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USDJPY TECHS

Range Base Holds Firm

EURGBP TECHS

Key S/T Resistance Exposed

GBPUSD TECHS

Triangle Base Tested


EXECUTIVE SUMMARY

  • MNI POLICY: Inflation To Hit 2% By Year End -Phil Fed Survey
  • MNI INTERVIEW: US Job Market Unlikely to Recover by 2024 - ADP
  • MNI BRIEF: Yellen Tells G7 US Plans To Go Big On Fiscal
  • MNI SOURCES: EU May Hire Banks To Decide Which Firms To Save

US

FED: Headline PCE inflation is set to hit 2.0% by the end of the year after base effects push it as high as 2.4% in March, an improvement over forecasts just three months earlier, according to the Philadelphia Federal Reserve Bank's quarterly survey of 39 professional forecasters.

  • The outlook for core PCE inflation has also improved by about two-tenths to 1.9% by the end of the year. For more see MNI Policy main wire at 1006ET.
US: The U.S. job market's recent stumble signals a recovery may take longer than the three years projected by officials including the Congressional Budget Office, ADP chief economist Nela Richardson told MNI.
  • "Every time we get a lackluster report, that timeline just stretches out and more people move from temporary to permanent" job loss, she said. Employment rose by just 49,000 in January after a December drop of 227,000, and unemployment that almost doubled to 10 million during the pandemic now includes 3.5 million permanent layoffs. For more see MNI Policy main wire at 1032ET
US TSY: U.S. Treasury Secretary Janet Yellen told G7 finance ministers and central bank governors Friday "the time to go big is now" on additional fiscal support, urging the group to focus on what more can be done to provide support at this time.
  • Stressing the Biden administration's focus on multilateralism, Yellen stated that the United States "places a high priority on deepening our international engagement and strengthening our alliances," according to a statement from a Treasury spokesperson. For more see MNI Policy main wire at 1131ET

EU

EU: European Union member states may contract investment banks to help manage a wave of corporate insolvencies in the wake of the Covid-19 pandemic, picking through companies big and small to decide which merit public aid and which should be allowed to go under, EU finance sources told MNI. For more see MNI Policy main wire at 1042ET

OVERNIGHT DATA

  • MICHIGAN PRELIM. FEB. CONSUMER SENTIMENT AT 76.2; EST. 80.9
  • FEB. MICHIGAN CONSUMER EXPECTATIONS INDEX AT 69.8 AFTER 74
  • FEB. MICHIGAN CURRENT CONDITIONS INDEX AT 86.2 AFTER 86.7
  • FEB. MICHIGAN SENTIMENT INDEX DECLINES TO A SIX-MONTH LOW
  • MICHIGAN 1-YR INFLATION EXPECTATIONS HIGHEST SINCE 2014
  • MICHIGAN 5-YR INFLATION EXPECTATIONS UNCHANGED AT 2.7%

MARKET SNAPSHOT

Key late session market levels
  • DJIA up 27.7 points (0.09%) at 31458.4
  • S&P E-Mini Future up 22.5 points (0.58%) at 3934.5
  • Nasdaq up 69.7 points (0.5%) at 14095.47
  • US 10-Yr yield is up 4.2 bps at 1.2049%
  • US Mar 10Y are down 10.5/32 at 136-17
  • EURUSD down 0.001 (-0.08%) at 1.212
  • USDJPY up 0.2 (0.19%) at 104.95
  • WTI Crude Oil (front-month) up $1.38 (2.37%) at $59.61
  • Gold is down $3.16 (-0.17%) at $1822.44

European bourses closing levels:

  • EuroStoxx 50 up 23.93 points (0.65%) at 3695.61
  • FTSE 100 up 61.07 points (0.94%) at 6589.79
  • French CAC 40 up 33.85 points (0.6%) at 5703.67

US TSY SUMMARY: Bear Steepening Following European Risk-On

USTs have sold off and the curve has bear steepened heading into the long weekend and followed through from the risk-on theme that materialised during the European session.

  • UST cash yields are 1-5bp higher on the day with the curve 4bp steeper. Last yields: 2-year -0.7133%, 5-year -0.6854%, 10-year -0.4290%, 30-year 0.0764%.
  • TYH1 trades at 136-17, marking the low of the day.
  • SPX has traded sideways for most of the session while still eking out gains on the day.
  • The FDA agreed that Modern can increase the dosage of the coronavirus vaccine in each bottle, which could help drive up supplies of vaccines.
  • The University of Michigan Consumer Sentiment index for February came in below expectations at 76.2 vs 80.9 survey.
  • Donald Trump's defense team has finished making arguments in the Senate impeachment trial.

US TSY FUTURES CLOSE


  • 3M10Y +4.167, 116.429 (L: 110.513 / H: 116.597)
  • 2Y10Y +4.175, 109.385 (L: 103.922 / H: 109.553)
  • 2Y30Y +5.726, 189.622 (L: 182.17 / H: 190.047)
  • 5Y30Y +3.295, 151.719 (L: 147.23 / H: 152.145)
  • Current futures levels:
  • Mar 2Y down 0.125/32 at 110-15.875 (L: 110-15.75 / H: 110-16.125)
  • Mar 5Y down 4/32 at 125-23 (L: 125-22.75 / H: 125-28)
  • Mar 10Y down 10.5/32 at 136-17 (L: 136-16 / H: 136-30)
  • Mar 30Y down 1-7/32 at 166-1 (L: 165-30 / H: 167-14)
  • Mar Ultra 30Y down 2-13/32 at 198-30 (L: 198-25 / H: 201-23)

US EURODOLLAR FUTURES CLOSE


  • Mar 21 +0.005 at 99.835
  • Jun 21 steady00 at 99.840
  • Sep 21 -0.005 at 99.825
  • Dec 21 steady00 at 99.790
  • Red Pack (Mar 22-Dec 22) -0.01 to -0.005
  • Green Pack (Mar 23-Dec 23) -0.035 to -0.02
  • Blue Pack (Mar 24-Dec 24) -0.055 to -0.04
  • Gold Pack (Mar 25-Dec 25) -0.07 to -0.055

US TSY: Short Term Rates

US DOLLAR LIBOR: Latest settles:

  • O/N -0.00012 at 0.07963% (-0.00225/wk)
  • 1 Month -0.00487 to 0.10738% (-0.01150/wk)
  • 3 Month -0.00388 to 0.19375% (+0.00287/wk) ** Record Low on 2/05/21: 0.19088%
  • 6 Month -0.00763 to 0.20075% (-0.00625/wk)
  • 1 Year -0.00388 to 0.29975% (-0.00438/wk)
STIR: FRBNY EFFR for prior session:
  • Daily Effective Fed Funds Rate: 0.08% volume: $67B
  • Daily Overnight Bank Funding Rate: 0.07%, volume: $206B
US TSYS: Repo Reference Rates
  • Secured Overnight Financing Rate (SOFR): 0.06%, $891B
  • Broad General Collateral Rate (BGCR): 0.04%, $362B
  • Tri-Party General Collateral Rate (TGCR): 0.04%, $332B
  • (rate, volume levels reflect prior session)
FED: NY Fed Operational Purchase
  • Tsy 0Y-2.25Y, $12.801B accepted vs. $49.153B submission
  • Next scheduled purchases:
  • Tue 2/16 1010-1030ET: Tsy 20Y-30Y, appr $1.750B
  • Wed 2/17 1010-1030ET: TIPS 7.5Y-30Y, appr $1.225B
  • Thu 2/18 1010-1030ET: Tsy 4.5Y-7Y, appr $6.025B
  • Fri 2/19 1010-1030ET: Tsy 2.25Y-4.5Y, appr $8.825B

FOREX: Dollar Weakens on Late Risk-On Wave

The greenback started the Friday session stronger, gaining against most others in G10. This effect faded sharply into the US close, however, as a wave of risk-on buoyed equities, with the E-mini S&P bouncing around 20 points just after the London close.

Separately, GBP traded well despite a mixed start, with EUR/GBP once again testing the year's lows of 0.8739. A break through here would mark new multi-month lows for the cross.

Scandi currencies were the best performer Friday, with NOK reversing early weakness to finish stronger on a decent snapback and resumption of the uptrend for Brent crude futures.

The coming week should get off to a slow start, with US President's Day keeping US assets closed on Monday. Across the week, data releases pick up, with Eurozone GDP, Germany's ZEW survey, UK inflation and US retail sales all due. Global prelim PMI data for February also crosses.

EGBs: Bear steepening drives EGB

Bear steepeners have taken center stage this afternoon.

  • Big bear steepening across the board, after the last few days flattening was mostly seen as more corrective, especially in the outright trade higher in Bunds.
  • Some position squaring ahead of a longer weekend for the US, with Holiday on Monday.
  • German 5/30s test highest levels since June 2020,
  • UK 5/30s highest since December 2018.
  • Peripheral spread are generally tighter, with Greece leading at 3.5bps.
  • Looking ahead, after market, Moody on Ireland and DBRS on Belgium.
MNI Chicago Bureau | +1 312-431-0089 | bill.sokolis@marketnews.com