EXECUTIVE SUMMARY
US
MNI FED: Musalem Dials Up Focus On Anchoring Inflation Expectations
St Louis Fed’s Musalem (’25 voter, hawk) has given a speech on the economic and monetary policy outlook, broadly in keeping with prior remarks from Feb 20 – especially on the need to keep policy as “modestly restrictive” – although it did include a greater focus on the need to keep inflation expectations anchored. Some highlights from his speech with full text here:
MNI BRIEF: Inflation Risks Skewed To Upside - Fed's Musalem
Federal Reserve Bank of St. Louis President Alberto Musalem said Monday his baseline outlook is for further disinflation but risks are skewed to the upside. "My baseline is for inflation to continue to converge towards 2% gradually. That requires monetary policy to remain modestly restrictive until there's confidence that inflation is indeed converging towards 2%," he said in Q&A at a NABE conference, taking note of surveys recently showing higher near-term inflation expectations.
NEWS
MNI UKRAINE: President Zelenskyy Says Hopes for US Support on Path to Peace
Latest comments from Zelensky via a post on x: We continue our work with partners. We have already had talks and other steps to come soon. It is very important that we try to make our diplomacy really substantive to end this war the soonest possible. We need real peace and Ukrainians want it most because the war ruins our cities and towns. We lose our people. We need to stop the war and to guarantee security.
MNI SECURITY: Trump Escalates Criticism Of Zelenskyy And European Leaders
US President Donald Trump has issued another criticism of Ukrainian President Volodymyr Zelenskyy, saying in a message on Truth Social "this guy doesn’t want there to be Peace as long as he has America’s backing." Trump's Truth message links to an AP article citing Zelenskyy as saying a deal to end the war, “is still very, very far away.”
MNI US: Trump To Decide On Canada/Mexico Tariffs Today - Lutnick
US Commerce Secretary Howard Lutnick told CNN that President Donald Trump will make a final determination on Canada/Mexico tariffs today, ahead of an announcement tomorrow. Lutnick's comments suggest last-minute negotiations could lead to another delay to the tariffs. Lutnick said Canada and Mexico, "have done a good job on the border" but indicated they may have to do more to tackle Fentanyl. "Trump will have to decide on tariffs Monday afternoon... we'll put it out Tuesday," he added.
MNI US: Trump To Announce $100B TSMC Investment
13:30 ET 18:30 GMT: US President Donald Trump is set to announce a USD$100 billion investment, over four years, by TSMC in the United States. The Wall Street Journal reports: "The investment would be used to build out cutting-edge chip-making facilities. Such an expansion would advance a long-pursued U.S. goal to regrow the domestic semiconductor industry after manufacturing fled largely to Asian countries in recent decades."
US TSYS
MNI US TSYS: Risk Sentiment Chills, "No Room Left" For Canada, Mexico Deal
OVERNIGHT DATA
MNI US DATA: ISM Mfg Prices “Surprise” Likely Smaller Than Survey Implied
MNI US DATA: ISM Mfg Prices Paid Jump But Growth Details Weak
The ISM manufacturing headline index was a little softer than expected in Feb, but still maintained only its second >50 reading since late 2022. However, details were more mixed. New orders and employment were notably softer than expected, setting the tone for market reaction as the former was particularly surprising considering signs elsewhere of tariff front-running, whilst prices paid jumped to their highest since Jun 2022.
MNI US DATA: Surprisingly Firm Mfg PMI Partially On Tariff Front-Running
MNI CANADA DATA: Tariff Fears Hit Manufacturing Confidence and Boost Input Costs
The S&P Global Canada manufacturing PMI slid from 51.6 in Jan to 47.8 in February, its lowest since July in clear signs of tariff disruption. Highlights from the press release (in full here):
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA down 643.32 points (-1.47%) at 43153.49
S&P E-Mini Future down 100.5 points (-1.69%) at 5855.5
Nasdaq down 492.4 points (-2.6%) at 18337.29
US 10-Yr yield is down 5.7 bps at 4.1513%
US Jun 10-Yr futures are up 15/32 at 111-18
EURUSD up 0.0107 (1.03%) at 1.0481
USDJPY down 1.21 (-0.8%) at 149.39
WTI Crude Oil (front-month) down $1.57 (-2.25%) at $68.13
Gold is up $33.14 (1.16%) at $2891.44
European bourses closing levels:
EuroStoxx 50 up 77.15 points (1.41%) at 5540.69
FTSE 100 up 61.57 points (0.7%) at 8871.31
German DAX up 595.59 points (2.64%) at 23147.02
French CAC 40 up 88.08 points (1.09%) at 8199.71
US TREASURY FUTURES CLOSE
3M10Y -5.196, -14.831 (L: -15.586 / H: -4.262)
2Y10Y -1.367, 20.156 (L: 18.105 / H: 22.535)
2Y30Y -0.159, 49.391 (L: 45.864 / H: 51.122)
5Y30Y +1.453, 48.219 (L: 45.578 / H: 49.065)
Current futures levels:
Jun 2-Yr futures up 2.5/32 at 103-18 (L: 103-12.5 / H: 103-18.875)
Jun 5-Yr futures up 8.5/32 at 108-6.5 (L: 107-23.5 / H: 108-08.25)
Jun 10-Yr futures up 15/32 at 111-18 (L: 110-26.5 / H: 111-21)
Jun 30-Yr futures up 1-01/32 at 119-4 (L: 117-20 / H: 119-06)
Jun Ultra futures up 1-15/32 at 125-19 (L: 123-16 / H: 125-21)
MNI US 10YR FUTURE TECHS: (M5) Trend Structure Remains Bullish
A bullish cycle in Treasury futures remains in play and the contract is holding on to the bulk of last week’s gains. 110-20, the 76.4% retracement of the Dec 3 - Jan 13 bear leg, has been cleared. Clearance of this level strengthens the recovery and signals scope for a climb towards the 111-22+, the Dec 3 ‘24 high and a key resistance. Initial firm support to monitor is 109-16+, the 50-day EMA.
SOFR FUTURES CLOSE
Mar 25 +0.015 at 95.728
Jun 25 +0.030 at 95.985
Sep 25 +0.045 at 96.220
Dec 25 +0.040 at 96.355
Red Pack (Mar 26-Dec 26) +0.045 to +0.055
Green Pack (Mar 27-Dec 27) +0.055 to +0.060
Blue Pack (Mar 28-Dec 28) +0.065 to +0.065
Gold Pack (Mar 29-Dec 29) +0.070 to +0.075
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
US TSYS: Repo Reference Rates
STIR: FRBNY EFFR for prior session:
FED Reverse Repo Operation
RRP usage retreats by nearly 50% to $119.987B from $234.442B on Friday's month end. Compares to $58.770B (lowest level since mid-April 2021) on February 14. The number of counterparties falls to 32 from 50 prior.
MNI PIPELINE: Corporate Bond Update: Over $28.3B Issuance Expected to Price Monday
MNI FOREX: Weak US Data Weighs on Greenback, NOKSEK Breaches Multi-Year Support
TUESDAY DATA CALENDAR
Date | GMT/Local | Impact | Country | Event |
04/03/2025 | 0700/1500 | ![]() | Chinese People's Political Consultative Conference | |
04/03/2025 | 1000/1000 | ** | ![]() | Gilt Outright Auction Result |
04/03/2025 | 1000/1100 | ** | ![]() | Unemployment |
04/03/2025 | 1355/0855 | ** | ![]() | Redbook Retail Sales Index |
04/03/2025 | 1630/1130 | * | ![]() | US Treasury Auction Result for Cash Management Bill |
04/03/2025 | 1920/1420 | ![]() | New York Fed's John Williams | |
05/03/2025 | 2200/0900 | * | ![]() | S&P Global Final Australia Services PMI |
05/03/2025 | 2200/0900 | ** | ![]() | S&P Global Final Australia Composite PMI |
05/03/2025 | 0030/0930 | ** | ![]() | S&P Global Final Japan Services PMI |
05/03/2025 | 0030/0930 | ** | ![]() | S&P Global Final Japan Composite PMI |
05/03/2025 | 0030/1130 | *** | ![]() | Quarterly GDP |
05/03/2025 | 0100/0900 | ![]() | National People's Congress opens | |
05/03/2025 | 0145/0945 | ** | ![]() | S&P Global Final China Services PMI |
05/03/2025 | 0145/0945 | ** | ![]() | S&P Global Final China Composite PMI |