HIGHLIGHTS
- Treasuries extended session lows in the lead-up to the FOMC policy announcement, rebounded amid after dots stuck with two 25bp cuts this year.
- Chairman Powell said the Fed can wait for policy uncertainty to subside before making any decisions on interest rates.
- The Fed also decided to slow the pace at which it is reducing Treasuries holdings in its balance sheet to a cap of USD5 billion per month from USD25 billion previously.
MNI US TSYS: Treasuries Rally Post FOMC, Underscores Policy Patience
- Treasury futures surged off pre-FOMC session lows after the Federal Reserve held rates steady at 4.25-4.5%, while anticipating two 25bp cuts this year.
- The Fed also decided to slow the pace at which it is reducing Treasuries holdings in its balance sheet to a cap of USD5 billion per month from USD25 billion previously.
- Tsy Jun'25 10Y futures marked 110-14.5 low pre-FOMC, climbed to 111-03 as Chairman Powell discussed the Fed decision with reporters.
- Chairman Powell said the Fed is is well-positioned to sit tight and wait for policy uncertainty to subside before making any decisions on interest rates. "We are well positioned to wait for greater clarity."
- The majority of the action in currency markets following the Fed has been for the Japanese Yen, as the bull steepening for the treasury curve provided a significant JPY boost, undeterred by the strong rally for US equities.
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M +0.00259 to 4.31937 (+0.00297/wk)
- 3M +0.00940 to 4.30469 (+0.00964/wk)
- 6M +0.01746 to 4.21726 (+0.01889/wk)
- 12M +0.03422 to 4.06520 (+0.04736/wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.31% (-0.01), volume: $2.465T
- Broad General Collateral Rate (BGCR): 4.30% (-0.01), volume: $954B
- Tri-Party General Collateral Rate (TCR): 4.30% (-0.01), volume: $934B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $113B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $292B
FED Reverse Repo Operation
RRP usage climbs to $193.378B this afternoon from $149.503B Tuesday. Compares to $58.770B (lowest level since mid-April 2021) on February 14. The number of counterparties at 47 from 39 prior.
US SOFR/TREASURY OPTION SUMMARY
Option desks reported better SOFR & Treasury put volume in the lead-up to the FOMC annc, call buying an afterthought post FOMC even as underlying futures surged to session highs (TYM5 tapped 111-03 (+9.5) after marking session low of 110-14.5 ahead the annc. Projected rate cuts through mid-2025 gained some momentum vs. session lows (*) as follows: May'25 at -5.2bp ( -4.7bp), Jun'25 at -18.9bp (-16.4bp), Jul'25 at -28bp (-24.2bp).
SOFR Options:
+18,000 SFRH6 95.00/95.50 put spds, 4.375
Block, 5,000 SFRM5 95.75/95.87 put spds 7.5 ref 95.855
+30,000 SFRZ5 95.87/96.12/96.37/96.62 call condors, 6.25-6.5 ref 96.205
+6,000 SFRM5/SFRU5 95.62/95.75 put spds, 0.25 net/June over
-4,000 SFRK5 95.81/SFRH6 95.25 put spds, 0.5 net/Mar over
+7,500 SFRH6 93.75/94.25 put spds, 0.75 ref 96.38
+5,000 SFRM5 96.00/96.18/96.50/96.68 call condors, 1.75
-2,000 SFRK5 95.75/95.81/95.87/95.93 iron condor, 4.25 ref 95.86
+2,500 SFRQ5 96.00/96.62 1x2 call spds vs. 95.75 puts, 3.5 db
4,000 0QM5 97.00/97.50 call spds ref 96.38
2,000 0QZ5 96.87/97.25 call spds ref 96.395
1,300 SFRU5 95.68/95.75/95.81/95.87 put condors, ref 96.075
+9,000 SFRM5 96.18/96.31/96.43/96.56 call condors, 0.5 ref 95.865 to -.87
+6,500 SFRM5 95.62/95.75/95.81/95.87 broken put condors, 1.0 ref 95.865
+2,500 SFRJ5 95.87/95.93/96.06/96.12 call condors, 1.25
2,000 0QM5 96.75/97.00 call spds ref 96.395
Treasury Options: April options expire Friday
+25,000 TYJ5 111 calls, 13 (appr vol 5.6%)
+30,000 TYJ5 109.75 puts, 1
+25,000 FVJ5 107 puts, 2
+19,000 TYJ5 109 puts
1,500 TYK5 111.5/112.5 1x2 call spds, 4 net/2-legs over
-7,500 TYK5 109/112 strangles from 39 to 38 ref 110-17.5
Block, -9,500 TYJ5 109.75/110.00/110.50 1x1x2 put trees, 22 net/110.5 over
4,000 TYJ5 108.75/109.25 2x1 put spds ref 110-18
+10,000 TYK4 114 calls 6-7
1,950 FVJ5 106.75/107/107.25 put flys ref 107-16.5
2,000 FVM5 105/106.5/107 broken put trees vs. FVM5 110 call
over +38,000 TUJ5 103.25 puts, 4-4.5
+5,000 TYM5 108/113.5 strangles, 39
-10,000 FVJ4 107.5/107.75 strangles 6.5 over the wk4 FV 107/108.25 strangle
4,000 TYM5 110 puts, 51 ref 110-21.5
over 7,300 TYJ5 111 calls, 10 last ref 110-22
+6,000 TYM5 113.5 calls, 24 ref 110-24.5
+5,000 TYM5 113 calls, 31 ref 110-26
+4,500 TYJ5 111.5 calls, 4 ref 110-25.5
1,500 FVJ5 107/107.25 put spds ref 107-21.25
MNI BONDS: EGBs-GILTS CASH CLOSE: Gilts Outperform Ahead Of BoE
Gilts outperformed Bunds Wednesday ahead of the BoE.
- Core FI started strong amid a risk-off move on political volatility in Turkey, with the session's best levels hit in early morning European trade.
- From there, Bunds and Gilts softened alongside a nascent recovery in equities and oil prices, in a fairly subdued trading session for headline risk and data with attention paid to the Fed decision after the cash close.
- In data, Eurozone final March inflation showed services prrice pressures appear to have seen a material dip in February.
- The UK and German curves both twist flattened, with Gilts outperforming Bunds across the curve.
- Periphery / semi-core EGB spreads tightened in alignment with stronger equities.
- Thursday's calendar includes UK labour market data (preview here) and the BOE decision (preview here). It would be a huge surprise if there was anything other than a pause in the MPC’s cutting cycle with unchanged guidance, but the vote split will once again be in focus.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 2bps at 2.196%, 5-Yr is up 0.5bps at 2.465%, 10-Yr is down 0.6bps at 2.804%, and 30-Yr is down 3.1bps at 3.09%.
- UK: The 2-Yr yield is up 0.5bps at 4.206%, 5-Yr is down 0.2bps at 4.293%, 10-Yr is down 1.2bps at 4.631%, and 30-Yr is down 1.5bps at 5.214%.
- Italian BTP spread down 0.8bps at 110bps / French OAT down 0.7bps at 67.6bps
MNI EGB OPTIONS: Pre-BOE UK Rate Upside Features Wednesday
Wednesday's Europe rates/bond options flow included:
- RXK5 126.00/124.50/123.00 put fly 3K sold out at 13
- 0RJ5 98.00/98.12 call spread vs 97.56 puts paper paid 1.5 on 10K for the call spread
- SFIZ5 96.20/96.30 call spread vs. 95.75/95.65 put spread, paper paid 1.75 for the call spread on another 6K, 12K trade there all day
MNI FOREX: USDJPY Sinks Post-Fed, Technical Outlook Remain Bearish
- The majority of the action in currency markets following the Fed has been for the Japanese Yen, as the bull steepening for the treasury curve provided a significant JPY boost, undeterred by the strong rally for US equities. The moves come as the Federal Reserve decided to slow the pace at which it is reducing Treasuries holdings in its balance sheet to a cap of USD5 billion per month from USD25 billion previously.
- USDJPY was sharply lower post the decision falling around 50 pips from 149.90 to 149.40 ahead of Chair Powell’s press conference. The pair then gathered momentum to the downside through the earlier post-BOJ lows at 149.14, falling as low as 148.67.
- Overall, moving average studies remain in a bear-mode set-up, highlighting a dominant downtrend - this suggests short-term gains over the past week are corrective. Support is not seen until 147.75, the March 14 low.
- On the session as a whole, the greenback remains firmer against most G10 peers, emphasised by the 0.3% gains for the ICE dollar index.
- Weakness for EURUSD standout, having spent a large portion of the session back below the 1.0900 handle. Early slippage was on the back of wider risk concerns relating to the Turkish newsflow relating to the arrest of Istanbul mayor and key opposition figure Ekrem Imamoglu. Initial EURUSD support remains much lower – at 1.0761 and 1.0721, the 20-day EMA.
- Australia will release February employment data on Thursday keeping AUDUSD (-0.16%) in focus, particularly important given the RBA said that the strong labour market would have been the key reason to leave policy on hold in February.
- 0.6400 continues to provide solid pivot resistance for the pair, having not closed above this level since early December. Clearance of 0.6409, the Feb 21 high, would be required to strengthen a bull cycle and confirm a resumption of the uptrend that started Feb 3. On the downside, initial support to watch is 0.6259, the Mar 11 low.
MNI FX OPTIONS: Expiries for Mar20 NY cut 1000ET (Source DTCC)
- EUR/USD: $1.0870-75(E851mln), $1.0900-10(E1.9bln)
- USD/JPY: Y145.00($1.2bln), Y150.00-15($847mln), Y150.50-70($1.2bln)
- EUR/GBP: Gbp0.8400(E580mln)
- AUD/USD: $0.6400-15(A$1.7bln)
MNI US STOCKS: Late Equities Roundup: Extending Highs Post FOMC
- Stocks are extending highs late Wednesday, even as Chairman Powell discussed an uptick in inflation, partially tied to tariffs, and underlying uncertainty in markets in the early stages of the Trump administration. Possibly holding onto a dovish message on the margin and transitory nature of inflation in regards to tariffs.
- Currently, the DJIA trades up 549.48 points (1.32%) at 42127.7, S&P E-Minis up 90 points (1.59%) at 5760, Nasdaq up 373.7 points (2.1%) at 17876.9.
- Consumer Discretionary and Information Technology sectors continued to outperform in late trade, broad based gains in Tech stocks included: Super Micro Computer +6.15%, Amphenol Corp+5.76%, Crowdstrike Holdings +3.95% and Fair Isaac Corp +3.73%.
- Cruise lines continued lead gainers in the Discretionary sector as they rebounded from Tuesday's selling: Caesars Entertainment +6.46%, Royal Caribbean Cruises +6.02%, Carnival Corp+5.94% and Norwegian Cruise Line +5.14%.
- On the flipside, Health Care and Consumer Staples sectors underperformed in late trade, pharmaceuticals weighing on the former: Gilead Sciences -3.08%, Revvity -2.76%, Mettler-Toledo International -2.60% and Bio-Techne Corp-2.16%.
- Food and beverage shares weighed on the Staples sector: Sysco -2.96%, General Mills -1.94%, Archer-Daniels-Midland -1.87% and Molson Coors Beverage -1.73%.
MNI EQUITY TECHS: E-MINI S&P: (M5) Oversold But Remains Bearish
- RES 4: 5955.55 50-day EMA
- RES 3: 5864.25 Low Jan 13 and a recent breakout level
- RES 2: 5830.45 20-day EMA
- RES 1: 5759.75 High Mar 17
- PRICE: 5744..00 @ 1524 ET Mar 19
- SUP 1: 5559.75 Low Mar 13 and the bear trigger
- SUP 2: 5483.50 2.00 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
- SUP 3: 5396.00 2.236 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
- SUP 4: 5341.87 2.382 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
The trend condition in S&P E-Minis is bearish. Moving average studies are unchanged and remain in a bear-mode set-up highlighting a dominant downtrend. Sights are on 5483.50, a Fibonacci projection. Note that the short-term trend condition is oversold. Recent gains are considered corrective and the bounce is allowing this set-up to unwind. Firm resistance to watch is 5955.55, the 50-day EMA.
MNI COMMODITIES: Gold, Copper Extend Gains, Crude Edges Higher
- Spot gold has risen to a fresh record high in recent trade, with the yellow metal currently up by 0.4% at $3,047/oz.
- The move comes amid a weakening of the dollar in the wake of the FOMC decision, which saw rates left unchanged and a taper in the Fed’s QT programme.
- A clear uptrend in gold remains intact and this week’s resumption of the bull cycle reinforces current conditions. Sights are on $3,056.84 next, a Fibonacci projection.
- Copper has also rallied further, with the red metal up by another 2.0% to $512/lb, taking total gains this month to over 12%.
- Goldman Sachs expect all forms of copper shipped to the US to be hit with tariffs by the end of this year, keeping prices on Comex trading at a hefty premium over other benchmarks. Tariffs could cause China to refine less copper.
- This week’s strong gains in copper reinforce a bullish theme and confirm a resumption of the uptrend. Eyes are on $514.40 next, a Fibonacci projection, with the contract also approaching a major resistance at $519.90, the May 20 ‘24 high.
- Meanwhile, WTI is slightly higher on the day, having recovered earlier losses, as the market digests the potential impacts of yesterday’s Putin/Trump call, rising US stocks, and re-emerging tensions in the Middle East.
- WTI Apr 25 is up by 0.4% at $67.2/bbl.
- Recent weakness in WTI futures has paved the way for an extension towards $63.73 next, the Oct 10 ‘24 low. Key pivot resistance to watch is $69.56, 50-day EMA.
THURSDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 20/03/2025 | 0700/0700 | *** |  GB | Labour Market Survey |
| 20/03/2025 | 0700/0800 | ** |  DE | PPI |
| 20/03/2025 | 0800/0900 |  EU | ECB's Lagarde At ECON Hearing | |
| 20/03/2025 | 0830/0930 | *** |  CH | SNB PolicyRate |
| 20/03/2025 | 0830/0930 | *** |  SE | Riksbank Interest Rate Decison |
| 20/03/2025 | 0830/0930 | *** | CH | SNB Interest Rate Decision |
| 20/03/2025 | 0900/1000 |  NO | Q1 Regional Network Survey | |
| 20/03/2025 | 1000/1100 | ** | EU | Construction Production |
| 20/03/2025 | 1100/1100 | ** | GB | CBI Industrial Trends |
| 20/03/2025 | 1200/1200 | *** | GB | Bank Of England Interest Rate |
| 20/03/2025 | 1200/1200 | *** | GB | Bank Of England Interest Rate |
| 20/03/2025 | 1200/1300 | EU | ECB's Lane At UCC Economics Society's Conference | |
| 20/03/2025 | 1200/1200 | GB | Agents summary of business conditions | |
| 20/03/2025 | 1230/0830 | * |  CA | Industrial Product and Raw Material Price Index |
| 20/03/2025 | 1230/0830 | *** |  US | Jobless Claims |
| 20/03/2025 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 20/03/2025 | 1230/0830 | ** | US | Philadelphia Fed Manufacturing Index |
| 20/03/2025 | 1230/0830 | * | US | Current Account Balance |
| 20/03/2025 | 1400/1000 | *** | US | NAR existing home sales |
| 20/03/2025 | 1430/1030 | ** | US | Natural Gas Stocks |
| 20/03/2025 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 20/03/2025 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 20/03/2025 | 1650/1250 | CA | BOC Governor speaks in Calgary | |
| 20/03/2025 | 1700/1300 | ** | US | US Treasury Auction Result for TIPS 10 Year Note |
| 21/03/2025 | 2330/0830 | *** |  JP | CPI |
| 21/03/2025 | 0001/0001 | ** | GB | Gfk Monthly Consumer Confidence |