HIGHLIGHTS
- Treasuries look to finish mostly lower Tuesday, curves steepening (2s10s +5.134 at 25.273) as bonds led a reversal off session highs (USM5 trades 118-03 low after the bell vs. 119-18 high at midmorning).
- The retreat was partially tied to the reversal in Bunds amid reports officials were proposing a E500B "whatever it takes" defense fund.
- Secondly - stocks managed to claw off lows during the same period, Nasdaq outperforming as tech stocks rallied.
- Focus turns to President Trump addressing the joint session of Congress tonight at 2100ET.
MNI US TSYS: Bonds Reverse Early Gains, Risk Off Consolidation?
- Treasuries look to finish mostly lower Tuesday, curves twisting steeper (2s10s +5.578 at 25.717) as Bonds lead reversal off this morning's highs (USM5 tapped 119-18 high, tapped 118-00 after the bell).
- Move partially tied to rebound in stocks off lows during the same period of time, Nasdaq firmly in the green before making a late retreat ahead of the close. Another factor was a retreat in Bunds amid reports officials were proposing a E500B "whatever it takes" defense fund.
- No substantive data Tuesday, "I do factor in some effect of tariffs on inflation on prices. I do think we're going to see that later this year," Williams told a Q&A at a Bloomberg Invest event.
- Focus turns to President Trump addressing the joint session of Congress tonight at 2100ET. Followed by ADP private employ data tomorrow morning at 0815ET.
- Late session chatter that President Trump looks to announce a late term minerals deal with Ukraine after all.
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M -0.00733 to 4.31406 (-0.01065/wk)
- 3M -0.00952 to 4.30019 (-0.01659/wk)
- 6M -0.01564 to 4.21664 (-0.04011/wk)
- 12M -0.01712 to 4.05781 (-0.06891/wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.33% (-0.06), volume: $2.636T
- Broad General Collateral Rate (BGCR): 4.31% (-0.05), volume: $949B
- Tri-Party General Collateral Rate (TCR): 4.31% (-0.05), volume: $930B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $110B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $287B
FED Reverse Repo Operation
RRP usage climbs to $135.257B this afternoon from $119.987B Monday. Compares to $58.770B (lowest level since mid-April 2021) on February 14. The number of counterparties falls to 32 from 50 prior.
US SOFR/TREASURY OPTION SUMMARY
Heavy SOFR and Treasury option volume on the day, leaning towards low delta puts well before the reversal in bonds to near session lows late. Projected rate cuts through mid-2025 gaining vs. late Monday levels (*) as follows: Mar'25 at -1.8bp (-3.1bp), May'25 at -12.2bp (-14bp), Jun'25 at -28.9bp (-31.0bp), Jul'25 at -38.8bp (-42.6bp).
SOFR Options:
16,000 SFRJ5 95.62/95.68 put spds, cab
-10,000 SFRU5 96.25 calls, 27.0 vs. 96.265/0.50%
Block, 17,500 SFRZ5 96.12/96.50 3x2 put spds, 18.5 net ref 96.44 to -.435
-5,000 SFRZ5 96.50/97.00 call spds, 14.5 ref 96.475
Block, 15,000 0QM5 97.00/97.50 call spds 7.5 (scree/pit total over -50k)
+10,000 0QM5 97.00/97.50 call spds, 7.5 ref 96.01
+5,000 SFRZ5 96.00 puts, 15.5
-3,000 SFRZ5 96.43 straddles, 72.0 ref 96.415
+5,000 SFRU5 97.00 calls 11.0 ref 96.275
-5,000 SFRJ5 96.12/96.37 call spds, 3.75 ref 96.005
+20,000 0QM5 97.00/97.50 call spds, 7.25 ref 96.565
-30,000 0QM5 95.12/95.50 put spds .75 vs. 96.545 to -.535/0.06%
-10,000 SFRN5 95.56/95.75/95.93 put flys, 4. ref 96.26
-5,000 SFRZ5 96.25/96.50 call spds, 10.0 ref 96.41
-20,000 SFRZ5 96.25/96.75/97.25 call flys, 7.5 ref 96.41
Block, 6,000 0QM5 96.75/97.25 call spds vs. 3QM5 96.62/97.12 call spds, 0.0
Block, 4,000 96.62/96.75 call spds 4.5 vs. 96.59/0.08%
over 7,600 0QM5 97.25/97.50 call spds ref 96.535
over 38,900 SFRZ5 95.62 puts - partly tied to flys/condors below
5,000 SFRZ5 95.37/95.62/95.87/96.12 put condors
7,350 SFRZ5 95.12/95.62/96.12 put flys ref 96.385
over 10,000 0QH5 96.50 calls ref 96.475
5,000 0QM5 97.25/97.50 call spds ref 96.52
+4,000 SFRZ5 96.00/96.25 put spds, 11.5 ref 96.385
+4,000 SFRZ5 96.50 calls, 30.0 ref 96.38
4,800 SFRZ5 95.93/96.12 put spds ref 96.38
5,000 SFRH5 95.75/95.87 call spds
5,000 2QH5 96.25/96.37 put spds ref 96.51
Block, 3,716 SFRM5 96.00/96.25 call spds, 6.0 ref 95.99
Treasury Options:
Block -16,000 TYK5 112.5 calls, 41 vs. 111-09/0.20% vs. +17,500 wk4 TY 114 calls, 8
Block -16,000 TYK5 112.5 calls, 47 vs. 111-20/0.20% vs. +17,000 wk4 TY 114 calls, 9
-3,000 TYM5 111.5 straddles, 248
+10,000 TYK 110.5 puts, 40
-20,000 TYJ5 109 puts, 3.0 vs. 111-25.5 to -26/0.06%
5,000 TYJ 107/108 put spds, 0.5 ref 111-21
2,500 FVK5 110/112 call spds
-12,000 wk1 TY 111/112.5/113.5 broken call flys, 2 ref 111-22, exp this Friday
24,800 TYJ5 109.5 puts, 6, total volume over 42,600
over 8,700 USJ5 117.5 puts, 45 last
over 8,000 USJ5 119.5 calls, 1-10 last
9,100 TYJ5 107/108 put spds ref 111-18
3,000 TYJ5 109/109.5 3x2 put spds ref 111-18 to -18.5
3,125 FVJ5 107.25 puts ref 108-09.25
MNI BUNDS: Futures Test Key Short-Term Support On Whatever It Takes Defense Moment
- Bund futures have slid in late trading on Merz-Klingbeil comments around submitting a proposal to change the debt brake in Germany next week and setting up to a EUR 500bn special defense fund.
- RXH5 extended the initial slide to have hit fresh lows of 130.93 (latest 131.07).
- It’s easily through 131.79 (Mar 3 low) and also a bear trigger at 131.26 (Feb 19 low), testing the key short-term support at 131.00 (Jan 24 low). After that lies 130.28 (Jan 15 low).
- Bloomberg writes that “Germany will set up a €500 billion ($528 billion) fund as part of a sweeping policy overhaul to tackle urgently needed investments in defense and infrastructure, according to chancellor-in-waiting Friedrich Merz. Merz, speaking to reporters in Berlin Tuesday, also said that spending over 1% of GDP will be exempted from the country’s debt brake.”
- Handelsblatt writes on it more specifically being E500bn for infrastructure spending over a period of 10 years.
- Whilst the magnitude of the infrastructure fund looks in keeping with Reuters reports over the weekend (E400-500bn) and it seems to have no specific mention of a separate defense fund (which Reuters sources had seen at E400bn), - which could argue for some paring of the sharp move – the bearish reaction is likely being sustained by Merz saying "I want to make it very clear: In view of the threats to our freedom and peace on our continent, our defense must now also be based on 'whatever it takes,'" (per a translation from Handelsblatt coverage).
MNI FOREX: Greenback Weakness Extends, USDCHF Slides Below 0.8900
- Tariff considerations have been a primary driver of FX sentiment on Tuesday, with Mexican peso & Canadian dollar weakness persisting across the session. Their depreciation may have been somewhat offset by broader dollar weakness, as the ongoing stagflationary concerns regarding the US economy also gain traction. This has placed the Ice Dollar index at its lowest level since December 09, printing a low of 105.88.
- The DXY break to new yearly lows coincided with several key technical levels giving way across the majors. For EURUSD, spot has broken a cluster of resistance between 1.0525/33 which has been the key focus in recent sessions. The pair was given an additional late boost from Germany’s conservative leader, who provided details on changing the debt brake, prompting EURUSD to extend to ~1.0575. A close at current levels would highlight an important technical break, providing the foundation for a stronger bullish short-term theme, initially opening 1.0630, the Dec 6 high.
- USDJPY also broke below 148.60 support, a level that had been building in significance. Spot traded as low as 148.10 but has bounced back closer to 149.00 ahead of the APAC crossover. Today’s breach does strengthen the current bearish condition and signal scope for a more protracted move lower to 146.95, a Fibonacci retracement.
- USDCHF is down 0.86% on the session, standing out in G10. In recent sessions, both 20- and 50-day exponential moving averages have moved into a bear-mode, signalling scope for further downside. Support levels remain scant, with a 50% Fibonacci retracement point (drawn from 2024 low – 2025 high) at 0.8788, the immediate technical level of note.
- Lower US yields and equities prompted further pressure on AUDJPY, which briefly extended its 3-week slide to 5.6%, reaching a low of 91.86 and narrowing the gap to key support ~90.20. Australian GDP data is due on Wednesday, before Swiss CPI. US ADP and ISM Services PMI are also scheduled.
MNI FX OPTIONS: Expiries for Mar05 NY cut 1000ET (Source DTCC)
- EUR/USD: $1.0300-20(E1.7bln), $1.0325-35(E1.1bln), $1.0430-50(E1.3bln), $1.0500-05(E746mln)
USD/JPY: Y147.90-00($702mln), Y148.50($505mln), Y149.00($720mln), Y151.00-10($1.0bln), Y151.85-00($1.0bln) - EUR/JPY: Y161.75(E1.2bln)
- GBP/USD: $1.2500-20(Gbp1.1bln)
- AUD/USD: $0.6350(A$1.3bln)
- USD/CAD: C$1.4475-80(C$1.2bln), $1.4495-00($1.9bln), C$1.4560($636mln)
- USD/CNY: Cny7.3265($600mln)
MNI US STOCKS: Late Equities Roundup: Chip Stocks Spur late Bounce, Nasdaq Leads
- Stocks are mixed in later trade, S&P Eminis managing to claw their way off January lows, while the Nasdaq is in the green led by semiconductor stocks. Little has changed regarding underlying risk sentiment, however, global markets still concerned over the impact of 25% US import tariffs against Canada & Mexico, 20% on China, not to mention agriculture products starting April 2.
- Currently, the DJIA trades down 314.99 points (-0.73%) at 42874.67, S&P E-Minis down 20.25 points (-0.35%) at 5840.0 (vs. 5744.00 low), Nasdaq up 101.8 points (0.6%) at 18450.86.
- Information Technology and Communication Services sectors led gainers in the second half, semiconductor makers buoyed the Tech sector: Super Micro Computer +10.20%, Enphase Energy +8.61%, First Solar +4.14% and NVIDIA +3.00%.
- Interactive media and entertainment shares buoyed the Communication Services sector with Match Group +3.38%, Warner Bros Discovery +2.90% and Alphabet +2.89%.
- Financial and Consumer Staples sectors lead the decline in late trade: banks and services led laggers in the former with Citigroup -5.07%, Ameriprise Financial -5.01%, Discover Financial Services- 4.95%, Capital One Financial Corp-4.87% and Bank of America -4.72%.
- Meanwhile, Target -3.10%, Coca-Cola -2.56%, Estee Lauder Cos -2.54% and Philip Morris International -2.46% weighed on the Consumer Staples sector.
- Earnings expected after the close include: Crowdstrike Holdings, Ross Stores, Foot Locker, Campbell's, Abercrombie & Fitch, Brown-Forman Corp, Marvell Technology and Victoria's Secret.
MNI EQUITY TECHS: E-MINI S&P: (H5) Double Top Reversal
- RES 4: 6178.75 High Dec 6 ‘24 and key resistance
- RES 3: 6166.50 High Jan 19
- RES 2: 6029.03 50-day EMA
- RES 1: 5924.0 Low Feb 25
- PRICE: 5805.25 @ 14:45 GMT Mar 4
- SUP 1: 5784.00 Low Nov 4 ’24
- SUP 2: 5730.00 Low Sep 18 ‘24
- SUP 3: 5698.25 Low 50.0% retrace of the Aug 5 - Dec 6 ‘24 bull leg
- SUP 4: 5658.00 Low Sep 12 ‘24
A sharp sell-off in the S&P E-Minis contract this week, reinforces a short-term bear threat. The contract has traded to a fresh low and the move down has resulted in a print below the next key support at 5809.00, the Jan 13 low. A clear break of this level would highlight a stronger reversal and confirm a double top pattern on the daily scale. This would open 5784.00, the Nov 4 ‘24 low. Initial firm resistance to watch is 6029.03, the 50-day EMA.
MNI COMMODITIES: WTI Edges Lower, Henry Hub At 26-Month High, Gold Extends Gains
- Crude markets extended their decline earlier today, before paring most of the losses later in the session. Downside pressure came from confirmation that OPEC plans to return barrels to the market, coupled with the disruption to trade and potential hit to global economic growth from Trump’s tariff policy.
- WTI Apr 25 is down by 0.1% at $68.3/bbl.
- OPEC has signalled that it will proceed with its planned output hike of 138k b/d in April amid healthy market fundamentals and positive market outlook.
- The current bearish trend condition in WTI futures remains intact and this week’s fresh short-term cycle low reinforces current conditions.
- Support at $67.75, the Dec 20 ‘24 low, was pierced earlier today, with next support seen at $66.41, the Dec 6 ‘24 low.
- Meanwhile, Henry Hub climbed to its highest close since Dec 2022, driven by near record LNG feedgas flows, forecasts of higher demand next week, and concerns that flows from Canada could be disrupted by the looming trade war.
- US Natgas Apr 25 rose by 5.3% to $4.34/mmbtu.
- Spot gold is up by 0.7% to $2,914/oz, aided by broad dollar weakness as stagflationary concerns in the US gain traction.
- Next immediate resistance in gold comes at $2,920, which has been pierced. Above here, a stronger rally would refocus attention on the next objective at $2,962.2, a Fibonacci projection.
WEDNESDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 05/03/2025 | 0730/0830 | *** |  CH | CPI |
| 05/03/2025 | 0745/0845 | * |  FR | Industrial Production |
| 05/03/2025 | 0815/0915 | ** |  ES | S&P Global Services PMI (f) |
| 05/03/2025 | 0815/0915 | ** | ES | S&P Global Composite PMI (final) |
| 05/03/2025 | 0845/0945 | ** |  IT | S&P Global Services PMI (f) |
| 05/03/2025 | 0845/0945 | ** | IT | S&P Global Composite PMI (final) |
| 05/03/2025 | 0850/0950 | ** | FR | S&P Global Services PMI (f) |
| 05/03/2025 | 0850/0950 | ** | FR | S&P Global Composite PMI (final) |
| 05/03/2025 | 0855/0955 | ** |  DE | S&P Global Services PMI (f) |
| 05/03/2025 | 0855/0955 | ** | DE | S&P Global Composite PMI (final) |
| 05/03/2025 | 0900/1000 | *** | IT | GDP (f) |
| 05/03/2025 | 0900/1000 | ** |  EU | S&P Global Services PMI (f) |
| 05/03/2025 | 0900/1000 | ** | EU | S&P Global Composite PMI (final) |
| 05/03/2025 | 0930/0930 | ** |  GB | S&P Global Services PMI (Final) |
| 05/03/2025 | 0930/0930 | *** | GB | S&P Global/ CIPS UK Final Composite PMI |
| 05/03/2025 | 1000/1100 | ** | EU | PPI |
| 05/03/2025 | 1000/1100 | * | IT | Retail Sales |
| 05/03/2025 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 05/03/2025 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 05/03/2025 | 1200/0700 | ** |  US | MBA Weekly Applications Index |
| 05/03/2025 | 1315/0815 | *** | US | ADP Employment Report |
| 05/03/2025 | 1430/1430 | GB | TSC: Bailey/Pill/Taylor/Greene | |
| 05/03/2025 | 1430/1430 | GB | Greene annual report | |
| 05/03/2025 | 1445/0945 | *** | US | S&P Global Services Index (final) |
| 05/03/2025 | 1445/0945 | *** | US | S&P Global US Final Composite PMI |
| 05/03/2025 | 1500/1000 | *** | US | ISM Non-Manufacturing Index |
| 05/03/2025 | 1500/1000 | ** | US | Factory New Orders |
| 05/03/2025 | 1530/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 05/03/2025 | 1900/1400 | US | Fed Beige Book | |
| 05/03/2025 | 2315/1815 | US | New York Fed's Roberto Perli | |
| 06/03/2025 | - | EU | European Central Bank Meeting | |
| 06/03/2025 | 0030/1130 | * |  AU | Building Approvals |
| 06/03/2025 | 0030/1130 | ** | AU | Trade Balance |