MNI ASIA OPEN: Ylds Moderate Ahead Wed FOMC Minutes

EXECUTIVE SUMMARY

• MNI INTERVIEW: Inflation Fears Premature-- Boston Fed Staffer
• FAUCI SAYS U.S. IS ON BRINK OF ANOTHER COVID SURGE, Bbg
• U.S. GOVERNMENT WON'T REQUIRE VACCINE CREDENTIAL SYSTEM, Bbg
• TORONTO ORDERS SCHOOLS TO SHIFT TO REMOTE LEARNING WEDNESDAY, Bbg

US

FED: Rising worries on Wall Street about the prospect of runaway inflation are so far misplaced because there is still ample slack in the economy according to a wide range of key metrics, though supply chain disruptions bear watching, Boston Fed Senior Economist Viacheslav Sheremirov told MNI.

• "Concerns about inflation rising persistently above the target are still premature, in my view," he said in an email interview. "Output is still significantly below its pre-pandemic level, labor markets have room to improve further, inflation readings are low, and both survey and market-based inflation expectations are relatively stable." For more see MNI Policy main wire at 1241ET.

OVERNIGHT DATA

• US BLS: JOLTS OPENINGS RATE 7.367M IN FEB
  
• US BLS: JOLTS QUITS RATE 2.3% IN FEB

MARKETS SNAPSHOT

Key late session market levels:

• DJIA down 54.97 points (-0.16%) at 33471.9
• S&P E-Mini Future up 3.25 points (0.08%) at 4071
• Nasdaq up 37.9 points (0.3%) at 13743.61
• US 10-Yr yield is down 4.6 bps at 1.6542%
• US Jun 10Y are up 18.5/32 at 131-22
• EURUSD up 0.0059 (0.5%) at 1.1872
• USDJPY down 0.34 (-0.31%) at 109.84
• WTI Crude Oil (front-month) up $0.61 (1.04%) at $59.24
• Gold is up $15.16 (0.88%) at $1743.39

• EuroStoxx 50 up 24.46 points (0.62%) at 3970.42
• FTSE 100 up 86.25 points (1.28%) at 6823.55
• German DAX up 105.51 points (0.7%) at 15212.68
• French CAC 40 up 28.38 points (0.47%) at 6131.34

US TSY SUMMARY: Carry-Over Rate Bid

• No react to JOLTS data (OPENINGS RATE 7.367M IN FEB; QUITS RATE 2.3%), rates drew better buying as angst over a third COVID-wave of closures spread:
• "FAUCI SAYS U.S. IS ON BRINK OF ANOTHER COVID SURGE" aired late while "TORONTO ORDERS SCHOOLS TO SHIFT TO REMOTE LEARNING" starting Wednesday.
• Unlikely adding to rate bid, but more likely keeping some squared-up on the sidelines is Wednesday afternoon release of March FOMC minutes.
• Pick-up in swappable corporate supply generated some selling (late launches, for Mexic, GM, Toyota and Penske still waited to price before hedges unwound). Core options positions remain hedged for rate hikes mid-2022 through 2023, while session trade say pick-up in in upside call buying.
• The 2-Yr yield is down 0.8bps at 0.1586%, 5-Yr is down 5.3bps at 0.8688%, 10-Yr is down 4.6bps at 1.6542%, and 30-Yr is down 3.3bps at 2.3129%.

US TSY FUTURES CLOSE:

• 3M10Y -3.992, 164.005 (L: 163.043 / H: 169.512)
• 2Y10Y -3.461, 149.723 (L: 149.014 / H: 154.261)
• 2Y30Y -1.776, 216.009 (L: 215.004 / H: 219.147)
• 5Y30Y +2.433, 144.698 (L: 140.793 / H: 145.332)
• Current futures levels:
• Jun 2Y up 1/32 at 110-11.5 (L: 110-10.625 / H: 110-11.625)
• Jun 5Y up 10.75/32 at 123-23 (L: 123-12.75 / H: 123-24.25)
• Jun 10Y up 18/32 at 131-21.5 (L: 131-03.5 / H: 131-23.5)
• Jun 30Y up 27/32 at 156-14 (L: 155-19 / H: 156-20)
• Jun Ultra 30Y up 1-12/32 at 185-1 (L: 183-21 / H: 185-12)

US EURODOLLAR FUTURES CLOSE:

• Jun 21 steady at 99.820
• Sep 21 steady at 99.805
• Dec 21 steady at 99.725
• Mar 22 +0.010 at 99.760
• Red Pack (Jun 22-Mar 23) +0.010 to +0.050
• Green Pack (Jun 23-Mar 24) +0.070 to +0.10
• Blue Pack (Jun 24-Mar 25) +0.10 to +0.110
• Gold Pack (Jun 25-Mar 26) +0.105 to +0.105

Short Term Rates

US DOLLAR LIBOR: Latest settles

• O/N +0.00313 at 0.07788% (+0.00137 total last wk)
• 1 Month -0.00025 to 0.11013% (+0.00313 total last wk)
• 3 Month -0.00237 to 0.19738% (+0.00075 total last wk) (Record Low of 0.17525% on 2/19/21)
• 6 Month -0.00025 to 0.20100% (-0.00200 total last wk)
• 1 Year +0.00575 to 0.28625% (-0.00025 total last wk)

• Daily Effective Fed Funds Rate: 0.07% volume: $73B
• Daily Overnight Bank Funding Rate: 0.07%, volume: $262B

• Secured Overnight Financing Rate (SOFR): 0.01%, $985B
• Broad General Collateral Rate (BGCR): 0.01%, $368B
• Tri-Party General Collateral Rate (TGCR): 0.01%, $338B
• (rate, volume levels reflect prior session)

• Tsy 20Y-30Y, appr $1.734B accepted vs. $3.985B submission
• Next scheduled purchases:
• Wed 4/07 1010-1030ET: Tsy 4.5Y-7Y, appr $6.025B
• Thu 4/08 1010-1030ET: TIPS 1Y-7.5Y, appr $2.425B
• Fri 4/09 1010-1030ET: Tsy 7Y-20Y, appr $3.625B

PIPELINE: $8.7B to Price Tuesday

• Date $MM Issuer (Priced *, Launch #)
  
• 04/06 $2.5B #Mexico 20Y +205
• 04/06 $700M #Brighthouse Financial Global Funding $400M 3Y +72, $300M 3Y FRN SOFR+76
• 04/06 $2.25B #General Motors $850M 3Y +73, $400M 3Y FRN SOFR+76, $1B 7Y +108 (adds to $2.5B on Jan 5: $1.5B 5Y +92, $1B 10Y +140)
• 04/06 $2.5B #Toyota Motor Cr $1B 2Y +28, $750M 2Y FRN SOFR+32, $750M 7Y +58 (adds to $3B on Jan 6: $1B 3Y +25, $750M 3Y FRN SOFR+33, $700M 5Y +40, $550M 10Y +62.5)
• 04/06 $750M #Penske Trucking +5Y +83
• Later in week:
• 04/07 $Benchmark Ontario 5Y +13a
• 04/06 $Benchmark Asia Development Bank (ADB) 5Y +5a
• 04/07 $Benchmark EBRD 5Y FRN SOFR+20a
• 04/08 $3.5B Organon $2B 7NC3, $1.5B 10NC5
• 04/09 $Benchmark Aflac multi-tranche
• 04/?? $Benchmark Philippines

FOREX: Shine Comes Off Sterling as Vaccine Rollout Falters

• GBP traded poorly, reversing the recent spell of strength and dragging GBP/USD off 1.3919 and back below the 1.3853 50-dma.
• Reversal in GBP follows continued concerns over an expected slowdown in the UK's vaccine rollout, as a supply crunch results in a marked slowdown of those receiving first doses. Nonetheless, UK PM Johnson has maintained that the lockdown easing schedule is currently on track.
• After a decent start, retracing the Monday losses, the dollar faltered in NY hours, keeping the USD Index oscillating on either side of the 200-dma.
• SEK was the strongest performer alongside CHF and EUR, while GBP, CAD and NZD were the weakest.
• Focus Wednesday turns to final revisions to March PMI data from across the Eurozone, UK, Australia and the US. US trade balance and the FOMC minutes from their latest rate-setting meeting also cross. Fed's Evans, Kaplan, Barkin & Daly all speak.

EGBs-GILTS CASH CLOSE: BTP Spreads Widen On Supply

European bond markets returned from the long weekend on a weak note, but Bunds and Gilts improved from worst levels in the session in tandem with US Tsys.

• While Bunds weakened by the end of the cash session, Gilts went from underperformer to outperformer.
• But new issuance stole the show in the afternoon, with Italy announcing a dual-tranche syndication (7-/50-Yr) and Portugal a 10-Yr. 10-Yr BTP spread moved from 98bps to over 100bps on the announcement.
• Attention Wednesday is on aforementioned syndications (which are likely to take place tomorrow), plus E4bn of German Bobl - and services PMIs. G20 meeting involving finance ministers and central bankers also bears some attention.

Closing yields/10-Yr Spreads to Bunds:

• Germany: The 2-Yr yield is up 0.7bps at -0.701%, 5-Yr is up 1bps at -0.649%, 10-Yr is up 1.2bps at -0.316%, and 30-Yr is up 0.9bps at 0.235%.
• UK: The 2-Yr yield is down 0.1bps at 0.075%, 5-Yr is up 0.7bps at 0.373%, 10-Yr is up 0.2bps at 0.797%, and 30-Yr is down 0.6bps at 1.337%.
• Italian spread +5bps at 100.9bps/ Spain +2.5bps at 66.1bps/ Portugal +2.1bps at 55.7bps