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MNI ASIA OPEN: Hawks Coming To Roost, 30YY Tops 2.55%


  • MNI FED: Powell's New Mantra: "Restoring Price Stability"
  • MNI: Fed's Powell Says Open to Larger Rate Hikes If Needed
  • FED: Powell Comments A Recipe For Flatter Curve
  • MNI BRIEF: Powell Sees GDP As Benchmark For Fed Balance Sheet
  • MNI BRIEF: Fed's Bostic Says Runoff Will Complement Rate Path


FED: Note the hawkish title of Chair Powell's speech today "Restoring Price Stability"
As we noted in our Fed review, this is symbolic of a very hawkish shift at the Fed - He referred multiple times last week to the need to "restore" price stability, a subtle but very important change in language from the usual "maintain price stability"

FED: Federal Reserve Chair Jerome Powell on Monday pledged to "take the necessary steps" to return inflation to 2%, including hiking benchmark interest rates by more than 25bps at a time and taking policy into restrictive territory.

  • "We will take the necessary steps to ensure a return to price stability," he told a National Association of Business Economists conference in Washington. "In particular, if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so. And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well."
  • Inflation is "much too high," and the war in Ukraine has heightened the risk that an extended period of high inflation could push longer-term inflation expectations "uncomfortably higher," underscoring the need for the FOMC to "move expeditiously," the Fed chair said. For more see MNI Policy main wire at 1232ET.
FED: Powell's response to the question of what would prevent the FOMC from hiking by 50bp in May was telling: "Nothing. Executive summary." While he mitigated that comment with the usual caveats that the FOMC hasn't yet decided, and that they will raise by 50bp at a meeting or meetings if appropriate.
  • That's about as strong a hint as you will get that the FOMC is headed to a half-point hike at the next meeting unless circumstances change.
  • If you wanted Powell to endorse a further yield curve flattening, you couldn't have done much better than that, when you include the final response implying they look mainly at the yield curve 18 months out (and downplaying the importance of 2s10s).
FED: Federal Reserve Chair Jerome Powell said Monday the Fed will likely shrink its USD8.9 trillion balance sheet over the next three years to a size that is similar in proportion to GDP as that which existed before the pandemic. "That process should take around three years. We won't get numerically to the same level we'll get roughly to the same level of GDP I think," he said.

FED: Atlanta Fed President Raphael Bostic Monday said uncertainty emanating from the war in Ukraine has not altered his view to get going soon on reducing the balance sheet at a faster pace than after the financial crisis, a move that will complement the interest rate path.

  • "Ukraine has not changed my view on that," Bostic told reporters after a speech, also noting he sees growth this year at 2.8% and inflation at 4.1%. The Atlanta Fed president said he does not see inflation falling to 2% "probably not until 2024." For more see MNI Policy main wire.

US TSYS: FI Sell-Off: Like Another FOMC Day Sans FOMC

US FI markets sold off in response to renewed hawkish Fed speak Monday, Tsy yields steadily higher with 30Y tapping 2.5531% late (highest lvls since Aug 2019).
  • Initial weakness after Atl Fed Bostic said uncertainty emanating from war in Ukraine has not altered his view to get going soon on reducing the balance sheet at a faster pace than after the financial crisis, a move that will complement the interest rate path.
  • Like another FOMC day sans FOMC: FI sell-off accelerated early afternoon after Fed Chair Powell's hawkish comments from NABE conf, willingness to make "more than 25bp" hikes at each meeting in order to keep inflation in check if needed.
  • Eurodollar Whites fell as much as -0.225 (EDU2-EDH3 -0.175-0.185 settle) as futures price in combination of 2 full points of rate hikes by year end.
  • Why wasn't Chair Powell more Hawkish at the March 16 FOMC, one trader queried. Another desk pondered today's moves meant either markets under-reacted to the March 16 FOMC or are over reacting today -- maybe a combination of both.
  • Data roundup for Tuesday: More Fed Speak Than Data (Richmond Fed Mfg):
    • 0910ET: NY Fed Wuerffell Sr VP on post-LIBOR world, ISDA webinar, Q&A
    • 1000ET Richmond Fed Mfg. Index (1, 2)
    • 1035ET: NY Fed Williams BIS panel discussion, no text, moderated Q&A
    • 1130ET: US Tsy $34B 52W bill auctions
    • 1400ET: SF Fed Daly Brookings Inst discussion
    • 1700ET: Cleveland Fed Mester on economy, mon-pol, text and Q&A


Limited economic data Monday: Chicago Fed National Activity Index at 0.51 vs 0.59 Prior


Key late session market levels:

  • DJIA down 356.06 points (-1.02%) at 34397.2
  • S&P E-Mini Future down 24 points (-0.54%) at 4429.25
  • Nasdaq down 153.4 points (-1.1%) at 13739.08
  • US 10-Yr yield is up 15.7 bps at 2.3059%
  • US Jun 10Y are down 45/32 at 123-7.5
  • EURUSD down 0.0032 (-0.29%) at 1.1018
  • USDJPY up 0.29 (0.24%) at 119.47
  • WTI Crude Oil (front-month) up $7.2 (6.88%) at $111.90
  • Gold is up $12.73 (0.66%) at $1934.34
European bourses closing levels:
  • EuroStoxx 50 down 20.64 points (-0.53%) at 3881.8
  • FTSE 100 up 37.66 points (0.51%) at 7442.39
  • German DAX down 86.12 points (-0.6%) at 14326.97
  • French CAC 40 down 37.91 points (-0.57%) at 6582.33


  • 3M10Y +9.411, 182.742 (L: 174.673 / H: 183.582)
  • 2Y10Y -1.697, 18.801 (L: 17.271 / H: 22.465)
  • 2Y30Y -5.856, 41.8 (L: 39.235 / H: 47.843)
  • 5Y30Y -6.693, 20.887 (L: 18.455 / H: 26.305)
  • Current futures levels:
  • Jun 2Y down 10.75/32 at 106-05.75 (L: 106-04.875 / H: 106-17.12)
  • Jun 5Y down 30.25/32 at 115-05.25 (L: 115-03.5 / H: 116-02.75)
  • Jun 10Y down 1-03/32 at 123-07.5 (L: 123-05 / H: 124-18)
  • Jun 30Y down 2-31/32 at 149-16 (L: 149-16 / H: 152-11)
  • Jun Ultra 30Y down 4-02/32 at 174-11 (L: 174-11 / H: 178-10)

US 10Y FUTURES TECH: (M2)‌‌ Trend needle Still Points South

  • RES 4: 128-04 High Mar 8
  • RES 3: 127-14+ High Mar 9
  • RES 2: 126-00 20-day EMA
  • RES 1: 125-14+ Low Feb 10 and a recent breakout level
  • PRICE: 124-10 @ 11:00 GMT Mar 21
  • SUP 1: 123-25+ Low Mar 16 and the bear trigger
  • SUP 2: 123-19+ 150.0% retracement of the Feb 10 - Mar 7 climb
  • SUP 3: 123-06 161.8% retracement of the Feb 10 - Mar 7 climb
  • SUP 4: 122-29+ 76.4% of the Oct ‘18 - Mar ‘20 upleg (cont)

Treasuries are consolidating and remain above the Mar 15 low of 123-25+. Trend conditions are bearish - last Monday’s strong sell-off resulted in a break of 125-14+, the Feb 10 low and a bear trigger. This confirmed a resumption of the primary downtrend and confirmed an extension of the bearish price sequence of lower lows and lower highs. This opens 123-19+ next. Initial firm resistance is seen at 125-14+.


  • Jun 22 -0.120 at 98.435
  • Sep 22 -0.210 at 97.890
  • Dec 22 -0.205 at 97.460
  • Mar 23 -0.210 at 97.205
  • Red Pack (Jun 23-Mar 24) -0.205 to -0.185
  • Green Pack (Jun 24-Mar 25) -0.195 to -0.18
  • Blue Pack (Jun 25-Mar 26) -0.175 to -0.16
  • Gold Pack (Jun 26-Mar 27) -0.16 to -0.14


US DOLLAR LIBOR: Latest settlements:

  • O/N +0.00143 at 0.33014% (+0.24942 total last wk)
  • 1 Month -0.00257 to 0.44400% (+0.05000 total last wk)
  • 3 Month +0.02357 to 0.95757% (+0.10800 total last wk) ** Record Low 0.11413% on 9/12/21
  • 6 Month +0.04857 to 1.33614% (+0.15700 total last wk)
  • 1 Year +0.08171 to 1.86814% (+0.19043 total last wk)

STIR: FRBNY EFFR for prior session:

  • Daily Effective Fed Funds Rate: 0.33% volume: $72B
  • Daily Overnight Bank Funding Rate: 0.32% volume: $253B

US TSYS: Repo Reference Rates

  • Secured Overnight Financing Rate (SOFR): 0.30%, $968B
  • Broad General Collateral Rate (BGCR): 0.30%, $381B
  • Tri-Party General Collateral Rate (TGCR): 0.30%, $371B
  • (rate, volume levels reflect prior session)

FED Reverse Repo Operation

NY Federal Reserve/MNI

NY Fed reverse repo usage climbs to highest since Feb 23 at $1,728.893B w/ 90 counterparties vs. $1,715.148B prior session -- remains well off all-time high of $1,904.582B on Friday, December 31.

PIPELINE: $8.75B GlaxoSmithKline (GSK), 7Pt Launched

GSK 7Pt leads with $8.75B multi-tranche jumbo. Still waiting for Philippines Bank and KEB Hana Bank to launch.

  • Date $MM Issuer (Priced *, Launch #)
  • 03/21 $8.75B #GlaxoSmithKline (GSK) $700M 2NC1 +90, $300M 2NC1 SOFR+89, $1.75B 3Y +90, $2B 5Y +110, $1B 7Y +115, $2B 10Y +135, $1B 30Y +158
  • 03/21 $4B #ING $1.25B 4NC3 +155, $500M 4NC3 SOFR+164, $1.25B 6NC5 +170, $1B 11NC10 +195
  • 03/21 $750M #Humana 7Y +137.5
  • 03/21 $525M #Union Electric 30Y +135
  • 03/21 $1.25B #Sempra $750M 3Y +102, $500M 7Y +140
  • 03/21 $Benchmark Philippines Bank 5Y +125a, 10.5Y +165a, 25Y 4.7%a
  • 03/21 $Benchmark KEB Hana Bank 3Y, 5Y investor calls
  • Rolled to Tuesday:
  • 03/22 $1B IBRD (World Bank) 2Y +17a, 10Y +41a
  • 03/22 $Benchmark Kommunalbanken 2.5Y SOFR+27a

EGBs-GILTS CASH CLOSE: Powell Completes The Rout

Yields surged to start the week, with UK yields up double-digits across the curve, and the German curve bear steepening.

  • Yields climbed steadily throughout the session. Among other milestones, 10Y Bund yields hit the highest since 2018.
  • Hawkish comments by Federal Reserve Chair Powell toward the end of the European session (including hinting strongly at a 50bp rate hike) completed the rout.
  • Not exactly a risk-on session, with equities mixed at best; performances in periphery likewise mixed (BTP spreads higher, Greece lower).

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is up 5.4bps at -0.284%, 5-Yr is up 8.6bps at 0.176%, 10-Yr is up 9.7bps at 0.47%, and 30-Yr is up 9.7bps at 0.658%.
  • UK: The 2-Yr yield is up 11.3bps at 1.322%, 5-Yr is up 13.4bps at 1.378%, 10-Yr is up 14.1bps at 1.638%, and 30-Yr is up 12.3bps at 1.866%.
  • Italian BTP spread up 2bps at 153.9bps / Greek down 5.1bps at 222bps

FOREX: Greenback Subdued Despite Spike In US Yields, USDJPY Remains Firm

  • Major currencies remained on the side-lines throughout Monday trade. While the dollar index sits in positive territory, up around 0.25%, the action was extremely subdued given the moves seen in US yields.
  • With Chair Powell confirming the Fed’s endorsement for the increasingly hawkish path in the dot plot, front-end yields spiked as much as 20 basis points but this was unable to spark any life into the dollar or indeed G10 FX markets overall.
  • With that said, USDJPY (+0.25%) continues to edge higher after the pair posted its Highest weekly close since January 2016 last Friday. The pair remains on an upward trajectory following significant break of 116.35 and the subsequent impressive three big figure extension in just over a week.
  • Last week’s important technical break was the move through resistance at 118.60/66, the Jan 3 ‘17 and Dec 15 ‘16 highs, strengthening current bullish technical conditions. Note too that the USD is also approaching the top of a bull channel, at 119.90, drawn from the Jun 1, 2021 high - an important chart point and resistance.
  • With Powell’s rhetoric taking the shine off the recent equity rally, AUD and NZD are Monday’s laggards, both retreating between 0.35-0.45% and closely followed by the single currency.
  • After probing key short-term resistance at 1.1121 last week, the near-term outlook has improved for EURUSD. However, a clear break is still required to signal potential for a stronger recovery. A continuation of the reversal lower from here would instead open the bear trigger at 1.0806, Mar 7 low.
  • RBA Governor Lowe is scheduled to speak at the Walkley Awards for Business Journalism, in Sydney overnight. This comes ahead of potential comments from ECB’s Lagarde, due to speak about the future of money in the Eurosystem and the potential role for a digital Euro at an online summit.
  • A light data calendar on Tuesday, however UK inflation data precedes the UK budget release on Wednesday.


22/03/20220700/0700***UKPublic Sector Finances
22/03/20220720/0820EUECB de Guindos in Panel at Money Review Banking Summit
22/03/20220900/1000**EUEZ Current Acc
22/03/20221000/1100**EUConstruction Production
22/03/20221100/1100**UKCBI Industrial Trends
22/03/20221230/0830**USPhiladelphia Fed Nonmanufacturing Index
22/03/20221255/0855**USRedbook Retail Sales Index
22/03/20221310/1410EUECB Panetta Opening CCP Risk Management Conference
22/03/20221315/1415EUECB Lagarde Speech at BIS Innovation Summit
22/03/20221400/1000**USRichmond Fed Survey
22/03/20221515/1515UKBOE Cunliffe Panels BIS Innovation Summit
22/03/20221530/1130**USUS Treasury Auction Result for 52 Week Bill
22/03/20221700/1800EUECB Lane Panels Discussion on Flexible Exchange Rates
22/03/20221800/1400USSan Francisco Fed's Mary Daly
22/03/20222100/1700USCleveland Fed's Loretta Mester

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