MNI ASIA OPEN: Trump: "No Room Left" for Canada/Mexico Deal
EXECUTIVE SUMMARY
- MNI FED: Musalem Dials Up Focus On Anchoring Inflation Expectations
- MNI BRIEF: Inflation Risks Skewed To Upside - Fed's Musalem
- MNI UKRAINE: President Zelenskyy Says Hopes for US Support on Path to Peace
- MNI US TSYS: Risk Sentiment Chills, "No Room Left" For Canada, Mexico Deal
- MNI US DATA: ISM Mfg Prices “Surprise” Likely Smaller Than Survey Implied
- MNI US DATA: ISM Mfg Prices Paid Jump But Growth Details Weak
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
- Treasuries look to finish near late session highs, stocks weaker - after Pres Trump's late "investment announcement" press conference weighed on risk sentiment. While Trump annc'd large $100B investment by Taiwan Semiconductor (TSMC), comments that there is "no room left for deal on Canada, Mexico" ahead of Tuesday's deadline.
- Prior, Trump posted on Truth Social: "To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold INSIDE of the United States. Tariffs will go on external product on April 2nd. Have fun!"
- Tsy Jun'25 10Y futures climbed to 111-19.5 (+16.5), through a couple rounds of resistance with focus on 111-22.5 (High Dec 3 ‘24 and a key resistance). Curves mixed, 2s10s -1.317 at 20.206, 5s30s +2.056 at 48.822.
- Morning data helped Treasurys rebound off lows after ISM Prices paid surge: 62.4 (cons 56.0, 7 responses vs 59 for the headline index) after 54.9 - highest prices paid since Jun 2022 having increased since Nov (when Trump won the presidential election).
- VIX vol index surged to 23.76 high (23.29 +3.66 after the bell) as stocks fell below Friday's lows (SPX Eminis -134.25 to 5829.0), Bbg US$ index weaker but off lows (BBDXY -5.0 aty 1293.12).
OVERNIGHT DATA
MNI US DATA: ISM Mfg Prices “Surprise” Likely Smaller Than Survey Implied
- Another reason why the weaker growth metrics in the ISM mfg survey are overshadowing the sharp rise in prices paid is that regional Fed surveys had already pointed to a similar result for price pressures, but it hadn’t been reflected in the typically narrow selection of responses.
- See the below chart, although note that it can give false flags such as short-lived spike in Apr 2024 so it would have been hard to have full conviction beforehand.
- In addition, Friday's MNI Chicago PMI also saw its price paid series leap 16.9 points to 77.1, its largest monthly increase since July 1957 for its highest level since August 2022.
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.
- ISM mfg: 50.3 (cons 50.8) in February after 50.9 in Jan.
- Prices paid: 62.4 (cons 56.0, 7 responses vs 59 for the headline index) after 54.9 - highest prices paid since Jun 2022 having increased since Nov (when Trump won the presidential election).
- New orders: 48.6 (cons 54.6, 3 responses) after 56.0 – lowest new orders since Oct 2024
- Employment: 47.6 (cons 50.1, 3 responses) after 50.3 - back meaningfully below 50 after what had been its highest since May and before that Sep 2023.
MNI US DATA: Surprisingly Firm Mfg PMI Partially On Tariff Front-Running
- The S&P Global US mfg PMI surprisingly accelerated by more than first thought, rising to 52.7 in the final February print (cons & prelim 51.6) after 51.2 in Jan.
- It’s the joint highest since Jun 2022 whilst both input cost and output charge inflation accelerated.
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
- RES 4: 112-02 1.382 proj of the Jan 13 - Feb 7 - Feb 12 price swing
- RES 3: 111-22+ High Dec 3 ‘24 and a key resistance
- RES 2: 111-13 High Dec 10
- RES 1: 111-09+ High Feb 28
- PRICE: 110-27 @ 11:17 GMT Mar 3
- SUP 1: 110-00 High Feb 7 and a recent breakout point
- SUP 2: 109-16+ 50-day EMA and a key near-term support
- SUP 3: 108-21 Low Feb 19
- SUP 4: 108-03+ Low Dec 12 and a bear trigger
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:
- 1M -0.00332 to 4.32139 (+0.00541 total last wk)
- 3M -0.00707 to 4.30971 (-0.00302 total last wk)
- 6M -0.02447 to 4.23228 (-0.03401 total last wk)
- 12M -0.05179 to 4.07493 (-0.09670 total last wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.39% (+0.06), volume: $2.684T
- Broad General Collateral Rate (BGCR): 4.36% (+0.02), volume: $939B
- Tri-Party General Collateral Rate (TCR): 4.36% (+0.02), volume: $938B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $95B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $234B
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
- Date $MM Issuer (Priced *, Launch #)
- 03/03 $10B #Synopsys $1B 2Y +60, $1B 3Y +70, $2B 5Y +85, $1.5B 7Y +95, $2.4B 10Y +100, $2.1B 30Y +125 (Largest since Bank of America issued $10B over 5tranches on January 17).
- 03/03 $2.5B #Sumitomo Mitsui $500M 3Y +60, $500M 5Y +75, $1B 5Y SOFR+99, $500M 10Y +90
- 03/03 $2.1B #Duke Energy $00M 2Y +40, $850M 10Y +90, $750M 30Y +110
- 03/03 $2.05B #AM Honda $650M 3Y +65, $400M 3Y SOFR+82, $500M 5Y +85, $500M 10Y +105
- 03/03 $2B #MPLX $1B 10Y +130, $1B 30Y +160
- 03/03 $1.5B #PayPal $450M 3Y +50, $450M 3Y SOFR+67, $600M 10Y +92
- 03/03 $1.25B #Virginia Electric $625M 10Y +100, $625M 30Y +120
- 03/03 $1.25B #Humana $750M 10Y +138, $00M 30Y +160
- 03/03 $1B #Columbia Pipelines $550M 10Y +125, $450M 30Y +148
- 03/03 $1B #Nucor $500M 5Y +70, $500M 10Y +95
- 03/03 $800M #Synchrony Financial 6NC5 +145
- 03/03 $750M #CME Group 5Y +50
- 03/03 $600M #Tampa Electric 10Y +100
- 03/03 $500M *John Deere Capital 3Y SOFR+50
- 03/03 $1B Alumina PtyLtd 5NC2, 7.5NC3
MNI FOREX: Weak US Data Weighs on Greenback, NOKSEK Breaches Multi-Year Support
- Weaker-than-expected growth and employment metrics in Monday’s release of ISM manufacturing data has weighed heavily on the greenback, culminating in the USD index declining over 1%. Gains across G10 have been broad based, although tariff sensitive currencies such as MXN, CAD and CNH are underperforming as the looming tariff deadlines maintain a sense of trepidation.
- The Japanese yen saw another volatile session, with the late European risk-on tone prompting a near 1% rally from the lows in USDJPY. Even more notable were the ~1.65% recoveries for the likes of EURJPY and GBPJPY which are now consolidating 0.85% advances on the session.
- Data today has supported a strong rally for EURUSD, which has risen 1.15%. Eurozone flash readings of CPI and core CPI coming in a tenth above consensus estimates helped boost the Euro, and the more constructive price action for European equities exacerbated the risk-on momentum.
- Today’s 1.15% advance has swiftly erased the majority of the three session decline seen late last week, and in the process we are flirting once again with the 1.05 handle. This leaves spot just 30 pips away from a cluster of resistance, a collection of daily highs between 1.0520/33 which will provide the key focus ahead.
- Also standing out in the G10 currency space on Monday has been the significant weakness for NOKSEK, following the breach of multi-year support at 0.9500. The cross is now 1.45% lower today at 0.9432 as we approach the APAC crossover. The likely close below 0.9500 represents an important bearish development and signals scope for a more protracted selloff towards the November 2020 low at 0.9274. EURSEK (-1.14%) meanwhile is through a cluster of support around 11.14 and is rapidly approaching the December 2023 low at 11.0030, another important chart point.
- On Tuesday, BOJ Governor Ueda is scheduled to deliver opening remarks at an event hosted by the IMF, in Tokyo. Elsewhere, the RBA minutes and Australia Jan retail sales will be released.
TUESDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 04/03/2025 | 0700/1500 |  CN | Chinese People's Political Consultative Conference | |
| 04/03/2025 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 04/03/2025 | 1000/1100 | ** |  EU | Unemployment |
| 04/03/2025 | 1355/0855 | ** |  US | Redbook Retail Sales Index |
| 04/03/2025 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 04/03/2025 | 1920/1420 | US | New York Fed's John Williams | |
| 05/03/2025 | 2200/0900 | * |  AU | S&P Global Final Australia Services PMI |
| 05/03/2025 | 2200/0900 | ** | AU | S&P Global Final Australia Composite PMI |
| 05/03/2025 | 0030/0930 | ** |  JP | S&P Global Final Japan Services PMI |
| 05/03/2025 | 0030/0930 | ** | JP | S&P Global Final Japan Composite PMI |
| 05/03/2025 | 0030/1130 | *** | AU | Quarterly GDP |
| 05/03/2025 | 0100/0900 | CN | National People's Congress opens | |
| 05/03/2025 | 0145/0945 | ** | CN | S&P Global Final China Services PMI |
| 05/03/2025 | 0145/0945 | ** | CN | S&P Global Final China Composite PMI |
