STIR: Scope For Renewed Sensitivity To Dovish PPI Details Or Claims
Mar-13 10:34
- Fed Funds implied rates broadly hold yesterday’s climb, which started ahead of US CPI but continued after as hotter core PCE implications outweighed softer than expected core CPI.
- Today’s US PPI report will be in the driving seat in the near-term as it rounds out the major steers for core PCE tracking, with unrounded analyst estimates averaging circa 0.32% M/M for Feb.
- Cumulative cuts from 4.33% effective: 0.5bp Mar, 9bp May, 25bp Jun, 37bp Jul and 71bp Dec.
- The recovery in pricing off dovish extremes early in the week (at one point sustainably pricing 85bp of cuts for the year) has seen a next cut only just fully priced in June vs 33bp prior to last week’s payrolls report. This June contract has seen the largest post-NFP adjustment of any 2025 meeting.
- It also re-raises sensitivity to any dovish surprises from PCE-relevant PPI details or jobless claims.
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GERMAN AUCTION RESULTS: 2.40% Apr-30 Bobl
Feb-11 10:32
| 2.40% Apr-30 Bobl | Previous | |
| ISIN | DE000BU25042 | |
| Total sold | E5bln | E5bln |
| Allotted | E3.777bln | E3.793bln |
| Avg yield | 2.17% | 2.42% |
| Bid-to-offer | 1.48x | 1.91x |
| Bid-to-cover | 1.96x | 2.52x |
| Average Price | 101.09 | 99.87 |
| Low acc. Price | 101.08 | 99.86 |
| Pre-auction mid | 101.066 | |
| Previous date | 14-Jan-25 |
FOREX: Powell in Focus, Republican Scrutiny Likely
Feb-11 10:30
- A brief phase of JPY buying has dissipated into the US open, with USD/JPY back above, and anchored to, the Y152.00 level. The general stability of the pair so far today is a decent signal that markets are well-priced for fractious trade tensions ahead, particularly as the EU outlined in detail that they'd respond in unison against the trade levies waged on steel and aluminium exported to the US.
- EUR is faring well alongside local equity markets, helping EUR/GBP progress back to 0.8350, but the consolidative move is yet to make any headway on last week's highs. This leaves EUR/AUD just above the pullback low, after the cross tested but failed break the 200-dma overnight at 1.6388. Regardless, the cross has printed six consecutive sessions of lower lows and a positive close today would be the first in seven sessions.
- Powell's appearance in front of the Senate Banking Committee later today, while bipartisan in nature, will be a focus for any Republican scrutiny on the Fed chair, with markets and lawmakers looking to gauge the Fed's potential responses to tariffs, tax actions and the impacts of immigration on US labour market gains.
- Powell's appearance is set for 1500GMT/1000ET, at which a release of text is expected. For monetary policy specifically, markets will be sensitive around wording for future rate adjustments, particularly if Powell drops a reference to "cautious" on policy ahead.
- Powell isn't the only central banker set to speak today, with BoE's Bailey, Fed's Hammack, Williams & Bowman and ECB's Schnabel all set to speak.
GILT SYNDICATION: New 10-year: 4.50% Mar-35 gilt: Final terms
Feb-11 10:27
- Size: GBP13bln (higher than the GBP8.5-10.0bln we expected)
- Orderbooks in excess of GBP140bln (inc JLM interest of GBP12bln)
- Spread set at 4.25% Jul-34 gilt + 5.5bp (guidance was + 5.5/6.0bps)
- Maturity: 7 March 2035
- ISIN: GB00BT7J0027
- Settlement: 12 February, 2025 (T+1)
- Bookrunners: Barclays, BNP Paribas, Citi (B&D/DM), Goldman Sachs International Bank, HSBC and NatWest.
- Timing: Books closed. Allocations and pricing later on today
From market source
