EXECUTIVE SUMMARY
- MNI BRIEF: Fed's Bostic Says Rates Should Stay Where They Are
- MNI UKRAINE: Trump Confirms Zelenskyy White House Visit On 28 Feb
- MNI US: Trump Delivers Extended Press Conference At Cabinet Meeting
- MNI US DATA: Lower Building Permits Revision Underscores Soft Construction Outlook
- MNI US DATA: New Home Sales Pull Back, Still Mitigating Existing Home Weakness
US
MNI BRIEF: Fed's Bostic Says Rates Should Stay Where They Are
Federal Reserve Bank of Atlanta President Raphael Bostic said Wednesday monetary policy should stay restrictive to bring inflation back to target. "We need to stay where we are and let's see where the world is," he told a Urban Land Institute conference. Monetary policy is restrictive and "mildly" causing the economy to slow in order to bring inflation back to 2%, he said.
- "Inflation is high and it's higher than I want it to be," he said. "We've seen a lot of progress in terms of inflation getting back down to the targets that we hope for, but it has slowed in the last six months or so," he said, citing services and housing. "Today, my outlook is that inflation will continue back on its path to get to 2%. That's been my outlook for a long time and the data that we've seen has been generally consistent with that."
NEWS
MNI US: Trump Delivers Extended Press Conference At Cabinet Meeting
A flurry of comments from US President Donald Trump hitting wires as he speaks with the press at a Cabinet meeting at the White House. Elon Musk, opening the meeting, says he will send another email to federal workers seeking justification for their ongoing employment. Trump endorses Musk's statement saying he's, "not happy about federal workers who did not respond." The comments appear aimed at heading off reports of a rift between the Trump admin and Musk's Department of Government Efficiency.
- Trump says, "will be talking to cabinet secretaries to do their own dirge of federal workers." Echoing a recent memo issued by the White House OMB and Office of Personnel Management, he says staff needs to be reduced because we're "bloated" and "sloppy".
MNI US: OMB Sets Out Plans For Large-Scale Staff Cuts And Govt Reorganisation - BBG
Bloomberg reporting that the White House Office of Management and Budget has directed federal government agencies "to drastically reduce the size of the US government" laying out a two-phase reform framework. The first phase would cover cuts to staffing, with proposals due March 13. The second phase would cover organisational overhaul, with proposals due April 14. The memo states that mass layoffs would occur in June - three months after first-phase plans are submitted to the OMB.
MNI UKRAINE: Trump Confirms Zelenskyy White House Visit On 28 Feb
Reuters reports US President Donald Trump has confirmed that Ukrainian President Volodymyr Zelenskyy will travel to the White House on Friday 28 Feb. Says the two will sign an agreement on rare earth metals and 'other things', adding that "We will get our money back". Earlier it was speculated the trip could be a non-starter after Zelenskyy said that the minerals deal was not concluded due to uncertainties over security guarantees.
MNI US TSYS: US Trade Policy Rekindles Risk-Off Sentiment
- Treasuries bounced off early session lows and look to finish near session highs, curves flatter with bonds outperforming as trade policy concerns rekindled risk-off sentiment prevalent in the first half of the week.
- Risk-off as Pres Trump cabinet meeting marks April 2 when Canada & Mexico "tariffs will go on, not all but a lot of them" , taking a firmer stance on the EU, stating that the decision on tariffs on the EU is 25% and that details will be “coming soon”.
- Tsy Jun'25 10Y futures trade at 110-28 (+10.5) after the bell, piercing resistance at 110-20, the 76.4% retracement of the Dec 3 - Jan 13 bear leg. This broadens the bullish recovery and signals scope for a climb towards the 111-00 handle, ahead of 111-22+, the Dec 3 high and a key resistance.
- New home sales fell much more sharply in January than expected, but this was more than made up for by upward revisions while building permits were revised slightly lower in January’s final reading, to 1,473k - representing a 0.6% decline rather than the initially reported 0.1% rise.
- Canadian dollar and Mexican peso have rallied as a result. USDCAD fell from 1.4360 to 1.4300, while USDMXN fell from 20.47 to 20.29 lows. EU tariff mention saw EURUSD slipping from key resistance around 1.0530 to 1.0485 in short order.
- The upcoming US economic data with the second release for Q4 national accounts on Thursday before the January PCE report on Friday. Real GDP growth is seen confirming what was at the time a softer than expected 2.3% annualized in Q4, whilst there will also be a first estimate for real GDI growth after 2.1% in Q3. However, January’s monthly report (on Friday) is likely to show consumption got off to a much weaker start of 2025.
OVERNIGHT DATA
MNI US DATA: New Home Sales Pull Back, Still Mitigating Existing Home Weakness
New home sales fell much more sharply in January than expected, but this was more than made up for by upward revisions. The 657k (SA annualized) of new single-family house sales were below the 680k survey - but December was revised a substantial 36k higher to 734k, meaning the actual 2-month total was 14k higher than the "expected" total.
- Sales fell in each of the 4 geographic regions in January, with the exception of the West.
- In terms of inventory, December now turns out to have had a sharp drop in months of supply (8.0, vs 8.5 pre-revision), but this rebounded sharply to 9.0 months in January.
- Median prices rose 3.7% Y/Y, the strongest since January 2024, to the 2nd-highest monthly price ever $446.3k (non-seasonally-adjusted - the record was $460k in October 2022) - the average in January was $510k.
- Bigger-picture, new home sales were down 1.1% Y/Y, so not exactly dynamic.
- But new homes continue to represent an unusually elevated proportion of supply (30%, vs half that pre-pandemic) and total sales (14-15%, vs 10% or lower pre-pandemic) as existing home sales growth stagnates amid high mortgage rates.
MNI US DATA: Lower Building Permits Revision Underscores Soft Construction Outlook
Building permits were revised slightly lower in January’s final reading, to 1,473k - representing a 0.6% decline rather than the initially reported 0.1% rise (to 1,483k, all figures on a seasonally-adjusted annualized basis).
- The lower revision came on the back of multi-unit permits showing a 7k decline to 479k (originally reported as a 1k rise to 487k), while single-family permits fell 2k to 994k, vs the unchanged 996k as originally reported.
- This cast a more negative light on residential construction conditions at the start of the year, which MNI described as “mixed” on the prelim data which showed housing starts fall 9.8% to 1,366k. The SA annualized levels of both permits and starts remained below year-prior levels.
- Sequentially though, residential construction is likely to contribute to GDP growth in Q1 albeit at a slower rate vs Q4, and economists' consensus is for permits and starts to edge higher through mid-2026 with mid-2024 having represented the trough.
- On a minor note, this report incorporates a new methodology used by the Census Bureau which takes into account permit data from Florida, Texas, and California to help impute regional permit factors - this results in a higher number of aggregated levels for permits (24 for single unit vs 8 prior; 36 for multi-unit vs 12 prior). More detail here.
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA down 129.53 points (-0.3%) at 43498.44
S&P E-Mini Future up 6.25 points (0.1%) at 5977.75
Nasdaq up 70.2 points (0.4%) at 19099.93
US 10-Yr yield is down 4.6 bps at 4.2486%
US Mar 10-Yr futures are up 10/32 at 110-26.5
EURUSD down 0.0026 (-0.25%) at 1.0487
USDJPY down 0.06 (-0.04%) at 148.98
WTI Crude Oil (front-month) down $0.14 (-0.2%) at $68.79
Gold is up $0.66 (0.02%) at $2915.53
European bourses closing levels:
EuroStoxx 50 up 80.09 points (1.47%) at 5527.99
FTSE 100 up 62.79 points (0.72%) at 8731.46
German DAX up 383.84 points (1.71%) at 22794.11
French CAC 40 up 92.85 points (1.15%) at 8143.92
US TREASURY FUTURES CLOSE
3M10Y -5.057, -5.544 (L: -5.925 / H: 3.463)
2Y10Y -2.127, 17.492 (L: 16.231 / H: 20.671)
2Y30Y -2.182, 43.465 (L: 41.295 / H: 46.214)
5Y30Y +0.609, 42.994 (L: 30.543 / H: 43.343)
Current futures levels:
Mar 2-Yr futures up 1.125/32 at 103-3 (L: 102-31.625 / H: 103-03.375)
Mar 5-Yr futures up 5.25/32 at 107-16.25 (L: 107-05 / H: 107-17.25)
Mar 10-Yr futures up 10/32 at 110-26.5 (L: 110-08 / H: 110-28)
Mar 30-Yr futures up 19/32 at 118-8 (L: 117-05 / H: 118-10)
Mar Ultra futures up 30/32 at 124-15 (L: 122-27 / H: 124-19)
MNI US 10YR FUTURE TECHS: (M5) Bull Cycle Remains In Play
- RES 4: 111-22+ High Dec 3 ‘24 and a key resistance
- RES 3: 111-00 Round number resistance
- RES 2: 110-31 1.00 proj of the Jan 13 - Feb 7 - Feb 12 price swing
- RES 1: 110-29 High Feb 26
- PRICE: 110-28+ @ 1520 ET Feb 26
- SUP 1: 110-00 High Feb 7 and a recent breakout point
- SUP 2: 109-11 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
Treasury futures have traded higher this week. The contract has pierced resistance at 110-20, the 76.4% retracement of the Dec 3 - Jan 13 bear leg.
This broadens the bullish recovery and signals scope for a climb towards the 111-00 handle, ahead of 111-22+, the Dec 3 high and a key resistance. Initial firm support to monitor is 109-11, the 50-day EMA. A move below this average is required to highlight a potential reversal.
SOFR FUTURES CLOSE
Mar 25 -0.005 at 95.70
Jun 25 +0.005 at 95.895
Sep 25 +0.010 at 96.090
Dec 25 +0.015 at 96.220
Red Pack (Mar 26-Dec 26) +0.030 to +0.050
Green Pack (Mar 27-Dec 27) +0.055 to +0.065
Blue Pack (Mar 28-Dec 28) +0.060 to +0.065
Gold Pack (Mar 29-Dec 29) +0.065 to +0.070
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M +0.00032 to 4.32384 (+0.00454/wk)
- 3M -0.00528 to 4.31324 (-0.00829/wk)
- 6M -0.01887 to 4.25155 (-0.03921/wk)
- 12M -0.05207 to 4.12001 (-0.10341/wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.33% (-0.01), volume: $2.467T
- Broad General Collateral Rate (BGCR): 4.31% (-0.01), volume: $943B
- Tri-Party General Collateral Rate (TCR): 4.31% (-0.01), volume: $924B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $108B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $302B
FED Reverse Repo Operation
RRP usage climbs to an even $126.058B this afternoon from $96.000B on Tuesday. Compares to Friday, February 14 low of $58.770B - the lowest level since mid-April 2021. The number of counterparties at 37 from 36 prior.
MNI PIPELINE: Corporate Bond Roundup: $7B HSBC 5Pt Launched
- Date $MM Issuer (Priced *, Launch #)
- 02/26 $7B #HSBC $1.5B 4NC3 +85, $750M 4NC3 SOFR+103, $1.75B 6NC5 +105, $$750M 6NC5 SOFR+129, $2.25B 11NC10 +120
- 02/26 $1.5B #McDonalds Corp $600M 5Y +55, $900M 10Y +72
- 02/26 $1.5B #Kenya 11Y 9.95%
- 02/26 $750M #Danske Bank 6NC5 +93
- 02/26 $700M #Tabreed 5Y Sukuk +115
- 02/26 $700M #Reinsurance Group 30NC10 6.65%
MNI BONDS: EGBs-GILTS CASH CLOSE: Peripheries Outperform As Equities Gain
European curves traded slightly flatter Wednesday, with short-ends underperforming, and periphery / semi-core EGBs outperforming.
- An early bid in core FI alongside weaker equities, a further fall in gas prices and and a stronger US dollar faded over the course of the session as the latter recovered. The Bund rally continued after the cash close in futures as US President Trump announced 25% tariffs would be imposed on EU products.
- Data was scant either side of the Atlantic: German GfK consumer confidence fell to the lowest since April, while the IFO employment barometer suggested that job cuts continue.
- BOE's Dhingra noted that higher US tariffs on UK imports are unlikely to greatly impact UK inflation.
- Bunds outperformed Gilts across most of the respective curves, with twist flattening in both.
- Periphery EGB spreads tightened into the cash close as equities rallied. In semi-core, OATs outperformed, finishing close to the 2025 low of 70.8bp.
- The February Eurozone flash inflation round starts Thursday with Spain - MNI's preview of the round is here. We also get various Eurozone confidence indicators and the accounts of the January ECB meeting.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 0.3bps at 2.068%, 5-Yr is down 1.9bps at 2.196%, 10-Yr is down 2.5bps at 2.433%, and 30-Yr is down 2.7bps at 2.696%.
- UK: The 2-Yr yield is up 0.1bps at 4.175%, 5-Yr is unchanged at 4.182%, 10-Yr is down 0.7bps at 4.502%, and 30-Yr is down 0.8bps at 5.094%.
- Italian BTP spread down 1.8bps at 111.2bps / French OAT down 2.2bps at 71.7bps
MNI FOREX: CAD & MXN Get Late Boost on Tariff Implementation Extension
- Headlines after the European close on Wednesday have sparked currency markets into life, as President Trump has announced that tariffs on Mexico and Canada will now be implemented on April 02, later than the prior March 04 deadline.
- The extension to this deadline has provided optimism, and the Canadian dollar and Mexican peso have rallied as a result. USDCAD fell from 1.4360 to 1.4300, while USDMXN fell from 20.47 to 20.29 lows.
- Optimism has been tempered since, as markets digest the headlines. Although the extension could be seen as providing more time to negotiate broader trade deals, Trump mentioning that the US is “not stopping the tariffs” is offsetting the initial price spikes.
- In contrast, President trump took a firmer stance on the EU, stating that the decision on tariffs on the EU is 25% and that details will be “coming soon”. This prompted some volatility for the single currency, with EURUSD slipping from key resistance around 1.0530 to 1.0485 in short order. EURCAD was also sharply lower on the contradictory sentiment, trading the entire day's range in quick fashion, from 1.5095 to 1.5010 lows.
- Overall on the session, AUD and NZD have exhibited underperformance as risk sentiment continues to cautiously tread water. Additionally, lower than expected inflation data in Australia as well as potential flows related to value date month-end may have weighed on AUDUSD, which hit intra-day lows of 0.6300. Attention below here is on 0.6231, the Feb 10 low.
- GBP trades more healthily, and cable has traded back above 1.27 for the first time since December 18, keeping a bullish trend condition intact. In similar vein, EURGBP has been edging lower to levels around 0.8265 at typing. The cross continues to narrow the gap towards 0.8203, the Mar 7 ‘22 low and a lowest point of a multi-year range.
- Swiss GDP and Spanish HICP inflation cross tomorrow in Europe, before the 2nd reading of US GDP is scheduled, alongside jobless claims and durable goods data.
THURSDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 27/02/2025 | 0745/0845 | ** |  FR | PPI |
| 27/02/2025 | 0800/0900 | ** |  SE | Economic Tendency Indicator |
| 27/02/2025 | 0800/0900 | *** |  ES | HICP (p) |
| 27/02/2025 | 0800/0900 | *** |  CH | GDP |
| 27/02/2025 | 0900/1000 | ** |  EU | M3 |
| 27/02/2025 | 0900/1000 | ** |  IT | ISTAT Consumer Confidence |
| 27/02/2025 | 0900/1000 | ** | IT | ISTAT Business Confidence |
| 27/02/2025 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 27/02/2025 | 1000/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 27/02/2025 | 1230/1330 | EU | Publication of MonPol Meeting Account | |
| 27/02/2025 | 1330/0830 | * |  CA | Current account |
| 27/02/2025 | 1330/0830 | * | CA | Payroll employment |
| 27/02/2025 | 1330/0830 | *** |  US | Jobless Claims |
| 27/02/2025 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 27/02/2025 | 1330/0830 | ** | US | Durable Goods New Orders |
| 27/02/2025 | 1330/0830 | *** | US | GDP |
| 27/02/2025 | 1415/0915 | US | Kansas City Fed's Jeff Schmid | |
| 27/02/2025 | 1500/1000 | ** | US | NAR Pending Home Sales |
| 27/02/2025 | 1500/1000 | US | Fed Governor Michael Barr | |
| 27/02/2025 | 1530/1030 | ** | US | Natural Gas Stocks |
| 27/02/2025 | 1600/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 27/02/2025 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 27/02/2025 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 27/02/2025 | 1645/1145 | US | Fed Governor Michelle Bowman | |
| 27/02/2025 | 1815/1315 | US | Cleveland Fed's Beth Hammack | |
| 27/02/2025 | 2015/1515 | US | Philly Fed's Pat Harker | |
| 28/02/2025 | 2330/0830 | ** |  JP | Tokyo CPI |
| 28/02/2025 | 2350/0850 | ** | JP | Industrial Production |
| 28/02/2025 | 2350/0850 | * | JP | Retail Sales (p) |