US TSYS: Pres Trump Ups China Tariff to 125%, Grants 90D Pause to Others
- Treasury futures still weaker after the bell but off session lows, little react to release of FOMC minutes that note risks to increased inflation and elevated policy uncertainty, stocks surged higher on the news, SPX eminis +9.6%, the Dow +7.88%, Nasdaq +12.5% after the rate close.
- Focus remains squarely on Pres Trump tweet upping China tariff to 125% while granting 90 day pause for 75 other countries while lowering to reciprocal tariff level to 10%.
- Most notable for Tsys is the swing in curves - from new 3 year highs overnight (2s10s tapped 73.847) to 44.835 at the moment (38.225 low). Projected rate hike pricing retreats: current levels vs. this morning (*) as follows: May'25 at -6bp (-13.4bp), Jun'25 at -22bp (-37.9bp), Jul'25 at -38.9bp (-61.4bp), Sep'25 -54.6bp (-79.3bp). Year end projection of 75bp total rate cut vs. full point this morning.
- While tariff headlines will continue to buffet markets, data in focus for Thursday includes weekly claims and March CPI: Analyst unrounded estimates see core CPI inflation little changed in March, at circa 0.25% M/M after 0.23% in February. It implies risk to the downside for rounded consensus of 0.3% M/M.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US: House Rules Cmtte To Meet Shortly To Consider Govt Funding Measure
The House Rules Committee is scheduled to gavel in shortly for a session that includes voting to advance House Speaker Mike Johnson's (R-LA) full-year stopgap funding measure. Hearing live stream. Although House Minority Leader Hakeem Jeffries (D-NY) issued a whip notice on Saturday urging House Democrats to vote down the bill, the baseline expectation is that Johnson will find sufficient support in the House to pass the package along party lines.
- Johnson’s 99-page bill, which would extend funding through September 30, is less ‘clean’ than many Democrats were expecting. It reauthorises government funding at Biden-era levels, includes roughly USD$6 billion in new spending for border security, and cuts non-defence spending by USD$13 billion.
- Notus reports: “Overall, the legislation reduces spending by $8 billion, though it doesn’t codify any of the cuts made by Elon Musk’s Department of Government Efficiency.”
- Should it pass the House, the package will then be passed to the Senate where Majority Leader John Thune (R-SD) will need to find at least eight Democrat Senators willing to back the measure.
- Punchbowl notes: “It doesn’t feel like a shutdown is going to happen, although there’s still a chance because, well, this is Congress. Every time we think we’ve reached new levels of silliness, lawmakers up the ante.”
EURJPY TECHS: Monitoring The Next Resistance
- RES 4: 164.08 High Jan 24 and a key resistance
- RES 3: 162.70 High Jan 28
- RES 2: 161.80 High Jan 30
- RES 1: 161.28 High Mar6
- PRICE: 159.51 @ 16:16 GMT Mar 10
- SUP 1: 158.55 20-day EMA
- SUP 2: 155.60 Low Mar 4
- SUP 3: 154.80 Low Feb 28 and a bear trigger
- SUP 4: 154.42 Low Aug 5 ‘24 and key medium-term support
Last week’s strong rally in EURJPY undermines a recent bearish threat and instead highlights a potential reversal. The cross is holding on to its latest gains reinforcing a bullish theme. Price has pierced resistance at 161.19, the Feb 13 high. A clear break of the hurdle would strengthen a bullish condition. Initial support to watch is 158.55, the 20-day EMA. Key support has been defined at 154.80, the Feb 28 low.
OPTIONS: US Options Summary
Monday's US rates/bond options flow included:
- TYJ5 108.50 puts paper paid 0-02 on 30K.
- Weekly TY options 110.00/109.75 put spread 9K blocked at 0-03, looks like a buyer of the put spread, this expires on Friday. Covered via 540 TYM5 futures at 110-25+.
