GLOBAL POLITICAL RISK: UAE Wants To Force Hormuz Open, Willing To Aid Fight -WSJ

• S&P Global Taiwan Feb. Manufacturing PMI rises to 55.2 from 51.7 in Jan., the highest reading since Dec. 2021, according to the statement from the agency.
• Index in Feb. is the third consecutive month in the expansion territory
• Output rises to 55.5 vs 51.6 in Jan, for the highest reading since July 2021 and third consecutive month of expansion
• New orders rise vs prior month and the highest reading since July 2021
• Taiwan’s manufacturing industry saw the quickest improvement in business conditions since the end of 2021 in Feb.  Stronger global demand conditions drove the sharpest increases in output and new orders for over four-and-a-half years.  The notable pick up in demand and accumulation of backlogs suggest that the sector is on course for further increases in output in the near-term.  Employment growth remained relatively lackluster. (per BBG)
• The Phlippines Mfg PMI rose to +54.6 from +52.9, highest since 2017
• Output up to 56.3 vs 54.3 prior and new orders up.
• The Thailand Mfg PMI rose to +53.5 from +52.7.
• Output up to +56.7 from 55.1 in Jan, new orders up on prior month.
• The Vietnam Mfg PMI rises to +54.3 from +52.5 for the eighth consecutive month of expansion.
• Output hits highest levels since July 2024. 

US Cash markets have shrugged off equity and commodity volatility and are higher in yield in the morning trading day in Asia.  Yields are up  2 - 3bps across the curve with the long end under performing.  The moves give back around half of the rally in USTs on Friday.  The higher oil prices are likely viewed as potentially inflationary, weighing heavy on bonds Monday.  

• The 2-Yr is up +2bps at 3.401%
• The 5-Yr is up +2.2bps at 3.526%
• The 10-Yr is up +2.3bps at 3.968%
• The 30-Yr is up +2.6bps at 4.641%.

Futures have given back earlier gains and are now trading lower for the day.  The US 10-Yr finished Friday at 113-26 and opened at 114-05+ and touched 114-06 briefly before falling back to 113-23+.

The move higher at the open took the 10-Yr above overbought on the 14-day relative strength index, capping the rally.  

• Monday in the US sees Manufacturing PMIs and ISM's as the focus.  
• The auction schedule is focused on US$89bn 13-week and US$77bn 26-week bills auction.  

Earlier the USD/CNY fix printed at 6.9236, slightly above the Friday outcome of 6.9228. The fixing error was slightly tighter at +595pips, versus +793pips on Friday. This fixing outcome is unlikely to change much thinking on yuan trends. USD/CNH is well off earlier highs, as the USD loses some of its earlier safe haven bid. Broader risk trends are steadier with US equity futures have pared loses by around a half, while oil gains have been more than halved.  Reports, via the WSJ, that Iran seeks nuclear talks with the US, is aiding sentiment. USD/CNH was last near 6.8635, after earlier getting to 6.8875. We are still above recent lows under 6.8300.