US TSYS: Rates Well Bid on Data, No US/UK Minerals/Peace Accord
Feb-28 20:40
- Treasuries look to finish near mid-December highs Friday, new lead Treasury quarterly futures, Jun'25 10y tapped 111-07.5 highs, just below technical resistance at 111-13 (High Dec 10). Global trade and tariff uncertainty coupled with data that leaned towards softer inflation remained supportive:
- Core PCE eased to 2.647% Y/Y from an upward revised 2.865% Y/Y (initial 2.794%) in Dec, as it starts to be helped by more favorable base effects.
- The Atlanta Fed’s GDPNow for Q1 has been slashed to -1.5% from 2.3% annualized in the Feb 19.
- Meanwhile, Chicago PMI, produced with MNI increased 6.0 points to 45.5 in February. This is the second consecutive monthly gain, taking the reading to the highest level since June 2024, though it remains in contractionary territory for the fifteenth consecutive month.
- USD gained ground after Pres Trump & Zelenskyy failed to reach an accord, chances of an imminent ceasefire looking less likely. EURUSD has slipped around 30 pips to 1.0370, but it's emerging markets that are really feeling the pinch, particularly the Hungarian forint. EURHUF rallies ~1.5% from 400 to 406.93 highs before moderating.
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STIR: Powell Sees Minimal Paring Of Hawkish Tilt For 2025 Rates
Jan-29 20:32
- Powell’s press conference has seen very little paring of the modest hawkish reaction to the earlier statement for most meetings this year.
- Fed Funds futures imply just 5.5bp of cuts for Mar, 24bp for Jun, 29bp for Jul and 45bp for 2025.
- There have been larger reversals further out though, with SOFR futures 4.5-5bp lower for mid-2026 to late 2027 contracts since Powell took to the podium, leaving them 0.5-1bp lower since the earlier statement.
- Some aspects from the press conference that helped the latter were Powell saying the removal of the reference to inflation making progress “was not meant to send a signal” along with “we’re meaningfully above neutral”.
AUDUSD TECHS: Trend Needle Points South
Jan-29 20:30
- RES 4: 0.6441 38.2% retracement of the Sep 30 - Jan 13 downleg
- RES 3: 0.6429 High Dec 12
- RES 2: 0.6384 High Dec 13
- RES 1: 0.6322/31 50-day EMA / High Jan 24
- PRICE: 0.6228 @ 16:32 GMT Jan 29
- SUP 1: 0.6209 Low Jan 21
- SUP 3: 0.6165/31 Low Jan 17 / 13 and the bear trigger
- SUP 3: 0.6100 Round number support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
The medium-term trend trend condition in AUDUSD is bearish and an important resistance at the 50-day EMA, at 0.6322, remains intact. The reversal lower from last week’s high suggests the possible end of the correction between Jan 13 - 24. A continuation lower would open 0.6131, the Jan 13 low and the bear trigger. On the upside, a clear breach of the 50-day average is required to signal scope for a stronger recovery.
FED: Fed on Framework Review and Inflation Target
Jan-29 20:20
- Powell on the 2% inflation target in the Framework Review: "We said, at times when inflation persistently undershot 2%, we would likely allow inflation to run moderately above 2% for some time. That is what we said. That turned out not to be relevant to what actually happened... in late 2021, we changed our view and raised rates a lot, and here we are at 4.1% unemployment and inflation way down."
- Final Q of the press conference Is on risks from Cryptocurrencies: We think banks are perfectly able to serve crypto customers as long as they can understand and manage the risks - a number of our banks we regulate and supervise do that. We certainly don't want to take actions that would cause banks to terminate customers that are perfectly legal, just because of excess risk aversion.
