US TSYS: Off Fresh Ytd Highs Ahead Of PCE, 60bp Of Cuts Eyed For 2025
Feb-28 12:07
- Treasuries have pared gains seen in Asia hours on safe haven flow, with the intraday pullback from fresh ytd highs starting in London trading in isolated moves that aren’t reflected in EGBs.
- Cleveland Fed’s Hammack saying in a Reuters interview published 0600ET on preferring a continued steady approach to QT could have helped the long end continue those intraday losses.
- It comes ahead of the January monthly PCE report, which as we noted yesterday should still see expectations in the 0.25/0.26% M/M area despite yesterday’s modest upward revision for Q4.
- It leaves the curve back little changed on the day, with yields between +-0.5bps on the day.
- 10Y yields earlier touched a fresh ytd low of 4.22% Y/Y for levels last seen Dec 11 (currently back at 4.26%), as they continue to reflect Bessent’s plan to lower long end rates along with growth-negative aspects of tariff policy.
- TYM5 at 110-27 (+ 07) is back towards the top end of yesterday’s range having pulled back from overnight and fresh cycle highs of 111-03+, amidst heavy volumes nearing 600k.
- The trend needle points north, with 111-03+ setting latest initial resistance after which lies 111-13 (Dec 10 high).
- Fed Funds futures cumulative cuts from 4.33% effective: 1.5bp Mar, 7.5bp May, 22bp Jun, 30bp Jul and 60.5bp Dec.
- Data: PCE Jan (0830ET), Adv goods trade bal Jan (0830ET), Retail/wholesale inventories Jan/Jan P (0830ET), MNI Chicago PMI Feb (0945ET), KC Fed Services Feb (1100ET)
- No Fedspeak scheduled today.
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SONIA: SONIA FIX - 29/01/25
Jan-29 12:01
SONIA FIX - Source: BBG/ICE
- 1M 4.53320 -0.0064
- 3M 4.48380 -0.0055
- 6M 4.39940 -0.0058
- 12M 4.28240 -0.0027
MNI: US MBA: MARKET COMPOSITE -2.0% SA THRU JAN 24 WK
Jan-29 12:00
- MNI: US MBA: MARKET COMPOSITE -2.0% SA THRU JAN 24 WK
FRANCE: PS Sets Out Conditions To Return To Budget Talks
Jan-29 11:54
The centre-left Socialist Party (PS) has set out the conditions that could see it return to the negotiating table with the gov't on the subject of the 2025 state budget. The PS confirmed it had suspended cooperation after comments from PM Francois Bayrou made on 27 Jan referring to a "feeling of flooding" with regards to immigration (see 'FRANCE: Greens & PS Criticise PM's Immigration Comments As Budget Talks Halted', 1005GMT). Le Monde reports that the PS could take part in budget talks if the PM walks back his comments, an immediate increase in the minimum wage, and a commitment not to touch state medical aid (AME) for illegal immigrants.
- Gov't spox Sophie Primas says that the budget talks must not be taken "hostage". Primas: "This is the number one issue for our country. We must reach an agreement."
- The demand on AME made by PS Mayor of Nantes, Johanna Rolland, could cause significant issues for the gov't. AME allows those without residency permits to receive medical treatment, but the budget draft passed by the Senate cut its budget by EUR200mn.
- Should the gov't seek the restoration of AME funds it risks a censure motion being moved by the far-right Rassembelement National (RN). Parties of the leftist New Popular Front alliance have proved reluctant to back RN censure motions, but the far-left La France Insoumise could support such a motion given its staunch anti-gov't stance. It would also put the nominally pro-gov't conservative Les Republicains in a difficult position.
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