EXECUTIVE SUMMARY
US TSYS: Equity Rout Sparks Safe Haven Rally
The short-end led a Treasury rally Monday, mirroring a sharp drop in equities.
NEWS
US (MNI): U.S. consumers' uncertainty about inflation rose in February as median inflation expectations rose a tenth to 3.1% at the year-ahead horizon and were unchanged at the three-year-ahead and five-year-ahead horizons at 3.0%, according to a monthly New York Fed survey. Survey respondents' uncertainty regarding future inflation outcomes increased at all three horizons. Median home price growth expectations increased by 0.1ppt to 3.3% and year-ahead commodity price expectations increased for all commodities. Median expected price growth for gas increased by 1.1ppts to 3.7%, and 0.5ppt for food to 5.1%, its highest level since May 2024.
US/CHINA (WSJ): Washington and Beijing have begun discussions about a potential "birthday summit" in June in the U.S. between President Trump and Chinese leader Xi Jinping, according to people familiar with the matter. The discussions, which the people say are in the early stages, come as the Trump administration is ramping up tariff and other trade measures against China. This strategy aims to build leverage for negotiations with Beijing.
CANADA (MNI): Incoming Canadian Prime Minister Mark Carney has a clear mandate to stand on his credentials as former BOC and BOE Governor to take a tough stand against Donald Trump's tariffs while being cautious about further deficit outlays to protect the economy, cabinet ministers told MNI. "We need to be able to fight back,” Patty Hajdu, the minister in charge of economic development in the timber and mineral region of Northern Ontario, told MNI at the Liberal leadership convention Sunday. “We are getting a new leader precisely when we need to.”
BANK OF CANADA (MNI BOC WATCH): Canada's central bank is seen lowering interest rates for a seventh consecutive meeting Wednesday as U.S. tariff hikes damage exports and investment, overwhelming domestic momentum from past cuts. Eighteen economists surveyed by MNI see a quarter-point cut to 2.75% in the decision due at 9:45am EST, well ahead of the four who expect a pause. Several shops switched their call to a reduction in the last week as Donald Trump said he intends to set a 25% tariff on most imports from Canada in coming weeks.
GERMANY (MNI POLITICAL RISK): The announcement from the environmentalist Greens that they do not support plans from the centre-right Christian Democratic Union (CDU) and the centre-left Social Democrats for a multi-billion euro infrastructure fund and the proposed loosening of the federal debt brake to allow for greater defence spending could pose a significant threat to the incoming gov'ts plans to bolster national and European security and upgrade Germany's crumbling public infrastructure network. The Greens, which are set to sit in opposition in the new Bundestag, have said that they oppose the plans and accuse the CDU and SPD of looking to use the funds as a "treasure chest" to enact their election promises. Outgoing Vice Chancellor Robert Habeck, who ran as the Greens' chancellor candidate in the February federal election, called his party's stance 'logical', and accused the CDU and SPD of acting "as if there were no tomorrow. They don't care about the future, climate protection, or intergenerational justice, but only about election gifts for their clientele."
EU (MNI BRIEF): Brussels is sticking with its proposal for a four-year time-limited exemption for defence spending from EU deficit and limits despite a German push for more time, a Commission spokesperson said Monday. "The reason why is because it's incredibly important to combine fiscal leeway in a responsible fashion with fiscal discipline," Balazs Ujvari said, adding it is "the fundamental reason why we are focused on a four-year period."
CHINA(MNI INTERVIEW): The island province of Hainan plans to launch China's largest free-trade port this year despite rising U.S. trade tensions, with officials expecting the island’s green development credentials will attract European companies, a senior provincial official told MNI on the side lines of this year’s National People’s Congress.
OVERNIGHT DATA
US DATA: NY Fed Survey Shows Consumer Inflation Expectations Edging Up
The NY Fed's February Survey of Consumer Expectations showed a modest but noteworthy uptick in inflation expectations through a 3-year horizon, with medium/longer-term expectations overall steady.
MARKETS SNAPSHOT
Below gives key levels of markets in afternoon NY trade:
- DJIA down 794.71 points (-1.86%) at 41978.22
- S&P E-Mini Future down 141.5 points (-2.45%) at 5630.25
- Nasdaq down 669.4 points (-3.7%) at 17507.76
- US 10-Yr yield is down 7.9 bps at 4.2226%
- US Jun 10-Yr futures (TY) are up 21.5/32 at 111-8
- EURUSD down 0.0008 (-0.07%) at 1.0826
- USDJPY down 0.61 (-0.41%) at 147.41
- WTI Crude Oil (front-month) down $1.02 (-1.52%) at $66.02
- Gold is down $20.13 (-0.69%) at $2889.71
Prior European bourses closing levels:
- EuroStoxx 50 down 81.43 points (-1.49%) at 5386.98
- FTSE 100 down 79.66 points (-0.92%) at 8600.22
- German DAX down 387.99 points (-1.69%) at 22620.95
- French CAC 40 down 73.2 points (-0.9%) at 8047.6
US TREASURY FUTURES CLOSE
Current futures levels:
Jun 2-Yr futures (TU) up 6/32 at 103-20.875 (L: 103-15.5 / H: 103-22.5)
Jun 5-Yr futures (FV) up 15.25/32 at 108-4.25 (L: 107-23.8 / H: 108-8)
Jun 10-Yr futures (TY) up 21.5/32 at 111-08 (L: 110-22.5 / H: 111-13.5)
Jun 30-Yr futures (US) up 35/32 at 117-24 (L: 116-29 / H: 118-07)
Jun Ultra futures (WN) up 41/32 at 123-11 (L: 122-12 / H: 124-03)
US 10YR FUTURE TECHS: (M5) Trend Structure Remains Bullish
The trend condition in Treasury futures is still bullish, confirming the slippage off last week’s highs as corrective. The contract has recently pierced resistance at 111-22+, the Dec 3 ‘24 high. A clear breach of this level would strengthen a bullish theme and open 112-02 and 112-13, Fibonacci projection points. Note that the daily trend condition is overbought, a pullback has allowed the overbought set-up to unwind. Firm support is at 110-00, the Feb 7 high.
STIR: End-2025 Implied Fed Rates Set For 4+ Month Low Close
Futures markets have added about a half a cumulative 25bp rate cut to the Fed's easing path through the end of the year as equities are set to post their worst session in over 2 years.
Meeting | Current FF Implieds (%), LH | Cumulative Change From Current Rate (bp) | Incremental Chg (bp) | Prior Session (Mar 07) | Chg Since Then (bp) |
Mar 19 2025 | 4.32 | -1.2 | -1.2 | 4.32 | -0.5 |
May 07 2025 | 4.20 | -13.5 | -12.3 | 4.23 | -3.7 |
Jun 18 2025 | 4.00 | -33.1 | -19.6 | 4.08 | -7.6 |
Jul 30 2025 | 3.88 | -45.5 | -12.4 | 3.96 | -8.3 |
Sep 17 2025 | 3.71 | -62.4 | -16.9 | 3.80 | -9.8 |
Oct 29 2025 | 3.61 | -71.8 | -9.4 | 3.72 | -11.1 |
Dec 10 2025 | 3.50 | -82.6 | -9.8 | 3.63 | -11.2 |
Jan 28 2026 | 3.48 | -85.3 | -3.7 | 3.60 | -12.1 |
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
US TSYS/OVERNIGHT REPO: SOFR Steady In Range, Could Drift Lower
Secured rates softened slightly Friday, with SOFR dipping 1bp to 4.34% per NY Fed data.
REPO REFERENCE RATES (rate, change from prev. day, volume):
* Secured Overnight Financing Rate (SOFR): 4.34%, -0.01%, $2477B
* Broad General Collateral Rate (BGCR): 4.33%, -0.01%, $959B
* Tri-Party General Collateral Rate (TGCR): 4.33%, -0.01%, $940B
New York Fed EFFR for prior session (rate, chg from prev day):
* Daily Effective Fed Funds Rate: 4.33%, no change, volume: $110B
* Daily Overnight Bank Funding Rate: 4.33%, no change, volume: $284B
US TSYS/OVERNIGHT REPO: ON RRP Takeup Remains Close To 2025 Average
Takeup of the Fed's Overnight Reverse Repo facility fell $7.3B to $129.1B Monday, slightly more than reversing Friday's $7B rise.
SOFR FIX - Source BBG/CME | ||
1M | 4.32537 | 0.00316 |
3M | 4.29875 | 0.00639 |
6M | 4.18496 | 0.00129 |
12M | 3.99367 | -0.00566 |
US SOFR/TREASURY OPTION SUMMARY
Monday's US rates/bond options flow included:
BONDS: EGBs-GILTS CASH CLOSE: Bunds Outperform As Fiscal Uncertainty Lingers
Core European curves twist steepened Monday, with short-end instruments strengthening to start the week.
Closing Yields / 10-Yr EGB Spreads To Germany
FOREX: CAD/JPY Slippage Follows Equities Lower Still
DATA/EVENTS CALENDAR
Date | GMT/Local | Impact | Country | Event |
11/03/2025 | 2330/0830 | ** | ![]() | Household spending |
11/03/2025 | 2350/0850 | *** | ![]() | GDP |
11/03/2025 | 0001/0001 | * | ![]() | BRC-KPMG Shop Sales Monitor |
11/03/2025 | 1000/0600 | ** | ![]() | NFIB Small Business Optimism Index |
11/03/2025 | - | *** | ![]() | New Loans |
11/03/2025 | - | *** | ![]() | Money Supply |
11/03/2025 | - | *** | ![]() | Social Financing |
11/03/2025 | 1255/0855 | ** | ![]() | Redbook Retail Sales Index |
11/03/2025 | 1400/1000 | *** | ![]() | JOLTS jobs opening level |
11/03/2025 | 1400/1000 | *** | ![]() | JOLTS quits Rate |
11/03/2025 | 1600/1200 | *** | ![]() | USDA Crop Estimates - WASDE |
11/03/2025 | 1700/1300 | *** | ![]() | US Note 03 Year Treasury Auction Result |
12/03/2025 | 0001/0001 | * | ![]() | RICS House Prices |
12/03/2025 | 0730/0730 | ![]() | DMO propose calendar for first 3 weeks of FY25/26 | |
12/03/2025 | 0845/0945 | ![]() | Lagarde at "ECB and Its Watchers" conference Frankfurt | |
12/03/2025 | 1000/1000 | ** | ![]() | Gilt Outright Auction Result |
12/03/2025 | 1100/0700 | ** | ![]() | MBA Weekly Applications Index |
12/03/2025 | 1100/1200 | ![]() | ECB Wage Tracker | |
12/03/2025 | 1230/0830 | *** | ![]() | CPI |
12/03/2025 | 1345/0945 | *** | ![]() | Bank of Canada Policy Decision |
12/03/2025 | 1430/1030 | ** | ![]() | DOE Weekly Crude Oil Stocks |
12/03/2025 | 1515/1615 | ![]() | Lane at "ECB and Its Watchers" conference Frankfurt | |
12/03/2025 | 1700/1300 | ** | ![]() | US Note 10 Year Treasury Auction Result |
12/03/2025 | 1800/1400 | ** | ![]() | Treasury Budget |