EXECUTIVE SUMMARY
- MNI: Fed Should Tread Cautiously On Productivity -Goolsbee
- MNI: US Tariffs Could Boost Inflation By 0.81%-1.63% -ATL Fed
- MNI US: Democrat Appropriators Say GOP "Walking Away" From Govt Funding Talks
- MNI US DATA: Chicago Business Barometer™ - Increases to 45.5 in February
- MNI US DATA: Q1 GDP Tracking Slashed On Tariff Front-Running And Weak PCE
- MNI US DATA: Core PCE Recent Trends Stabilize Above Target After Upward Revisions
US
MNI: Fed Should Tread Cautiously On Productivity -Goolsbee
Policymakers don't yet know whether the recent productivity surge will last and monetary policy should react cautiously, Federal Reserve Bank of Chicago President Austan Goolsbee said Friday. If AI becomes the next general-purpose technology generating years of higher productivity growth, it will allow the economy to grow and wages to rise more without triggering inflation, he said.
MNI: US Tariffs Could Boost Inflation By 0.81%-1.63% -ATL Fed
New tariffs on imports from China, Canada and Mexico would noticeably boost consumer prices in an "immediate and persistent" manner, a new study from the Federal Reserve Bank of Atlanta on Friday finds. The Trump administration is threatening 25% levies on goods produced in Mexico and Canada and a doubling of the 10% tariff on Chinese imports starting next week. Such policies "could raise consumer prices on everyday retail purchases, such as food and beverage items and general merchandise, covering about a quarter of the total consumption basket, by 0.81% to 1.63%," wrote Salome Baslandze and three co-authors.
NEWS
MNI US: Democrat Appropriators Say GOP "Walking Away" From Govt Funding Talks
The top Democrat appropriators, Senator Patty Murray (D-WA) and Rep Rosa DeLauro (D-CT), have issued a statement claiming Republicans have walked away from government funding discussions, raising the risk of a government shutdown on March 15. Statement: “It’s incredibly disappointing that Republican leadership is walking away from bipartisan negotiations to fund the government—and raising the risk of a shutdown in so doing.
MNI GLOBAL: President Trump Says Zelenskyy Disrespected US
Latest from Trump (via truth social): “We had a very meaningful meeting in the White House today. Much was learned that could never be understood without conversation under such fire and pressure. It’s amazing what comes out through emotion, and I have determined that President Zelenskyy is not ready for Peace if America is involved, because he feels our involvement gives him a big advantage in negotiations. I don’t want advantage, I want PEACE. He disrespected the United States of America in its cherished Oval Office. He can come back when he is ready for Peace.”
MNI SECURITY: Future Of Gaza Ceasefire Unclear Ahead Of End Of Phase 1
Talks are underway in Cairo on the second phase of the Gaza ceasefire deal, with the first phase set to end on Saturday. Phase 2 of the ceasefire agreement is intended to include a return of all remaining hostages in Gaza and the withdrawal of all Israeli forces from the territory. France24 summarizes a prevailing view amongst analysts: “It will be difficult to reconcile a deal with the war objectives of Israeli Prime Minister Binyamin Netanyahu, who has called for dismantling Hamas’s governing and military capabilities.”
MNI US-RUSSIA: Talks In Istanbul 'Substantive And Businesslike' - Russian MFA
Reuters reporting that diplomatic talks between US and Russian officials in Istanbul yesterday were “substantive and businesslike” according to a Russian Foreign Ministry statement, with Russia suggesting the US, “consider restoring direct air links”. The Russian MFA noted that the US and Russian officials discussed issues related to diplomatic property and “agreed to continue the dialogue through this channel.”
MNI US TSYS: Rates Well Bid on Data, No US/UK Minerals/Peace Accord
- Treasuries look to finish near mid-December highs Friday, new lead Treasury quarterly futures, Jun'25 10y tapped 111-07.5 highs, just below technical resistance at 111-13 (High Dec 10). Global trade and tariff uncertainty coupled with data that leaned towards softer inflation remained supportive:
- Core PCE eased to 2.647% Y/Y from an upward revised 2.865% Y/Y (initial 2.794%) in Dec, as it starts to be helped by more favorable base effects.
- The Atlanta Fed’s GDPNow for Q1 has been slashed to -1.5% from 2.3% annualized in the Feb 19.
- Meanwhile, Chicago PMI, produced with MNI increased 6.0 points to 45.5 in February. This is the second consecutive monthly gain, taking the reading to the highest level since June 2024, though it remains in contractionary territory for the fifteenth consecutive month.
- USD gained ground after Pres Trump & Zelenskyy failed to reach an accord, chances of an imminent ceasefire looking less likely. EURUSD has slipped around 30 pips to 1.0370, but it's emerging markets that are really feeling the pinch, particularly the Hungarian forint. EURHUF rallies ~1.5% from 400 to 406.93 highs before moderating.
OVERNIGHT DATA
MNI US DATA: Core PCE Recent Trends Stabilize Above Target After Upward Revisions
- Core PCE eased to 2.647% Y/Y from an upward revised 2.865% Y/Y (initial 2.794%) in Dec, as it starts to be helped by more favorable base effects.
- Three-month run rate: 2.4% annualized after 2.5% (revised up from 2.2%).
- Six-month run rate: 2.6% after 2.4% (revised up from 2.3%).
- Supercore PCE eased to 3.1% Y/Y from 3.6% Y/Y (revised from 3.5%).
- Three-month run rate: 3.1% annualized after 3.7% (revised up from 3.2%).
- Six-month run rate: 3.3% after 3.3% (revised up from 3.1%).
MNI US DATA: Core PCE Unrounded Details - A Decent Beat
A decent 'beat' when factoring in a sizeable upward revision to Dec (we knew there were Q4 upward revisions) rather than earlier in the quarter on top of the January print at the high end of analyst expectations.
- M/M (SA): 0.285% in Jan (vs BBG cons 0.3 median, MNI unrounded 0.26 av)
- Follows 0.208% in Dec (initial 0.156%), 0.1% in Nov (initial 0.108%)
- Y/Y (SA): 2.647% in Jan (cons 2.6) from 2.865% in Dec
MNI US DATA: Chicago Business Barometer™ - Increases to 45.5 in February
The Chicago Business Barometer™, produced with MNI increased 6.0 points to 45.5 in February. This is the second consecutive monthly gain, taking the reading to the highest level since June 2024, though it remains in contractionary territory for the fifteenth consecutive month.
- The rise was driven by increases in four out of five subcomponents: Production, New Orders, Supplier Deliveries and Order Backlogs, whilst Employment fell.
- Production expanded 7.6 points to 46.7. This is the second successive monthly increase taking the index to its highest level seen since June 2024.
- New Orders broadened 5.0 points. This takes the subcomponent to its highest level since November 2023, and firmly above the 2024 average.
- Supplier Deliveries extended 9.5 points, partially reversing January’s dip. However, it is hard to know whether this should be seen as a positive as slower deliveries don’t necessarily reflect stronger demand.
- Order Backlogs grew 5.2 points, to the highest level since September 2024.
- Employment in contrast fell 1.5 points to 36.3, printing another lowest level since June 2020. Almost 40% of respondents reported lower levels of employment for the first time since mid-2009.
- Prices Paid leapt 16.9 points to 77.1. This is the largest monthly increase since July 1957, bringing the index to its highest level since August 2022. No respondents reported lower prices, whilst over half reported higher prices.
- Inventories decreased 9.9 points.
MNI US DATA: Q1 GDP Tracking Slashed On Tariff Front-Running And Weak PCE
- The Atlanta Fed’s GDPNow for Q1 has been slashed to -1.5% from 2.3% annualized in the Feb 19.
- It was primarily driven by the net trade contribution being revised down from -0.4pp to -3.7pps after the huge trade deficit in signs of tariff front-running.
- This would mark a sharp trade drag after a largely neutral contribution in Q4 (seen adding just 0.04pps in the second Q4 release), but if it’s tariff front-running it should be reversed in due course.
- Real personal consumption tracking was also cut sharply though, revised down from 1.3% to 2.3% after a notably weaker than expected January PCE print.
MNI CANADA DATA: Canada Q4 GDP Annualized +2.6% Beats BOC's +1.8% Estimate
- Canada Q4 annualized GDP +2.6%, beating BOC's +1.8% estimate. Increase driven by household spending suggests boost from two-month tax holiday and BOC's six rate cuts that started June. Exports and business investment also led gains but imports and inventories were drags.
- Jan flash estimate +0.3% MOM led by mining, quarrying, oil and gas, wholesale trade and transportation but decline in retail partially offset gains. This suggests momentum into Q1.
- Dec GDP rebounds +0.2% MOM from Nov -0.2%. Dec increase driven by retail +2.6%, largest monthly gain since June 2021, supported by tax holiday.
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA up 330.39 points (0.76%) at 43575.15
S&P E-Mini Future up 42.75 points (0.73%) at 5920.75
Nasdaq up 127.3 points (0.7%) at 18676.28
US 10-Yr yield is down 4.4 bps at 4.2158%
US Jun 10-Yr futures are up 16.5/32 at 111-5
EURUSD down 0.0033 (-0.32%) at 1.0366
USDJPY up 0.69 (0.46%) at 150.5
WTI Crude Oil (front-month) down $0.43 (-0.61%) at $69.92
Gold is down $28.14 (-0.98%) at $2849.36
European bourses closing levels:
EuroStoxx 50 down 9.02 points (-0.16%) at 5463.54
FTSE 100 up 53.53 points (0.61%) at 8809.74
German DAX up 0.54 points (0%) at 22551.43
French CAC 40 up 9.11 points (0.11%) at 8111.63
US TREASURY FUTURES CLOSE
3M10Y -4.257, -8.616 (L: -9.994 / H: -2.707)
2Y10Y +2.015, 22.488 (L: 18.774 / H: 23.614)
2Y30Y +3.681, 51.26 (L: 46.107 / H: 52.909)
5Y30Y +3.189, 48.619 (L: 45.014 / H: 50.363)
Current futures levels:
Jun 2-Yr futures up 5.625/32 at 103-15.875 (L: 103-10.5 / H: 103-16.25)
Jun 5-Yr futures up 12/32 at 107-31.25 (L: 107-20.75 / H: 108-00.75)
Jun 10-Yr futures up 17/32 at 111-5.5 (L: 110-23 / H: 111-07.5)
Jun 30-Yr futures up 24/32 at 118-8 (L: 117-17 / H: 118-10)
Jun Ultra futures up 29/32 at 124-10 (L: 123-11 / H: 124-15)
MNI US 10YR FUTURE TECHS: (M5) Trend Needle Points North
- RES 4: 112-02 1.382 proj of the Jan 13 - Feb 7 - Feb 12 price swing
- RES 3: 111-22+ High Dec 3 ‘24 and a key resistance
- RES 2: 111-13 High Dec 10
- RES 1: 111-06 High Feb 28
- PRICE: 110-31+ @ 16:47 GMT Feb 28
- SUP 1: 110-00 High Feb 7 and a recent breakout point
- SUP 2: 109-14+ 50-day EMA and a key near-term support
- SUP 3: 108-21 Low Feb 19
- SUP 4: 108-03+ Low Dec 12 and a bear trigger
A bullish cycle in Treasury futures remains in play and Friday’s fresh cycle high, reinforces current conditions. The contract has traded through 110-20, the 76.4% retracement of the Dec 3 - Jan 13 bear leg. A clear break of this level strengthens the recovery and signals scope for a climb towards the 111-22+, the Dec 3 ‘24 high, and a key resistance. Initial firm support to monitor is 109-14+, the 50-day EMA.
SOFR FUTURES CLOSE
Mar 25 +0.018 at 95.715
Jun 25 +0.065 at 95.955
Sep 25 +0.090 at 96.175
Dec 25 +0.105 at 96.315
Red Pack (Mar 26-Dec 26) +0.090 to +0.105
Green Pack (Mar 27-Dec 27) +0.075 to +0.090
Blue Pack (Mar 28-Dec 28) +0.075 to +0.080
Gold Pack (Mar 29-Dec 29) +0.075 to +0.085
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M +0.00203 to 4.32471 (+0.00541/wk)
- 3M -0.00173 to 4.31678 (-0.00302/wk)
- 6M -0.00501 to 4.25675 (-0.03401/wk)
- 12M -0.00819 to 4.12672 (-0.09670/wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.36% (+0.06), volume: $2.557T
- Broad General Collateral Rate (BGCR): 4.34% (+0.03), volume: $954B
- Tri-Party General Collateral Rate (TCR): 4.34% (+0.03), volume: $925B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $110B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $280B
FED Reverse Repo Operation
RRP usage surged over $200B this afternoon to $234.442B from $182.044B on Thursday. Compares to $58.770B (lowest level since mid-April 2021) on February 14. The number of counterparties at 50 from 41 prior.
MNI PIPELINE: Corporate Bond Issuance, February Total Over $194B
- No new US$ corporate bond issuance Friday after $53.2B total issued on week, just over $194B for the month
MNI EGBS: CASH CLOSE: Paring of Risk Off Open Gains, EZ HICP Next Focus Point
EGBs have moved off recent highs seen after a short-lived latest rally in spillover from negative US 1 GDP tracking, and indeed German 10s have recently touched session lows amidst narrow ranges.
- RXH5 trades at 132.99 (+ .10), close to recent session lows of 132.94 having pushed through the 133.00 seen after nationwide CPI data at 1400CET. That said, the day’s high of 133.46 marks a latest extension of the bull cycle that started Feb 19, after which lies 133.71 (Feb 5 high and a reversal trigger).
- EGBs more broadly are mildly firmer on the day, with most 2Y yields between 0-2bp lower on the day and 10Y yields between -1bp and +0.5bp.
- In 10Y space, OATs underperform with the OAT-Bund spread at 73.7bp (+1.2bp) widening back towards levels seen at the open prior to softer than expected French HICP inflation (at 0.9% Y/Y vs cons 1.1%).
- Peripheral spreads have tightened intraday though, with the BTP-Bund spread in particular back to 112.8bp (-0.1bp) having pushed easily above 115bp in early trading, aided by an almost 1% intraday recovery in the Euro Stoxx 50 to close -0.2% on the day.
- Next week sees early focus with flash February HICP for the Eurozone on Monday, with risks of it coming in at the higher end of our previous tracking of 2.1-2.2% Y/Y. The ECB is of course on Thursday, fully expected to cut another 25bps, whilst more broadly, defense spending deliberations will continue to have an impact and the Bundesbank’s debt brake reform on Mar 5 will also be watched.
MNI FOREX: Late Trump/Zelenskyy Headlines Sour Risk Sentiment / Boost Greenback
- Latest tariff developments this week have prompted a solid 1.40% recovery for the USD index from the week’s lows as markets digest the potential impact of a more protectionist US trade policy. Furthermore, latest negative developments from the White House as discussions between Trump and Zelenskyy sour have weighed on risk sentiment, further boosting the dollar.
- It’s emerging markets where the real pain has been late Friday, with the likes of ZAR and HUF the weakest global currencies. EURHUF rallied from around 400 to 407 on the headlines, as the latest optimism to a Russia/Ukraine ceasefire evaporated.
- Underlying this theme, it is the risk sensitive AUD and NZD which have significantly underperformed in G10. Weekly losses now total 2.57% and 2.69% respectively, with the doubling of China tariffs adding to the bearish momentum.
- This has seen NZDUSD slide back below 0.5600, and a daily close here would be the weakest since mid-Jan. Price action will keep markets pondering a revisit to the YTD lows of 0.5516 in the near-term.
- For AUDUSD, the steep sell-off yesterday and the follow through today is signalling scope for a deeper retracement. Downside momentum is bolstered by spot comfortably back below the 20- and 50-day EMAs, exposing support at 0.6171, the Feb 4 low. A break of this level would suggest scope for test of the bear trigger at 0.6088, the Feb 3 low.
- The Japanese Yen is also among the weakest performers in G10 Friday despite the lower US yields, as markets suggest the bullish yen narrative in recent weeks could be losing steam. USDJPY rose from overnight lows of 149.10 to reach as highs as 150.99 before moderating into the close.
- Eurozone inflation data and US ISM Manufacturing PMI headline Monday’s economic calendar.
MONDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 03/03/2025 | 0700/0200 | * |  TR | Turkey CPI |
| 03/03/2025 | 0815/0915 | ** |  ES | S&P Global Manufacturing PMI (f) |
| 03/03/2025 | 0845/0945 | ** |  IT | S&P Global Manufacturing PMI (f) |
| 03/03/2025 | 0850/0950 | ** |  FR | S&P Global Manufacturing PMI (f) |
| 03/03/2025 | 0855/0955 | ** |  DE | S&P Global Manufacturing PMI (f) |
| 03/03/2025 | 0900/1000 | ** |  EU | S&P Global Manufacturing PMI (f) |
| 03/03/2025 | 0900/1000 | IT | Deficit to GDP 2024/ GDP Y/Y | |
| 03/03/2025 | 0930/0930 | ** |  GB | BOE Lending to Individuals |
| 03/03/2025 | 0930/0930 | ** | GB | BOE M4 |
| 03/03/2025 | 0930/0930 | ** | GB | S&P Global Manufacturing PMI (Final) |
| 03/03/2025 | 1000/1100 | *** | EU | HICP (p) |
| 03/03/2025 | - | *** |  US | Domestic-Made Vehicle Sales |
| 03/03/2025 | 1445/0945 | *** | US | S&P Global Manufacturing Index (final) |
| 03/03/2025 | 1500/1000 | *** | US | ISM Manufacturing Index |
| 03/03/2025 | 1500/1000 | * | US | Construction Spending |
| 03/03/2025 | 1630/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 03/03/2025 | 1630/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 03/03/2025 | 1735/1235 | US | St. Louis Fed's Alberto Musalem | |
| 04/03/2025 | 2330/0830 | * |  JP | Labor Force Survey |
| 04/03/2025 | 0001/0001 | * | GB | BRC Monthly Shop Price Index |
| 04/03/2025 | 0030/1130 |  AU | RBA Meeting Minutes | |
| 04/03/2025 | 0030/1130 | AU | Balance of Payments: Current Account | |
| 04/03/2025 | 0030/1130 | ** | AU | Retail Trade |