MNI ASIA OPEN: Trade Progress Remains Opaque
EXECUTIVE SUMMARY
- MNI TARIFFS: Bessent Touts "Substantial Movement" In Trade Talks
- MNI EUR: Bessent Sees ECB Cutting To Lower Euro
- MNI TARIFFS: Trump Intimately Involved In 'Bespoke' Trade Deals
- MNI US TSYS/SUPPLY: Quarterly Borrowing Estimates Rise In Line With MNI Expectations
US
MNI BRIEF: US Boosts Q2 Borrowing Estimate To $514B, Q3 $554B
The U.S. Treasury on Monday increased its estimate for federal borrowing for the current quarter by USD391 billion to USD514 billion, while reiterating its previous assumption for cash balance at the end of June, assuming that Congress eventually raises or suspends the debt limit. The Treasury Department said in a statement Monday that it now estimates USD514 billion in net borrowing for April though June, up significantly from the USD123 billion it had penciled in back in February and above market expectations.
NEWS
MNI TARIFFS: Bessent Touts "Substantial Movement" In Trade Talks
US Treasury Secretary Scott Bessent has issued a statement on social media touting "substantive movement" towards trade deals with India, South Korea, and Japan. Bessent: "We are continuing to make substantive movement on negotiations with many of our trading partners. The negotiations with our Asian trading partners are going very well; the negotiations with the Republic of Korea have gone very well; [Vice President JD Vance's] negotiations with India went very well; and I think we've had some very substantial negotiations with our Japanese allies."
MNI EUR: Bessent Sees ECB Cutting To Lower Euro
US Tsy Sec Bessent has recently had an interview with CNBC, with more color to follow from our political risk team. One area touched upon was euro strength, although when factoring in comments from last week on its “substantial” appreciation, it seems unlikely to trigger any currency manipulation warnings. "*BESSENT: YOU WILL SEE ECB CUTTING RATES TO GET EURO BACK DOWN" - bbg
MNI TARIFFS: Trump Intimately Involved In 'Bespoke' Trade Deals - Bessent
Treasury Secretary Scott Bessent has told CNBC and Fox News that President Donald Trump is “intimately involved” in “bespoke” deals with 15-18 trading partners. Bessent added: “I would guess that India would be one of the first trade deals we would sign.” Bessent did little to offset confusion over communication between China and the US on trade, stressing that Beijing must reach out first: “Maybe they’ll call me one day.” Bessent said he is “not worried about empty shelves,” noting “we'll see elasticities, we'll see replacements” as US businesses prepare to receive the first shipments of steeply tariffed Chinese goods.
Bloomberg: IBM to Invest $150 Billion in America Over Next Five Years
IBM plans to invest $150 billion in America over next five years to bolster US-based tech innovation and manufacturing. Investment includes $30 billion in research & development with focus on advancing mainframe and quantum computer manufacturing.
MNI US TSYS: Near Late Highs, Curves Bull Steepening, Borrow Estimates Rising
- Treasuries look to finish near late session highs Monday, curves bull steepening (2s10s +4.412 at 52.737) after decent front end buying in 5s and 2s10s steepener blocks/crosses.
- Jun'25 10Y futures breach resistance at 111-25 (50.0% retracement of the Apr 7 - 11 bear leg) to 111-30.5 high (+14), focus on next resistance at 112-12 (61.8% retracement of the Apr 7 - 11 bear leg).
- Underlying bid as Dallas Fed's Texas Manufacturing Survey for April -- the weakest since the start of the Covid pandemic in 2020, as tariff uncertainty weighed heavily on manufacturers in the district while price pressures remained elevated.
- Meanwhile Treasury's latest borrowing / financing requirements estimates were slightly higher - but broadly in line with - MNI's estimates: $514B for the Apr-Jun quarter, and $554B for the Jul-Sep quarter.
- A lack of concrete details surrounding the US administration’s progress on trade deals has allowed the broader dollar weakening trend to resume, Bbg US$ index at 1219.81 (-6.24) after the bell.
OVERNIGHT DATA
MNI US TSYS/SUPPLY: Quarterly Borrowing Estimates Rise In Line With MNI Expectations
Treasury's latest borrowing / financing requirements estimates were slightly higher - but broadly in line with - MNI's estimates: $514B for the Apr-Jun quarter, and $554B for the Jul-Sep quarter (MNI had pencilled in $500B for each quarter).
- Financing needs are -$17B for Apr-Jun (MNI estimated -$14B) with $480B in Jul-Sep (MNI: $430B).
- The assumption that Treasury would maintain its end-quarter cash balance target of $850B proved correct.
- The Apr-Jun borrowing estimate was indeed raised significantly (by $391B) but this was entirely a function of the required cash raise as we discussed earlier today. As Treasury points out, "excluding the lower than assumed beginning-of-quarter cash balance, the current quarter borrowing estimate is $53 billion lower than announced in February.
MNI US TSYS/SUPPLY: Lower Ex-Cash Borrowing Requirement May Hint At Unch Guidance
We sense there may be a sense of disappointment in today's borrowing estimates given Treasury did not lower the quarter-end TGA cash targets, which had been expected by some. But the current quarter's borrowing requirements are - excluding the effect of TGA cash rebuild - actually $53B lower than estimated at the last refunding in February (doing the math: the borrowing requirement was revised up by $391B, but the cash increase was also revised up by $444B from zero, so if they didn't have to rebuild the TGA cash pile, the borrowing estimate would have been $53B lower).
- And Jan-March borrowing was $2B lower than had been expected back in February, again when excluding the impact of TGA cash building. And Treasury's press release takes note of both improvements.
- Taking those into account, some of the higher-end analyst estimates for borrowing in this quarter have proved too high, and at least Treasury has confirmed that it sees a slightly stronger fiscal situation in the current quarter - in line with what looks like a strong April tax take.
- That may tilt the balance on Wednesday to "no change" in the guidance that Treasury will keep nominal coupon auction sizes unchanged for “at least the next several quarters”, which would be a positive development for Treasuries.
- This shouldn't greatly change the narrative, but swap spreads have ticked slightly wider in Treasuries' favor in the aftermath of the release, potentially reflecting a bit of optimism heading into Wednesday's refunding announcement.
MNI US DATA: Texas Manufacturers Turn Even More Pessimistic In April On Tariffs
The Dallas Fed's Texas Manufacturing Survey for April was the weakest since the start of the Covid pandemic in 2020, as tariff uncertainty weighed heavily on manufacturers in the district while price pressures remained elevated. The headline general activity index printed -35.8 (vs -17.0 survey, and lowest since May 2020), was a 19.5 point drop from March and a 50 point drop since January. That being said, actual factory activity continued to rise, with the production index at 5.1, indicating "modest growth", though shipments went negative for the first time this year.
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA up 114.09 points (0.28%) at 40227.59
S&P E-Mini Future down 5 points (-0.09%) at 5545
Nasdaq down 16.8 points (-0.1%) at 17366.13
US 10-Yr yield is down 2.7 bps at 4.2082%
US Jun 10-Yr futures are up 13/32 at 111-29.5
EURUSD up 0.0055 (0.48%) at 1.142
USDJPY down 1.6 (-1.11%) at 142.07
WTI Crude Oil (front-month) down $1.11 (-1.76%) at $61.91
Gold is up $29.9 (0.9%) at $3349.37
European bourses closing levels:
EuroStoxx 50 up 16.37 points (0.32%) at 5170.49
FTSE 100 up 2.09 points (0.02%) at 8417.34
#VALUE!
French CAC 40 up 37.5 points (0.5%) at 7573.76
US TREASURY FUTURES CLOSE
3M10Y -1.88, -9.326 (L: -10.486 / H: -1.666)
2Y10Y +3.835, 52.16 (L: 46.905 / H: 53.315)
2Y30Y +4.864, 99.762 (L: 92.782 / H: 101.123)
5Y30Y +3.242, 87.33 (L: 81.511 / H: 87.921)
Current futures levels:
Jun 2-Yr futures up 4.5/32 at 103-30.5 (L: 103-24.62 / H: 103-31.125)
Jun 5-Yr futures up 10/32 at 108-30 (L: 108-16.5 / H: 108-30.75)
Jun 10-Yr futures up 13/32 at 111-29.5 (L: 111-10 / H: 111-30.5)
Jun 30-Yr futures up 19/32 at 116-13 (L: 115-14 / H: 116-17)
Jun Ultra futures up 1-01/32 at 121-2 (L: 119-19 / H: 121-04)
MNI US 10YR FUTURE TECHS: (M5) Corrective Cycle Remains In Play
- RES 4: 113-04 76.4% retracement of the Apr 7 - 11 bear leg
- RES 3: 112-12 61.8% retracement of the Apr 7 - 11 bear leg
- RES 2: 111-25 50.0% retracement of the Apr 7 - 11 bear leg
- RES 1: 111-22+ High Apr 25
- PRICE: 111-15+ @ 11:21 BST Apr 28
- SUP 1: 110-16+/109-08 Low Apr 22 / 11 and the bear trigger
- SUP 2: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
- SUP 3: 108-21 Low Feb 19
- SUP 4: 108-03+ Low Dec 12 ‘24 and a key support
Treasury futures are trading closer to their recent highs. Recent gains are considered corrective and resistance to watch is 111-25, 50.0% of the Apr 7 - 11 bear leg sell-off. Clearance of this level would undermine the bearish theme, and open 112.12, the 61.8% retracement point. On the downside, a resumption of weakness would refocus attention on 109-08, the Apr 11 low and the bear trigger. Clearance of this level would resume the downtrend.
SOFR FUTURES CLOSE
Jun 25 +0.010 at 95.895
Sep 25 +0.035 at 96.295
Dec 25 +0.065 at 96.605
Mar 26 +0.085 at 96.815
Red Pack (Jun 26-Mar 27) +0.10 to +0.105
Green Pack (Jun 27-Mar 28) +0.070 to +0.085
Blue Pack (Jun 28-Mar 29) +0.065 to +0.065
Gold Pack (Jun 29-Mar 30) +0.055 to +0.065
REFERENCE RATES (PRIOR SESSION)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.33% (+0.04), volume: $2.565T
- Broad General Collateral Rate (BGCR): 4.32% (+0.04), volume: $1.055T
- Tri-Party General Collateral Rate (TCR): 4.32% (+0.04), volume: $1.023T
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $112B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $298B
FED Reverse Repo Operation
RRP usage rebounds to $148.649B this afternoon from $94.021B last 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 38.
MNI PIPELINE: Corporate Bond Update
$17.025B to price Monday:
- Date $MM Issuer (Priced *, Launch #)
- 04/28 $5B #Alphabet $750M 5Y +32, $1.25B 10Y +47, $1.5B 30Y +62, $1.5B 40Y +70
- 04/28 $2.5B #Philip Morris $750M 3Y +58, $400M 3Y SOFR+83, $750M 5Y +75, $600M 10Y +93
- 04/28 $2B #Keurig Dr Pepper $500M each: 1.5Y SOFR+58, 3Y +68, 5Y +83, 10Y +98
- 04/28 $1.25B #Procter & Gamble $700M 5Y +28, $550M 10Y +43
- 04/28 $1.125B #Consumer Energy $500M +5Y +67, $625M 10Y +87
- 04/28 $1.1B #Northern States Power $600M 10Y +83, $500M 30Y +98
- 04/28 $1.1B #CBRE Services $600M 5Y +120, $500M 10Y +135
- 04/28 $750M #General Dynamics 10Y +78
- 04/28 $700M *Posco Holdings $400M 5Y +137.5, $300M 10Y +157.5
- 04/28 $700M *Kookmin Bank $400M 3Y +77.5, $300M 5Y +82.5
- 04/28 $500M #Colgate Palmolive 5Y +38
- 04/28 $500M #DR Horton +5Y +103
- 04/28 $Benchmark Goldman Sachs investor calls
MNI BONDS: EGBs-GILTS CASH CLOSE: Bear Steepening Ahead Of Euro Inflation
European yields backed up slightly Monday, reversing the modest declines seen Friday.
- Various factors weighed on core FI in a session that was devoid of market-moving data (Spanish Q1 unemployment saw a notable uptick).
- These factors included slightly more positive risk-on tone on US tariffs coming in from the weekend, and reports Monday morning of a Ukraine proposal for a full 30-day ceasefire with Russia.
- While a widespread Spanish and Portuguese energy blackout made headlines, the market impact was limited.
- The German and UK curves both bear steepened, though Schatz/Bobl notably underperformed their UK counterparts.
- Periphery/semi-core EGBs were mixed and little changed on the day.
- The April Eurozone flash inflation round starts Tuesday with Spain - MNI's preview is here.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 2.3bps at 1.742%, 5-Yr is up 4.2bps at 2.059%, 10-Yr is up 5.2bps at 2.521%, and 30-Yr is up 5.8bps at 2.947%.
- UK: The 2-Yr yield is up 0.8bps at 3.866%, 5-Yr is up 1.2bps at 3.986%, 10-Yr is up 3bps at 4.509%, and 30-Yr is up 5.1bps at 5.27%.
- Italian BTP spread up 0.3bps at 110.8bps / Spanish spread up 0.6bps at 66bps
MNI FOREX: JPY, CHF and GBP Outperform as Greenback Loses Ground
- The dollar has traded on the backfoot Monday amid a bull steepening move for treasuries and renewed modest pressure on major US equity benchmarks. This has particularly benefitted the Japanese yen and Swiss Franc, while GBP is also among the best performers in G10. A lack of concrete details surrounding the US administration’s progress on trade deals has allowed the broader dollar weakening trend to resume, although the plethora of data this week and month-end could provide obstacles to short-term sentiment.
- For USDJPY, tests of the 144 handle have capped the topside for now, and moving average studies are in a bear-mode position highlighting a dominant downtrend. As such, USDJPY has been edging steadily lower across Monday, printing fresh session lows around 142.40 as we approach the APAC crossover. Key short-term technical parameters are seen at 144.47, the 20-day EMA, and 139.89, last week’s low.
- USDCHF held the prior breakdown point well last week around 0.8333 and late weakness towards the 0.82 mark also appears to be confirming last week’s pullback as corrective.
- GBPUSD is notably back above 1.34 and spot trades in close proximity to the 1.3424 bull trigger (as well as 1.3434, the Sept'24 high). This is a key medium-term area for cable and it will be eagerly monitored in coming sessions. Further strength would signal scope for a move towards 1.3500 Round number resistance and 1.3550, the Feb 24 ’22 high.
- Price action has prompted EURGBP to trade through a major support area we flagged last week at 0.8520-31 - marking both the early April pullback low as well as the 50% retracement of the tariff-inspired upleg off 0.8323.
- Downward pressure on equities has relatively hindered the progress for the likes of EUR, AUD and NZD. However, EURUSD is pushing back above 1.14 in late trade and AUDUSD is within 20 pips of a cluster of highs from last week around 0.6435, which represent four-month highs for the pair.
- Eurozone inflation data kicks off Tuesday, and in the US, JOLTS and consumer confidence data are highlights.
TUESDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 29/04/2025 | 0600/0800 | * |  DE | GFK Consumer Climate |
| 29/04/2025 | 0600/0800 | ** |  SE | Private Sector Production m/m |
| 29/04/2025 | 0600/0800 | SE | Flash Quarterly GDP Indicator | |
| 29/04/2025 | 0600/0800 | ** | SE | Retail Sales |
| 29/04/2025 | 0700/0900 | ** | SE | Economic Tendency Indicator |
| 29/04/2025 | 0700/0900 | *** |  ES | HICP (p) |
| 29/04/2025 | 0700/0900 | *** | ES | GDP (p) |
| 29/04/2025 | 0700/0900 |  EU | ECB's Cipollone On Financial and Trade Fragmentation | |
| 29/04/2025 | 0800/1000 | ** | EU | M3 |
| 29/04/2025 | 0800/1000 | ** |  IT | ISTAT Consumer Confidence |
| 29/04/2025 | 0800/1000 | ** | IT | ISTAT Business Confidence |
| 29/04/2025 | 0800/1000 | ** | EU | ECB Consumer Expectations Survey |
| 29/04/2025 | 0900/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 29/04/2025 | 0900/1000 | * |  GB | Index Linked Gilt Outright Auction Result |
| 29/04/2025 | 0940/1040 | GB | BOE Ramsden At Innovate Finance Global Summit | |
| 29/04/2025 | 1230/0830 | ** |  US | Advance Trade, Advance Business Inventories |
| 29/04/2025 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 29/04/2025 | 1300/0900 | ** | US | S&P Case-Shiller Home Price Index |
| 29/04/2025 | 1300/0900 | ** | US | FHFA Home Price Index |
| 29/04/2025 | 1300/0900 | ** | US | FHFA Home Price Index |
| 29/04/2025 | 1400/1000 | *** | US | Conference Board Consumer Confidence |
| 29/04/2025 | 1400/1000 | *** | US | JOLTS jobs opening level |
| 29/04/2025 | 1400/1000 | *** | US | JOLTS quits Rate |
| 29/04/2025 | 1430/1030 | ** | US | Dallas Fed Services Survey |
| 30/04/2025 | - |  JP | Bank of Japan Meeting | |
| 30/04/2025 | 2350/0850 | * | JP | Retail Sales (p) |
| 30/04/2025 | 2350/0850 | ** | JP | Industrial Production |
| 30/04/2025 | 0130/0930 | *** |  CN | CFLP Manufacturing PMI |
| 30/04/2025 | 0130/0930 | ** | CN | CFLP Non-Manufacturing PMI |
| 30/04/2025 | 0130/1130 | *** |  AU | CPI inflation |
| 30/04/2025 | 0130/1130 | *** | AU | CPI Inflation Monthly |
| 30/04/2025 | 0145/0945 | ** | CN | S&P Global Final China Manufacturing PMI |
