US TSYS: Sentiment Cools Ahead Wednesday Data, Tariff Headline Risk
Apr-15 19:45
- Treasuries look to finish modestly higher for the most part Tuesday, curves flatter (2s10s -3.888 at 48.575) with short end rates underperforming. Cautious early optimism over tariff relief (or delay) for autos buoyed rates and stocks in early trade, evaporated in the second half, markets wary of tariff related headline risk.
- Treasuries inch off lows earlier after Empire Mfg comes out less negative than expected, both import & export price index figures lower than expected, prior import prices down revised while prior export prices are up-revised.
- The Empire manufacturing survey improved by more than expected in April to -8.1 (cons -13.5) after a weak -20.0 in March although forward-looking aspects in particular make for sour reading.
- Overall import prices fell -0.1% M/M (cons 0.0%) in March after a downward revised 0.2% (initial 0.4%) in February. For a better idea of underlying price pressures, imports ex petroleum prices saw a larger miss with 0.0% M/M (cons 0.3) after 0.1% (initial 0.4%).
- Jun'25 10Y futures currently +7.5 at 110-31.5, nearing initial technical resistance at 111-00+/111-20 (20-day EMA / High Apr 9). Cross asset: Bbg US$ index mear highs: +3.84 at 1233.90, stocks weaker w/ SPX eminis -8.75 at 5432.00.
- Focus on midweek data: Retail Sales, Industrial Production, Capacity Utilization, NAHB Housing Market Index while Fed Chair Powell will discuss his outlook at the Economic Club of Chicago (text, Q&A) at 1330ET.
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
Mar-14 21:28
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Mar-14 21:25
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
Mar-14 21:17
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
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