STIR: US Rates Modestly Pare Yesterday’s Latest Rally Ahead Of Data Deluge
Apr-30 10:28
- Fed Funds implied rates are 0-2bp higher on the day for 2025 meetings, in a similar pattern to yesterday’s overnight session with a modest paring of the previous day’s large rally.
- Cumulative cuts from 4.33% effective: 2.5bp for next week, 17bp Jun, 38.5bp Jul and 95.5bp Dec.
- The ~96bp of cuts is off yesterday’s low of 98bps that marked its lowest since Apr 11.
- Further out the curve, SOFR futures have given back little of yesterday’s gains: SFRU6 (where the terminal yield currently sits at 2.985%) is just 1 tick higher on the day at 97.015 (overnight high 97.045) having returned to pre-tariff pause levels on Monday.
- Today sees a heavy data docket, including ADP employment, Q1 GDP, Q1 ECI, MNI Chicago PMI and the monthly PCE report in chronological order.
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OUTLOOK: Price Signal Summary - Bear Threat In USDJPY Remains Present
Mar-31 10:22
- In FX, recent weakness in EURUSD appears to have been a correction and the trend condition remains bullish. MA studies are in a bull-mode position highlighting a dominant uptrend. 1.0733, the Mar 27 low, marks a key near-term support. A move through it would confirm a clear breach of the 20-day EMA and allow for a deeper correction towards the 50-day EMA at 1.0649. Key resistance and the bull trigger is at 1.0955, the Mar 18 high.
- The trend in GBPUSD is bullish and the pair continues to trade above last week’s lows. Moving average studies are in a bull-mode position highlighting a dominant uptrend. Support at the 20-day EMA, at 1.2884, is intact. A continuation higher and a breach of 1.3015, the Mar 20 high and bull trigger, would pave the way for a climb towards 1.3048, the Nov 6 2024 high. A clear breach of the 20-day EMA is required to signal scope for a deeper correction.
- USDJPY is trading lower today. The primary trend direction is unchanged, it remains down and the latest recovery is considered corrective. A key short-term resistance at the 50-day EMA - at 150.90 - is intact. A clear break of this EMA would undermine the bearish theme and signal scope for a stronger rally towards 152.70, a 50.0% retracement of the Jan 10 - Mar 11 bear leg. For bears, the first key support to watch is 148.18, the Mar 20 low. A breach would be bearish.
STIR: A Notable Build In Fed Rate Cut Expectations Overnight
Mar-31 10:21
- Fed Funds implied rates hold their dovish adjustment seen at the open on a combination of tariff concerns ahead of April 2 "Liberation Day" and geopolitical fears.
- Cumulative cuts from 4.33% effective: 5.5bp May (unch), 24bp Jun (+2bp from Fri), 41bp Jul (+4.5bp) and 80.5bp Dec (+7bp).
- It sees a notable extension of Friday’s rates rally which saw added impetus from another markdown in Atlanta Fed’s GDPNow with its gold-adjusted estimate at -0.5% for Q1. See a review of last week’s many pertinent macro developments here.
- Today sees further manufacturing surveys watched for signs of stagflation, with the MNI Chicago PMI at 0945ET and Dallas Fed survey at 1030ET. There’s no scheduled Fedspeak today.
LOOK AHEAD: Monday Data Calendar: Chicago PMI, Dallas Fed Mfg, Tsy Bill Sales
Mar-31 10:20
- US Data/Speaker Calendar (prior, estimate)
- 31-Mar 0945 MNI Chicago PMI (45.5, 45.5)
- 31-Mar 1030 Dallas Fed Mfg Activity (-8.3, -5.0)
- 31-Mar 1130 US Tsy $76B 13W & $68B 26W Bill auctions
