MNI ASIA OPEN: Projected Rate Cut Pricing Continues to Ebb

EXECUTIVE SUMMARY

• MNI US: White House Publishes Fact Sheet On $1.2T Qatar Deal
• MNI FED: VC Jefferson Eyes Higher Risks To Both Sides Of Mandate, But No Rush To Cut
• MNI US: House Ways And Means Committee Approves Republican Tax Bill
• MNI MACRO ANALYSIS: US Investment Pledges Under Trump In Context

US

MNI FED: VC Jefferson Eyes Higher Risks To Both Sides Of Mandate, But No Rush To Cut

Fed Vice Chair Jefferson (permanent FOMC voter) provides a fairly even-handed outlook for the economy with his views appearing to correspond to those of the center of the Committee. He doesn't exactly repeat the language he's employed in recent months of being in "no need to be in a hurry" to cut rates, but the overall tone in his latest speech is consistent with a wait-and-see attitude on hard data and open-mindedness on whether tariffs will be persistently inflationary. Overall, he thinks uncertainty is likely to prevail for "some time".

• He continues describes the current level of rates as "moderately restrictive" (Chair Powell reiterated last week that policy was modestly or moderately restrictive, with Gov Kugler Monday also using the term "restrictive"), and repeats what colleagues have described as policy being "well positioned" to respond to developments: "Over the past several meetings, the rate has been held at what I view as a moderately restrictive level. I view the current stance of policy as well positioned to respond to developments that may arise."

NEWS

MNI US: White House Publishes Fact Sheet On $1.2T Qatar Deal

The White House has published a fact sheet claiming that US President Donald Trump has signed an "agreement with Qatar to generate an economic exchange worth at least $1.2 trillion." The announcement is the second major investment deal of Trump's Middle East trip, following a deal with Saudi Arabia yesterday worth $600B, per the White House. The White House notes that the Qatar agreement includes separate deals, "totaling more than $243.5 billion between the United States and Qatar, including an historic sale of Boeing aircraft and GE Aerospace engines to Qatar Airways."

MNI MACRO ANALYSIS: US Investment Pledges Under Trump In Context

The magnitude of investment in the US under the second Trump administration has been a point of contention in US politics. The following helps quantify the amounts seen, which we estimate to be a max case of $0.85trn per year through the presidential term. That’s worth 2.9% of latest annualized GDP which compares with non-residential investment worth 13.8% GDP in 2024 with a harder outstanding question of to what extent the pledged amounts from US-based investments were already planned. The below doesn’t include the just announced $1.2trn “economic exchange” with Qatar which looks particularly light on investments judging by the White House statement.  

MNI MACRO ANALYSIS: US Investment Pledges Under Trump In Context

For context, the flow of total investment in the US summed to $4.0trn in 2024 (from standard national accounts), of which $0.9trn was in structures, $1.5trn in equipment and $1.6tn in IP. That total was worth 13.8% GDP in 2024, close to the high end for previous cycles having rarely exceeded and last higher with the Dotcom bubble, peaking at 15% GDP in 2000.  

MNI TARIFFS: Fox-US Nears Trade Deals w/ Japan & South Korea

Charles Gasparino at Fox Business posts on X: "Trade-tariff deals with Japan and South Korea said to be “close,” according to me Wall Street sources close to the White House. Timing unclear. India deal as well though it has been throttled by the tensions with Pakistan."

MNI US: House Ways And Means Committee Approves Republican Tax Bill

The House Ways and Means Committee has approved the Republican tax bill in a 26-19 vote, along party lines, following a 17-hour markup. The other two crucial committee markups - Agriculture and Energy and Commerce - are set to resume today with safety net programmes - Medicaid (E&C) and SNAP (Ag.) - the focus of debate. Punchbowl reports that the final Ways and Means markup failed to resolve the dispute between blue-state Republicans and GOP leadership over the cap on State and Local Tax deductions (SALT).

US TSYS

MNI US TSYS: Projected Rate Cut Pricing Continues to Cool

• Treasuries look to finish near late Wednesday session lows, curves mixed (2s10s +1.654 at 47.722; 5s30s -.065 at 80.592) as 10s retreated to the lowest level in four weeks.
• Jun'25 10Y futures trade 109-21 (-10), session lows strengthens a bearish theme and exposes a key support at 109-08, the Apr 24 low and a bear trigger.
• Projected rate cut pricing steady in the near term while longer dates retreat vs. this morning levels (*) as follows: Jun'25 steady at -2.1bp, Jul'25 steady at -9.8bp, Sep'25 at -22.8bp (-24.7bp), Oct'25 at -34.8bp (-37.3bp), Dec'25 at -49.6bp (-52.9bp).
• No obvious headline or Block trade driver for the decline, it appeared markets were gearing up for higher inflation signals from tomorrow's heavy round of economic data: Retail Sales, PPI, Weekly Claims, Industrial Production and Capacity Utilization.
• Fed VC Jefferson continues describes the current level of rates as "moderately restrictive" (Chair Powell reiterated last week that policy was modestly or moderately restrictive, with Gov Kugler Monday also using the term "restrictive").
• Stocks trade near steady to mixed after the bell, the tech heavy Nasdaq outperforming as chip stocks outperformed for the second consecutive session.
• Cross Asset roundup: Bbg US$ index gradually recovered from early morning lows (BBDXY +1.03 at 1232.32 vs. 1224.24 low); broad decline for Gold to 3177.75 (-72.26); crude lower (WTI -.83 at 62.84.)

OVERNIGHT DATA

MNI US DATA: A Tentative Pause In Tighter Mortgage Lending Standards

MBA composite mortgage applications increased 1.1% last week (sa) to essentially hold steady after a noisy period on swings in mortgage rates. Spreads to swap rates have stopped climbing although mortgage rates look set for a further increase ahead. Overall applications stand at 53% of 2019 levels, close to the 51.5% in late March ahead of tariff announcements that sparked large gyrations in rates,

• That equates to 64% vs 61% for new purchase applications and 41% vs 41% for refis.
• The 30Y conforming rate ticked up 2bp last week to 6.86% despite an 11bp increase in the average 10Y swap rate over the week.
• It sees the mortgage rate to swap spread tighten for the first time last March, to 306bp from 315bp at what had been the widest since Feb 2024.
• That could mark a peak in what has been an additional 30-35bp tightening in lending standards since April but is just one week of data.
• Further mortgage rate increases are likely ahead with the 10Y swap rate currently trading 13bp higher than last week’s average. 

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 82.38 points (-0.2%) at 42057.94
S&P E-Mini Future up 4.75 points (0.08%) at 5909.5
Nasdaq up 133.3 points (0.7%) at 19143.74
US 10-Yr yield is up 7.1 bps at 4.5363%
US Jun 10-Yr futures are down 9.5/32 at 109-21.5
EURUSD down 0.0018 (-0.16%) at 1.1167
USDJPY down 0.62 (-0.42%) at 146.86
WTI Crude Oil (front-month) down $0.82 (-1.29%) at $62.85
Gold is down $68.92 (-2.12%) at $3181.39

European bourses closing levels:
EuroStoxx 50 down 12.77 points (-0.24%) at 5403.44
FTSE 100 down 17.91 points (-0.21%) at 8585.01
German DAX down 111.55 points (-0.47%) at 23527.01
French CAC 40 down 37.04 points (-0.47%) at 7836.79

US TREASURY FUTURES CLOSE

3M10Y +6.149, 13.903 (L: 3.649 / H: 14.301)
2Y10Y +1.643, 47.711 (L: 45.014 / H: 48.211)
2Y30Y +1.18, 91.355 (L: 89.108 / H: 93.001)
5Y30Y -0.419, 80.238 (L: 79.927 / H: 83.155)
Current futures levels:
Jun 2-Yr futures down 2.75/32 at 103-6.5 (L: 103-06.25 / H: 103-11)
Jun 5-Yr futures down 6.75/32 at 107-9 (L: 107-08.25 / H: 107-22) 
Jun 10-Yr futures down 9.5/32 at 109-21.5 (L: 109-20 / H: 110-09.5)
Jun 30-Yr futures down 14/32 at 112-8 (L: 112-06 / H: 113-11)
Jun Ultra futures down 19/32 at 115-14 (L: 115-12 / H: 116-28)

MNI US 10YR FUTURE TECHS: (M5) Bear Mode Condition

• RES 4: 112-20+ High May 1 and a bull trigger 
• RES 3: 112-01+ High May 2 
• RES 2: 111-22   High May 7 and a key near-term resistance
• RES 1: 111-01   20-day EMA
• PRICE:‌‌ 109-28+ @ 16:04 BST May 14
• SUP 1: 109-21   Low May 14
• SUP 2: 109-08   Low Apr 11 and key support
• SUP 3: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
• SUP 4: 108-21   Low Feb 19  

Treasury futures extended a softer tone following recent weakness. Support at 110-01+, 76.4% of the Apr 11 - May 1 bull leg, has been cleared. The breach strengthens a bearish theme and exposes a key support at 109-08, the Apr 24 low and a bear trigger. Key near-term resistance has been defined at 111-22, the May 7 high. A move above this level is required to signal a potential reversal.

SOFR FUTURES CLOSE

Jun 25 steady00 at 95.70
Sep 25 -0.025 at 95.905
Dec 25 -0.045 at 96.135
Mar 26 -0.060 at 96.310
Red Pack (Jun 26-Mar 27) -0.06 to -0.045
Green Pack (Jun 27-Mar 28) -0.05 to -0.045
Blue Pack (Jun 28-Mar 29) -0.05 to -0.045
Gold Pack (Jun 29-Mar 30) -0.05 to -0.045

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

• Secured Overnight Financing Rate (SOFR): 4.30% (+0.02), volume: $2.565T
• Broad General Collateral Rate (BGCR): 4.29% (+0.02), volume: $1.075T
• Tri-Party General Collateral Rate (TCR): 4.29% (+0.02), volume: $1.035T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $113B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $299B

FED Reverse Repo Operation

RRP usage climbs to $165.024B this afternoon from $144.214B yesterday, total number of counterparties at 36. 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.

MNI PIPELINE: Corporate Bond Update: $3.5B Woodside Finance 4Pt Launched

• Date $MM Issuer (Priced *, Launch #)
• 05/14 $3.5B #Woodside Finance 500M 3Y +105, $1.25B 5Y +130, $500M 7Y +145, $1.25B 10Y +160
• 05/14 $2.5B #Societe Generale $1B 4NC3 +120, $500M 4NC3 SOFR+142, $1B 6NC5 +135
• 05/14 $1.5B #Var Energi $750M each: 5Y +175, 10Y +205
• 05/14 $1B *AIIB WNG 10Y SOFR+61
• 05/14 $1B #Athene 30Y +172
• 05/14 $750M #Swedbank 5Y +93
• 05/14 $600M #Peachtree Corners 10Y +150
• 05/14 $Benchmark PSEG Power 5Y +110, 10Y +132
• 05/14 $500M Bombardier 8NC3
• 05/14 $500M Navient 7NC
• Expected Thursday:
• 05/15 $Benchmark JICA 5Y SOFR+67a

MNI BONDS: EGBs-GILTS CASH CLOSE: Weakness Persists

European yields rose Wednesday for the third session this week, with periphery EGB spreads narrowing.

• Core FI as well as periphery EGBs turned lower in the afternoon session after a mixed morning, despite relatively limited macro and news flow.
• US Treasuries set the tone, trading heavily throughout the day, while also potentially weighing was US President Trump's hint at potential news on the Russia-Ukraine conflict at some point today.
• BoE hawkish dissenter Mann pointed to a more resilient labour market than had been expected, along with concerns that inflation expectations have increased.
• Though Mann's commentary didn't move markets, Gilts underperformed on the day as the UK curve bear flattened; the German curve bear steepened.
• Periphery EGBs' early outperformance faded, with the 10-year BTP/Bund spread briefly moving below 100bp handle for the first time since September 2021, but closing above that mark. GGBs outperformed overall.
• Thursday's calendar includes preliminary Q1 UK GDP data.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.4bps at 1.94%, 5-Yr is up 2.4bps at 2.269%, 10-Yr is up 1.9bps at 2.699%, and 30-Yr is up 2bps at 3.146%.
• UK: The 2-Yr yield is up 4.4bps at 4.024%, 5-Yr is up 5.3bps at 4.184%, 10-Yr is up 4.3bps at 4.713%, and 30-Yr is up 4.2bps at 5.469%.
• Italian BTP spread down 0.6bps at 101.2bps /Greek down 2.3bps at 76.5bps 

MNI FOREX: USD Index Fully Reverses Monday Surge Before Stabilising

• Tuesday’s theme of a weakening US dollar extended today, helped lower by major equity benchmarks consolidating their recent strength and headlines surrounding trade talks providing an additional greenback headwind. The US and South Korea agreed to share a mutual understanding of the principles they hold for operating foreign exchange markets and to continue discussions on FX policy. The headlines spurred some USDKRW weakness, which then filtered through to a broader dollar move against G10 peers.
• Price action prompted the USD index to bridge the gap to last Friday’s close, notably eroding the entirety of the US/China tariff reprieve inspired rally to start the week.
• Hardest hit on Wednesday was USDJPY, which has traded in an impressive 206 pip range. The Japanese yen had been trading in a relatively weak manner amid the risk sentiment surge, however, discussions on FX policy being discussed between other administrations prompted some speculative yen appreciation. USDJPY traded as low as 145.61, and was down as much as 1.27% before stabilising. The move did fall just shy of last Friday’s close at 145.37. Amid a broader stabilisation for the greenback, USDJPY has pared roughly half the moves and stands around 146.50 as we approach the APAC crossover.
• Elsewhere, the likes of AUD and NZD are underperforming (down around 0.45%), although they still remain among the best performers in G10 this week. For AUDUSD, Monday’s move lower was considered corrective and another test above 0.6500 today reinforces the underlying bullish tone. Further strength would open 0.6528, the Nov 29 high, although there appears scope for a more protracted recovery towards the US election related highs at 0.6688.
• Thursday’s APAC session will be highlighted by the Australian unemployment report, before the focus turns to UK GDP. In the US, PPI and Retail Sales data are scheduled, which will be followed by Fed Chair Powell speaking.

THURSDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
15/05/2025	0600/0700	**	GB	UK Monthly GDP
15/05/2025	0600/0700	**	GB	Index of Services
15/05/2025	0600/0700	***	GB	Index of Production
15/05/2025	0600/0700	**	GB	Output in the Construction Industry
15/05/2025	0600/0700	***	GB	GDP First Estimate
15/05/2025	0600/0800	**	NO	Norway GDP
15/05/2025	0600/0700	**	GB	Trade Balance
15/05/2025	0645/0845	***	FR	HICP (f)
15/05/2025	0700/0900		CH	Flash GDP
15/05/2025	0700/0900		EU	ECB's Cipollone at Payments Forum
15/05/2025	0750/0950		EU	ECB's Elderson At Green Finance Conference
15/05/2025	0900/1100	**	EU	Industrial Production
15/05/2025	0900/1100	***	EU	GDP (p)
15/05/2025	1015/1215		EU	ECB's De Guindos At ISDA Meeting
15/05/2025	1130/1330		EU	ECB's Cipollone In Digital Currency Fireside Chat
15/05/2025	1215/0815	**	CA	CMHC Housing Starts
15/05/2025	1230/0830	***	US	Jobless Claims
15/05/2025	1230/0830	**	US	WASDE Weekly Import/Export
15/05/2025	1230/0830	**	CA	Monthly Survey of Manufacturing
15/05/2025	1230/0830	**	CA	Wholesale Trade
15/05/2025	1230/0830	***	US	Retail Sales
15/05/2025	1230/0830	***	US	PPI
15/05/2025	1230/0830	**	US	Empire State Manufacturing Survey
15/05/2025	1230/0830	**	US	Philadelphia Fed Manufacturing Index
15/05/2025	1240/0840		US	Fed Chair Jerome Powell
15/05/2025	1300/0900	*	CA	CREA Existing Home Sales
15/05/2025	1315/0915	***	US	Industrial Production
15/05/2025	1400/1000	*	US	Business Inventories
15/05/2025	1400/1000	**	US	NAHB Home Builder Index
15/05/2025	1400/1500		GB	BOE Dhingra At New Economics Foundation conference
15/05/2025	1430/1030	**	US	Natural Gas Stocks
15/05/2025	1530/1130	*	US	US Bill 08 Week Treasury Auction Result
15/05/2025	1530/1130	**	US	US Bill 04 Week Treasury Auction Result
15/05/2025	1800/1400	***	MX	Mexico Interest Rate
15/05/2025	1805/1405		US	Fed Governor Michael Barr
16/05/2025	2350/0850	***	JP	GDP
16/05/2025	0430/1330	**	JP	Industrial Production