
04/03/2026	0850/0950	**	FR	S&P Global Composite & Services PMI (f)
04/03/2026	0855/0955	**	DE	S&P Global Composite & Services PMI (f)
04/03/2026	0900/1000	**	EU	S&P Global Composite & Services PMI (f)
04/03/2026	0900/1000		IT	Unemployment
04/03/2026	0930/0930	**	GB	S&P Global Composite & Services PMI (Final)
04/03/2026	1000/1100	**	EU	EZ PPI
04/03/2026	1000/1100	**	EU	EZ Unemployment
04/03/2026	1000/1100	***	IT	GDP (f)
04/03/2026	1045/1145		EU	ECB Cipollone Panel at European Investment Bank Group Forum
04/03/2026	1200/0700	**	US	MBA Weekly Applications Index
04/03/2026	-		CN	Chinese People's Political Consultative Conference
04/03/2026	1330/1430		EU	ECB de Guindos Remarks at American Academy, Berlin
04/03/2026	1445/0945	***	US	S&P Global Composite & Services Index (final)
04/03/2026	1500/1000	***	US	ISM Non-Manufacturing Index
04/03/2026	1520/1020		CA	BOC Governor Macklem speech
04/03/2026	1530/1030	**	US	US DOE Petroleum Supply
04/03/2026	1530/1030	**	US	DOE Weekly Crude Oil Stocks
05/03/2026	0030/1130	**	AU	Trade Balance