EXECUTIVE SUMMARY
- MNI US: Majority Of Americans Think Trump's Proposed Tariffs Will Raise Costs
- MNI US-RUSSIA: Trump-If No Deal Soon Taxes, Tariffs & Sanctions On Russia & Allies
- MNI EU-RUSSIA: Kallas Says "No Reason To Weaken Sanctions On Russia Now"
- MNI US DATA: MBA Applications Hold Bounce But Still Depressed
- MNI FED: Key Inter-Meeting Fed Speak – Jan 2025
US
MNI FED: Key Inter-Meeting Fed Speak – Jan 2025
Ahead of next week's Fed decision, we've published our summary of FOMC participant communications since the December FOMC meeting, including analysis of the latest Beige Book and MNI's Hawk-Dove Matrix.
Link: FedSpeakJan2025.pdf
NEWS
MNI US: Majority Of Americans Think Trump's Proposed Tariffs Will Raise Costs
A survey from Ipsos has found that a majority of Americans believe that proposed by US President Donald Trump will raise the price of consumer goods.
- Ipsos: "...a majority of Americans (66%) think these tariffs will raise the cost of the goods they buy, according to the latest data from the Ipsos Consumer Tracker. That perception is practically unanimous among Democrats (at 87%), but nearly half of Republicans feel the same."
- Ipsos notes: "We've also seen that high confidence the tariffs will happen in the first place: 81% of Americans think"it's likely that Trump will try to increase tariffs on imports from China and Mexico," according to a recent Ipsos poll for The New York Times."
Figure 1: “To what extent do you agree or disagree with the following? - Tariffs will raise prices on goods I buy”
Source: Ipsos
MNI US-RUSSIA: Trump-If No Deal Soon Taxes, Tariffs & Sanctions On Russia & Allies
US President Donald Trump posts on Truth Social regarding the war in Ukraine. "...If we don’t make a “deal,” and soon, I have no other choice but to put high levels of Taxes, Tariffs, and Sanctions on anything being sold by Russia to the United States, and various other participating countries." Trump: " Let’s get this war, which never would have started if I were President, over with! We can do it the easy way, or the hard way - and the easy way is always better. It’s time to “MAKE A DEAL.”..."
MNI US: Rubio's Quad Meetings Suggest Trump Continuity In Indo-Pacific Strategy
Secretary of State Marco Rubio yesterday held his first meetings at the State Department, convening a conflab of Indo-Pacific ‘Quad’ foreign ministers. The prioritisation of the Indo-Pacific dialogue alliance indicates continuity with the Biden administration in multilateral partnership with Japan, India, and Australia. Rubio also met bilaterally with his three counterparts and acknowledged the importance of the next Quad Leaders’ Summit, to be hosted by India in September.
MNI EU: Macron Hosts Scholz In Meeting To Discuss Trump Impact
Speaking in Paris, where he is hosting German Chancellor Olaf Scholz, French President Emmanuel Macron speaks on EU and national responses to the second Trump presidency in the US. Says "More than ever [it is] up to Europeans, and France and Germany to protect our sovereignty in light of the arrival of Trump."
MNI IRELAND: Parliament Meets To Confirm New PM & Cabinet
The Dáil Éireann (lower house) meets for the first time in 2025 today to formally confirm Fianna Fáil (FF) leader Micheál Martin as Taoiseach (PM). The new gov't is similar in composition to that which governed Ireland from 2020-2024, with the centrist FF governing in coalition with the centre-right Fine Gael (FG).
MNI EU-RUSSIA: Kallas Says "No Reason To Weaken Sanctions On Russia Now"
Kaja Kallas, the European Commission Vice President and EU High Representative for Foreign Affairs, told Reuters she sees “no reason to weaken sanctions on Russia now,” noting she believes the EU will “find agreement to renew” sanctions. Kallas endorsed recent comments from US President Donald Trump calling on NATO members to hike defence contributions, but pushed back on his claims that the US is bearing the brunt of Ukraine financing: “We are [Ukraine's] biggest international donor.”
MNI SOUTH KOREA: Yoon To Attend Court Tomorrow Amid Heightened Political Tensions
President Yoon Suk-yeol is set to appear in front of the Constitutional Court for a second time on Thursday 23 January with the court to begin calling senior witnesses allegedly involved in Yoon's aborted declaration of martial law in December. Earlier today, Yoon's legal team said "As of now, we plan to attend all [trial dates] if possible." The country remains in a state of elevated political tension following the high-profile storming by the president's supporters of the courthouse where Yoon's detention was extended on 19 Jan.
(BBG) UK Budget Deficit Soars on Debt Costs in Setback for Reeves
Debt interest costs pushed up UK government borrowing more than predicted last month, putting Chancellor of the Exchequer Rachel Reeves on course to overshoot official forecasts this year. The budget deficit totaled £17.8 billion ($21.9 billion) in December, more than double the £7.7 billion recorded a year earlier and the highest for the month since the pandemic, the Office for National Statistics said Wednesday. Economists had expected £14.2 billion.
MNI US TSYS: Decent 20Y Bond Auction Re-Open Helped Treasuries Bounce Off Lows
- Treasuries look to finish weaker Wednesday, off midday lows after the $13B 20Y Bond auction finally broke a string of poorly received sales, trading 1bp through: 4.900% high yield vs. 4.910% WI; 2.750x bid-to-cover vs. prior month's 2.50x.
- Lite data session: MBA composite mortgage applications increased 0.1% last week (sa) to consolidate the 33% jump the week prior; US DEC. LEADING INDICATOR FALLS 0.1% M/M; EST. -0.1% (Bbg).
- Late short covering saw the Mar'25 10Y contract trades 108-20 (-3.5) vs. 108-14 low, well above initial technical support at 108-00/107-06 (Low Jan 16 / 13 and the bear trigger). 10Y yield gained .0122 to 4.5886, curves flatter: 2s10s -.050 at 29.961, 5s30s -2.161 at 38.997.
- Pres Trump’s tariff threat towards Russia weighed on Treasuries earlier in the session while underpinning US$ (BBDXY +.08 t 1302.69 late). Higher core yields have also been supportive of this price dynamic, while a 4bp move for 5-year treasury yields also provided support to the broader dollar index.
- Cross asset roundup: Spot gold has risen by a further 0.4% to $2,756/oz on Wednesday, bringing the yellow metal to its highest level since October 31. WTI lost some ground on the day, with outages on the US gulf coast bearish for oil. However, it has struggled for clear direction, with earlier movement driven by Trump comments towards the war in Ukraine. WTI Mar 25 is down by 0.5% at $75.4/bbl.
OVERNIGHT DATA
MNI US DATA: MBA Applications Hold Bounce But Still Depressed
- MBA composite mortgage applications increased 0.1% last week (sa) to consolidate the 33% jump the week prior.
- This consolidation is reflected by both new purchases (0.6% after 26.9%) and refis (-2.9% after 43.5%).
- The 30Y mortgage rate dipped 7bps to 7.02% after the 7.09% the prior week marked its highest since Mar 2024.
- The increase in applications has been impressive considering the climb in mortgage rates from a recent low of 6.13% in late September, although composite applications are still only 48% of 2019 averages (new purchases 63%, refis 32%).
- Within the details, the regular to jumbo spread held its push higher at 4bps, having last week seen the regular rate push above the jumbo rate for the first time since Nov 2023.
- MNI: US REDBOOK: JAN STORE SALES +4.2% V YR AGO MO
- US REDBOOK: STORE SALES +4.5% WK ENDED JAN 18 V YR AGO WK
- US DEC. LEADING INDICATOR FALLS 0.1% M/M; EST. -0.1%
MNI CANADA: CAD Assets Look Through Further Climb In Y/Y Cost Pressures
- The industrial product and raw materials price report didn’t have a discernible impact on Canadian asset prices although it nevertheless shows a further acceleration in cost pressures in Y/Y terms.
- BoC-dated OIS has ~21bp of cuts priced for next Wednesday’s BoC decision.
- Not linked to the data, USDCAD has since stepped higher to session highs of 1.4370 on the back of a leg higher in the BBDXY index. It remains within particularly wide recent ranges (key support at 1.4261 from Jan 20 low vs resistance at 1.4516 from Jan 21 high).
- Details: IPPI was admittedly softer than expected at 0.2% M/M (cons 0.6) after 0.6% M/M in Nov and 1.2% in Oct, although IPPI ex-petroleum has seen a more consistent recent trend with 0.4% M/M in Dec after 0.5% in Nov and 1.0% in Oct.
- That leaves IPPI ex-petroleum inflation at 5.1% Y/Y (fastest since Nov 2022) whilst raw materials inflation stands at 9.1% Y/Y or 12.1% Y/Y ex-petroleum (fastest since May 2022).
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA up 157.52 points (0.36%) at 44183.58
S&P E-Mini Future up 45.75 points (0.75%) at 6129.75
Nasdaq up 264.2 points (1.3%) at 20020.64
US 10-Yr yield is up 2 bps at 4.5967%
US Mar 10-Yr futures are down 5.5/32 at 108-18
EURUSD down 0.0009 (-0.09%) at 1.0419
USDJPY up 0.97 (0.62%) at 156.49
WTI Crude Oil (front-month) down $0.33 (-0.44%) at $75.49
Gold is up $10.44 (0.38%) at $2755.29
European bourses closing levels:
EuroStoxx 50 up 39.87 points (0.77%) at 5205.83
FTSE 100 down 3.16 points (-0.04%) at 8545.13
German DAX up 212.27 points (1.01%) at 21254.27
French CAC 40 up 66.45 points (0.86%) at 7837.4
US TREASURY FUTURES CLOSE
3M10Y +0.434, 27.197 (L: 20.241 / H: 28.822)
2Y10Y +0.549, 30.56 (L: 28.228 / H: 31.603)
2Y30Y -0.763, 52.52 (L: 50.951 / H: 53.568)
5Y30Y -2.126, 39.032 (L: 38.32 / H: 40.905)
Current futures levels:
Mar 2-Yr futures down 0.5/32 at 102-22.75 (L: 102-21.875 / H: 102-24.62)
Mar 5-Yr futures down 3.25/32 at 106-4 (L: 106-01.75 / H: 106-09.5)
Mar 10-Yr futures down 5.5/32 at 108-18 (L: 108-14 / H: 108-28)
Mar 30-Yr futures down 7/32 at 113-14 (L: 113-06 / H: 113-30)
Mar Ultra futures down 9/32 at 118-14 (L: 118-05 / H: 119-04)
MNI US 10YR FUTURE TECHS: (H5) Remains Below The 50-Day EMA
- RES 4: 110-25 High Dec 12
- RES 3: 109-31 High Dec 18
- RES 2: 109-16+ 50-day EMA
- RES 1: 109-04/109-06 High Jan 21 / High Dec 31
- PRICE: 108-25 @ 11:02 GMT Jan 22
- SUP 1: 108-00/107-06 Low Jan 16 / 13 and the bear trigger
- SUP 2: 107-04 Low Apr 25 ‘24 and a key support
- SUP 3: 107-00 Round number support
- SUP 4: 106-11 2.00 proj of the Oct 1 - 14 - 16 price swing
The medium-term trend condition in Treasury futures remains bearish and the recovery that started Jan 13, appears to be a correction. The contract has traded through the 20-day EMA, at 108-17+. This exposes 109-06, the Dec 31 high, and 109-16+, the 50-day EMA. A clear break of the 50-day EMA is required to strengthen a bullish theme. The bear trigger is unchanged at 107-06, the Jan 13 low.
SOFR FUTURES CLOSE
Mar 25 -0.005 at 95.755
Jun 25 +0.005 at 95.890
Sep 25 +0.015 at 95.975
Dec 25 +0.010 at 96.010
Red Pack (Mar 26-Dec 26) -0.01 to +0.005
Green Pack (Mar 27-Dec 27) -0.02 to -0.015
Blue Pack (Mar 28-Dec 28) -0.025 to -0.015
Gold Pack (Mar 29-Dec 29) -0.025 to -0.02
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M +0.00270 to 4.30483 (+0.00443/wk)
- 3M +0.00630 to 4.29664 (+0.00655/wk)
- 6M +0.01011 to 4.26221 (+0.00840/wk)
- 12M +0.01255 to 4.20721 (+0.01296/wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.29% (+0.00), volume: $2.361T
- Broad General Collateral Rate (BGCR): 4.27% (+0.00), volume: $894B
- Tri-Party General Collateral Rate (TGCR): 4.27% (+0.00), volume: $875B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $100B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $298B
FED Reverse Repo Operation
RRP usage rebounds to $123.981B this afternoon from yesterday's $96.015B. Compares to Thursday Jan 16 low of $94.489B, the lowest level since mid-April 2021. The number of counterparties remains steady at 44.
MNI PIPELINE: Corporate Bond Issuance Update
Wrapping up midweek corporate bond issuance: $8.8B to Price Wednesday
- Date $MM Issuer (Priced *, Launch #)
- 01/22 $2.75B #PNC Financial $1B 6NC5 +80, $1.75B 11NC10 +98
- 01/22 $1.5B *OPEC Fund 3Y SOFR+64
- 01/22 $1.25B *CDC 3Y SOFR+57
- 01/22 $1.05B #Bank of Montreal $750M 4NC3 +67, $300M 4NC3 SOFR+86
- 01/22 $1B #Blackstone Private Cr Fund 7Y +175
- 01/22 $750M #Penske 5Y +85
- 01/22 $500M *FMO +3Y +35
- Expected to issue Thursday:
- 01/23 $Benchmark KDB 3Y SOFR+58a, 5Y SOFR+77a
MNI BONDS: EGBs-GILTS CASH CLOSE: Risk Spreads Tighten Alongside Equity Gains
Core European yields rose Wednesday, with periphery/semi-core EGB spreads tightening.
- Bund and Gilt gains peaked in European morning trade, with the periphery/semi-core instruments appearing to lead the way in a session that saw European equities hit fresh record highs.
- The initial core bid faded and yields hit session highs toward the cash close, weighed down in part by higher oil prices following US President Trump's ultimatum to Russia on reaching a deal to end the war with Ukraine, and with US long-end supply looming later in the day.
- In a session with limited data, higher-than-expected UK public sector borrowing figures did little to impact Gilts, while ECB speakers at Davos including Lagarde brought no surprises and no major market reaction. Supply included Spanish and Finnish syndications, and Bund auction.
- The rise in German yields was roughly parallel across the curve at +2bp (5Y outperformed slightly), with the UK curve bear steepening.
- Periphery and semi-core EGB spreads to Bunds tightened, with OATs leading the way for a 2nd consecutive session following strong demand at Tuesday's 15Y syndication.
- Thursday's data slate is sentiment survey-focused, including French and EU confidence, with the UK GfK and CBI reports as well.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 2.1bps at 2.236%, 5-Yr is up 1.7bps at 2.335%, 10-Yr is up 2bps at 2.53%, and 30-Yr is up 2.2bps at 2.753%.
- UK: The 2-Yr yield is up 2.1bps at 4.355%, 5-Yr is up 1.4bps at 4.351%, 10-Yr is up 4.2bps at 4.632%, and 30-Yr is up 3.1bps at 5.182%.
- Italian BTP spread down 1bps at 107.1bps / French OAT down 3.2bps at 73.8bps
MNI FOREX: Higher Core Yields/Equities Weighs on JPY, Supportive of EMFX Recovery
- Major equity indices have continued their impressive advance on Wednesday, consistently weighing on the Japanese Yen throughout the US session. This has allowed USDJPY to outperform, rising around 0.75% to 156.65 as we approach the APAC crossover. Higher core yields have also been supportive of this price dynamic, while a 4bp move for 5-year treasury yields also provided support to the broader dollar index.
- USDJPY move extends the rally from Tuesday’s lows to around 1% ahead of Friday’s BOJ meeting, where a hike is broadly expected, especially due to no market turbulence in the aftermath of Trump’s inauguration. Support to watch is 155.00, the 50-day EMA, and 154.48, a trendline drawn from the Sep 16 ‘24 high. Key resistance and the bull trigger remain at 158.87, the Jan 10 high.
- Elsewhere, initial price action saw the Euro extend its most recent strength, pushing to a new 2025 high of 1.0457 against the greenback. The rally was met with firm resistance at the 50-day EMA and the pair has subsequently drifted lower, back to 1.0415.
- Broader risk optimism has been particularly supportive of the emerging market FX basket, highlighted by a significant rally for the Brazilian Real. After breaking the psychological 6.00 mark, USDBRL picked up momentum through the 50-day EMA, extending session lows below 5.92 ahead of the close. All LatAm peers have also trade in a bullish manner.
- Additionally, EURPLN (-0.65%) looks set to close below the key 4.25 handle for the first time since the early onset of the pandemic, with the zloty buoyed by recent hawkish communication from the NBP.
- Canada retail sales and US jobless claims headlines the docket on Thursday, however, the focus may be on any commentary from political leader at the WEF in Davos.
THURSDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 23/01/2025 | 0745/0845 | ** |  FR | Manufacturing Sentiment |
| 23/01/2025 | 0900/1000 | *** |  NO | Norges Bank Rate Decision |
| 23/01/2025 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 23/01/2025 | 1100/0600 | *** |  TR | Turkey Benchmark Rate |
| 23/01/2025 | 1100/1100 | ** | GB | CBI Industrial Trends |
| 23/01/2025 | 1330/0830 | ** |  CA | Retail Trade |
| 23/01/2025 | 1330/0830 | *** |  US | Jobless Claims |
| 23/01/2025 | 1500/1600 | ** |  EU | Consumer Confidence Indicator (p) |
| 23/01/2025 | 1530/1030 | ** | US | Natural Gas Stocks |
| 23/01/2025 | 1600/1100 | ** | US | DOE Weekly Crude Oil Stocks |
| 23/01/2025 | 1600/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 23/01/2025 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 23/01/2025 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 23/01/2025 | 1800/1300 | ** | US | US Treasury Auction Result for TIPS 10 Year Note |
| 24/01/2025 | 2200/0900 | *** |  AU | Judo Bank Flash Australia PMI |
| 24/01/2025 | 2330/0830 | *** |  JP | CPI |
| 24/01/2025 | 0001/0001 | ** | GB | Gfk Monthly Consumer Confidence |
| 24/01/2025 | 0030/0930 | ** | JP | Jibun Bank Flash Japan PMI |
| 24/01/2025 | 0300/1200 | *** | JP | BOJ Policy Rate Announcement |