EXECUTIVE SUMMARY
- MNI NY FED BRIEF: 5-Yr Inflation Expectation Highest Since May
- MNI US-EU: Commission-No Justification For Tariffs, Will React To Protect Interests
- MNI ISRAEL: Def Min-Military Will Be On Alert Following Hamas Statement On Hostages
- MNI US DATA: NY Fed Near-Term Inflation Expectations Bely U.Mich Jump
US
MNI NY FED BRIEF: 5-Yr Inflation Expectation Highest Since May
Inflation expectations in January remained unchanged at the short- and medium-term horizons but the longer term measure jumped three tenths to the highest since May, according to the New York Fed's monthly survey of consumers Monday.
- Median year-ahead inflation expectations were unchanged at 3.00% and the three-year-ahead measure stood at 2.99%. The five-year-ahead measure increased 0.26pp to 2.98%. Several Fed officials in recent weeks have said they are especially focused on inflation expectations and emphasized the need to keep expectations well anchored after the surge in inflation following the pandemic.
NEWS
MNI US-EU: Commission-No Justification For Tariffs, Will React To Protect Interests
The European Commission has released a short statement following the announcement by US President Donald Trump of 25% tariffs on all aluminum and steel imports into the US. The Commission says that it has not yet received and official notification regarding the imposition of tariffs, adding that it will not respond to 'broad announcements' without additional detail. Nevertheless, the statement says: "The EU sees no justification for the imposition of tariffs on its exports. We will react to protect the interests of European businesses, workers and consumers from unjustified measures."
MNI ISRAEL: Hamas To Delay Release Of Next Batch Of Hostages-BBG
Bloomberg reports that a spox for Hamas has said that the group will delay the next Saturday delivery of Israeli hostages, citing alleged violations by the IDF of the ceasefire in place in Gaza. Spox says "We will not release kidnapped persons until further notice".
MNI ISRAEL: Def Min-Military Will Be On Alert Following Hamas Statement On Hostages
Following Hamas' announcement that the next release of Israeli hostages planned for the weekend had been postponed, Defence Minister Israel Katz claims that Hamas not releasing hostages "is a violation of the ceasefire deal". Katz: "I have instructed the IDF to prepare at the highest level of alert for any possible scenario in Gaza and to protect the communities. We will not allow a return to the reality of October 7." There remains the significant risk of an escalation in the conflict once again, something that would both inflame regional tensions and risk a humanitarian crisis given many Palestinians have returned to their home towns across Gaza following the ceasefire's implementation.
MNI SECURITY: Russia Restates Hardline Ceasefire Conditions Ahead Of Expected Talks
Reuters reporting that Russian Deputy Minister for Foreign Affairs, Sergei Ryabkov, reiterated that Russia’s conditions for ending the war in Ukraine have not changed since Russian President Vladimir Putin outlined a proposalin June last year.Ryabkov: “…the sooner the USA and the West understand that all of Putin’s conditions need to be fulfilled the sooner there will be a settlement… As for our dialogue with US on strategic stability, situation does not look promising as Putin said…” The comments come as Washington and Moscow maintain ambiguity on an acceptable ceasefire framework, particularly regarding any security guarantees for both Ukraine and Russia that could unlock talks.
MNI US TSYS: Headline Risk Tempers Early Sentiment, Focus on Powell Senate Testimony
- Treasuries look to finish mostly lower Monday, lower half of the range, curves steeper with the short end outperforming (2s10s +2.075 at 22.410). Mar'25 10Y futures trade 109-05 after the bell (-2.5) after climbing to 109-13.5 high midmorning, well below initial technical resistance at 110-00 (High Feb 7).
- Headlines continue to rattle markets & squelch sentiment: Tsys & stocks had gapped lower on the overnight open after President Trump announced 25% tariffs on all imported steel and aluminum into the U.S. Market recovered from early overnight lows as details on last Friday's vague reciprocal tariff implementation appear to be delayed until later in the week.
- Risk off sentiment reemerged as Israeli/Hamas hostage transfers appear to have hit a snag with both sides accusing each other for breaching ceasefire/transfer agreements.
- The USD index is holding onto 0.2% gains on Monday, as the initial reaction to a Trump announcement of tariffs on steel and aluminium bolstered the greenback. Aside from the Japanese yen, G10 currency ranges have remained subdued as markets await the key US CPI data due on Wednesday.
- Focus turns to Fed Chairman Powell's testimony to the Senate Banking committee tomorrow at 1000ET (text, Q&A)
OVERNIGHT DATA
MNI US DATA: NY Fed Near-Term Inflation Expectations Bely U.Mich Jump
- The NY Fed consumer survey saw 1Y and 3Y inflation expectations unchanged in January at 3.0% although the 5Y bounced three tenths after a two tenth decline to 3.0% for its highest since May.
- 1Y inflation expectations have been particularly steady in recent months, averaging 3.0% since June in a 2.9-3.0% range.
- That’s in contrast to the U.Mich equivalent which has ramped up to 4.3% as of last week’s preliminary February release after 3.3% in July, but does have a pronounced issue with partisanship. It was 2.8% prior to Trump’s inauguration and 2.7% prior to the November presidential election.
- That said, the NY Fed’s 5Y metric is likely to be watched from here, with the 3.0% at joint highs for the limited history back to Jun 2022.
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA up 154.03 points (0.35%) at 44456.26
S&P E-Mini Future up 38.75 points (0.64%) at 6088.25
Nasdaq up 200.1 points (1%) at 19723.11
US 10-Yr yield is up 0.8 bps at 4.5028%
US Mar 10-Yr futures are down 2.5/32 at 109-5
EURUSD down 0.0023 (-0.22%) at 1.0305
USDJPY up 0.61 (0.4%) at 152.02
WTI Crude Oil (front-month) up $1.4 (1.97%) at $72.40
Gold is up $42.2 (1.48%) at $2903.26
European bourses closing levels:
EuroStoxx 50 up 32.9 points (0.62%) at 5358.3
FTSE 100 up 67.27 points (0.77%) at 8767.8
German DAX up 124.74 points (0.57%) at 21911.74
French CAC 40 up 33.19 points (0.42%) at 8006.22
US TREASURY FUTURES CLOSE
3M10Y +0.864, 16.51 (L: 11.874 / H: 16.51)
2Y10Y +2.471, 22.806 (L: 19.121 / H: 23.052)
2Y30Y +4.07, 44.194 (L: 39.417 / H: 44.946)
5Y30Y +2.94, 37.344 (L: 34.488 / H: 38.155)
Current futures levels:
Mar 2-Yr futures up 0.125/32 at 102-23.25 (L: 102-21.875 / H: 102-24.75)
Mar 5-Yr futures down 0.75/32 at 106-14 (L: 106-11.75 / H: 106-19.25)
Mar 10-Yr futures down 3/32 at 109-4.5 (L: 109-02.5 / H: 109-13.5)
Mar 30-Yr futures down 8/32 at 115-9 (L: 115-07 / H: 115-29)
Mar Ultra futures down 18/32 at 120-8 (L: 120-08 / H: 121-05)
MNI US 10YR FUTURE TECHS: (H5) Short-Term Trend Needle Points North
- RES 4: 110-25 High Dec 12
- RES 3: 110-19 76.4% retracement of the Dec 6 - Jan 13 bear leg
- RES 2: 110-14 High Dec 14
- RES 1: 110-00 High Feb 7
- PRICE: 109-05 @ 11:27 GMT Feb 10
- SUP 1: 108-20+ Low Feb 4
- SUP 2: 108-06/107-06 Low Jan 23 / 13 and the bear trigger
- SUP 3: 107-04 Low Apr 25 ‘24 and a key support
- SUP 4: 106-11 2.00 proj of the Oct 1 - 14 - 16 price swing
A bull phase in Treasury futures remains in play and the contract is holding on to the bulk of its latest gains. Price has traded through the 50-day EMA of 109-10+. This highlights potential for a stronger reversal and sights are on a climb above the 110-00 handle. On the downside, initial firm support to watch is unchanged at 108-20+, the Feb 4 low. Clearance of it would signal a reversal and the end of the corrective cycle.
SOFR FUTURES CLOSE
Mar 25 -0.005 at 95.715
Jun 25 steady00 at 95.830
Sep 25 steady00 at 95.930
Dec 25 +0.005 at 960
Red Pack (Mar 26-Dec 26) -0.005 to +0.005
Green Pack (Mar 27-Dec 27) -0.01 to -0.005
Blue Pack (Mar 28-Dec 28) -0.01 to -0.005
Gold Pack (Mar 29-Dec 29) -0.015 to -0.01
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M +0.00328 to 4.31847 (+0.00213 total last wk)
- 3M +0.01075 to 4.31469 (+0.00169 total last wk)
- 6M +0.02121 to 4.27893 (+0.00941 total last wk)
- 12M +0.04061 to 4.21972 (+0.01881 total last wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.35% (-0.01), volume: $2.336T
- Broad General Collateral Rate (BGCR): 4.34% (+0.00), volume: $929B
- Tri-Party General Collateral Rate (TCR): 4.34% (+0.00), volume: $901B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $107B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $286B
FED Reverse Repo Operation
RRP usage inches up to $99.653B this afternoon from Friday's $95.248B - compares to last Wednesday's $78.788B -- lowest level since mid-April 2021. The number of counterparties rebounds to 41 from 33 prior.
MNI PIPELINE: Corporate Bond Update: $6.5B Eli Lilly 6Pt Launched
- Date $MM Issuer (Priced *, Launch #)
- 02/10 $6.5B #Eli Lilly $1B 3Y +27, $1.25B 5Y +42, $1B 7Y +50, $1.25B 10Y +60, $1.25B 30Y +80, $750M 40Y +90
- 02/10 $2B #Union Pacific $1B 10Y +65, $1B 30Y +88
- 02/10 $500M #Textron 10Y +102
- Expected to launch Tuesday:
- 02/11 $700M Snap Inc 8NC3 7%a
MNI BONDS: EGBs-GILTS CASH CLOSE: Gilts Modestly Outperform
Gilts modestly outperformed Bunds Monday.
- Core European bonds faded slightly in the post-weekend re-open, with EGBs weighed down by higher gas prices, and only a fairly muted reaction to US President Trump's declaration of steel and alluminium tariffs.
- With no Tier 1 data on Monday's schedule, Bund and Gilt yields drifted lower in afternoon trade amid a modest pickup in market bids though no clear headline catalyst - all within last week's ranges.
- ECB's Lagarde reiterated in her remarks to the EU Parliament that inflation remains on track to reach 2% but that "greater friction in global trade would make the euro area inflation outlook more uncertain.”
- The UK and German curves moderately bull steepened on the day. Front-ends were boosted by an extension of central bank cut pricing (ECB end-2025 to 90bp vs 87bp Friday, BoE to 65bp from 60bp).
- Periphery EGB spreads were mostly tighter, with Greece's widening slightly (BTPs saw little reaction to an Italy syndication 15Y syndication announcement, which had been anticipated by MNI).
- Tuesday's agenda includes pricing of the syndication of the new 4.50% Mar-35 gilt and scheduled comments from BoE’s Bailey & Mann (see MNI's Gilt Week Ahead for more, PDF), while ECB's Schnabel speaks on a panel.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 2.2bps at 2.026%, 5-Yr is down 1.1bps at 2.142%, 10-Yr is down 1bps at 2.362%, and 30-Yr is down 0.6bps at 2.615%.
- UK: The 2-Yr yield is down 2.2bps at 4.146%, 5-Yr is down 2.6bps at 4.147%, 10-Yr is down 1.9bps at 4.457%, and 30-Yr is unchanged at 5.056%.
- Italian BTP spread down 0.6bps at 108.8bps / French OAT up 0.5bps at 72.4bps
MNI FOREX: USD Index Holds Moderate Advance, JPY Remains Volatile
- The USD index is holding onto 0.2% gains on Monday, as the initial reaction to a Trump announcement of tariffs on steel and aluminium bolstered the greenback. Aside from the Japanese yen, G10 currency ranges have remained subdued as markets await the key US CPI data due on Wednesday.
- The Japanese Yen traded in a relatively volatile manner and remains weaker on Monday. USDJPY briefly extended its recovery from Friday’s lows to around 150 pips, printing a 152.54 session high during the European session. Overall, this recovery for Cross/JPY appeared to be very much a correction to the broader developing theme we saw last week, and across the US session these moves did reverse.
- USDJPY backtracked across US hours alongside a broader bid in core FI on light volumes. As such, the pair trades around 151.75 as we approach the APAC crossover. Renewed weakness would keep the focus on 150.93, the Feb 07 low, a break of which would open up 149.69, the Dec 9 low. In similar vein, EURJPY resides around 90 pips off the session highs of 157.42.
- EURUSD printed a 1.0280 low overnight and moving average studies remain in a bear-mode position, highlighting a dominant downtrend. 1.0272, the Feb 04 low is the immediate support level of note.
- In emerging markets, USDMXN is on the front foot as tariff concerns continue to linger. The pair is 0.53% higher at 20.67, with the pair edging closer to the mid-week highs from last week around 20.71.
- Speeches from BOE’s Mann and Governor Bailey will headline the Tuesday calendar, before Fed Chair Powell is due to deliver testimony on the Semiannual Monetary Policy Report to Congress.
TUESDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 11/02/2025 | 0700/0800 |  NO | GDP | |
| 11/02/2025 | 0845/0845 |  GB | BOE's Mann lecture on Economic Prospects | |
| 11/02/2025 | 1100/0600 | ** |  US | NFIB Small Business Optimism Index |
| 11/02/2025 | 1215/1215 | GB | BOE Bailey's speech on changes in financial markets | |
| 11/02/2025 | - | *** |  CN | Money Supply |
| 11/02/2025 | - | *** | CN | New Loans |
| 11/02/2025 | - | *** | CN | Social Financing |
| 11/02/2025 | 1330/0830 | * |  CA | Building Permits |
| 11/02/2025 | 1350/0850 | US | Cleveland Fed's Beth Hammack | |
| 11/02/2025 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 11/02/2025 | 1500/1000 | US | Fed Chair Jerome Powell | |
| 11/02/2025 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 11/02/2025 | 1700/1200 | *** | US | USDA Crop Estimates - WASDE |
| 11/02/2025 | 1700/1800 |  EU | ECB's Schnabel in Nuremberg Talk Series' panel | |
| 11/02/2025 | 1800/1300 | *** | US | US Note 03 Year Treasury Auction Result |
| 11/02/2025 | 2030/1530 | US | New York Fed's John Williams | |
| 11/02/2025 | 2030/1530 | US | Fed Governor Michelle Bowman | |
| 12/02/2025 | 0030/1130 | ** |  AU | Lending Finance Details |