EXECUTIVE SUMMARY
- MNI US-RUSSIA: Trump-Putin Discussing Major Economic Development Transactions- Trump
- MNI US: Polls Hint At Inflation Risk To Trump, Consumer Sentiment Dips
- MNI US OUTLOOK/OPINION: Dallas Manufacturing Survey Anecdotes Point To Tariff Hit
- MNI US DATA: Tariffs Sink Texas Manufacturing Survey Activity, Boost Inflation
US
MNI US: Polls Hint At Inflation Risk To Trump, Consumer Sentiment Dips
A Reuters/Ipsos poll released Sunday underscored that President Donald Trump is putting “considerable effort into policies that many Americans don't like, or don't consider very important... Fighting inflation motivates 58 percent of the survey’s respondents. Just 32 percent approve of Trump's performance on prices… Fifty-three percent of the country opposes what they see from Trump’s Department of Government Efficiency, while 42 percent of the country supports the endeavor.”
- The Hill notes on the Ipsos survey, “President Trump is flying high… but polls at his one-month mark are flashing yellow,” noting that Trump "has acknowledged higher inflation but tried to sidestep the topic last week during a Fox News interview. Both the president and Vice President JD Vance have said lowering grocery prices will take time."
- The University of Michigan notes: “Consumer sentiment extended its early month decline, sliding nearly 10% from January. The decrease was unanimous across groups by age, income, and wealth. All five index components deteriorated this month, led by a 19% plunge in buying conditions for durables, in large part due to fears that tariff-induced price increases are imminent.”
Figure 1: Consumer Sentiment, Monthly and Three-Month Moving Average
Source: University of Michigan
NEWS
MNI UKRAINE: US And Ukraine Close To Agreement On Revised Mineral Deal - Axios/BBG
Axios and Bloomberg reporting that Washington and Kyiv are "closing in" on an agreement that will give the US a share of Ukraine's natural resource wealth in return for US commitment to a “free, sovereign and secure” Ukraine. The draft agreement does not specify any US military support or mutual defence assurances for Kyiv. Ukrainian Deputy Prime Minister Olga Stefanishyna said in a statement this morning: "Ukrainian and U.S. teams are in the final stages of negotiations regarding the minerals agreement... We hope both US and UA leaders might sign and endorse it in Washington the soonest to showcase our commitment for decades to come."
MNI US: MNI POLITICAL RISK - Speaker Johnson Eyes Tuesday Budget Vote
House Speaker Mike Johnson (R-LA) will press forward this week in his bid to adopt a budget resolution to underpin a multi-trillion reconciliation package. A vote this week, without clear GOP support, risks a defeat for Johnson that would hand the initiative back to the Senate, who passed their competing budget resolution last week. Johnson and Budget Committee Chair Jodey Arrington (R-TX) are reportedly surveying members about counting the cost of extending the 2017 TCJA as zero.
MNI US-RUSSIA: Trump-Putin Discussing Major Economic Development Transactions- Trump
US President Donald Trump has issued a statement on Truth Social, following a virtual meeting of G7 leaders, claiming that he is in "serious discussions" with Russian President Vladimir Putin on ending the war in Ukraine. Trump: "I am in serious discussions with [Putin] concerning the ending of the War, and also major Economic Development transactions which will take place between the United States and Russia. Talks are proceeding very well!"
MNI US TSYS: Carry-Over Safe Haven FI Bid, US$ Bid as Mexico/Canada Tariffs Proceed
- Treasury futures reversed early session weakness and look to finish near late session highs. Safe haven buying amid ongoing concerns over the Trump administration's trade policy and stocks reversing early support to new multi-week lows were cited by trading desks.
- Tsy futures remain bid (TYH5 +4.5 at 109-26.5) after the latest $69B 2Y note auction (91282CMP3) stops out: 4.169% high yield vs. 4.179% WI; 2.56x bid-to-cover vs. 2.66x prior.
- Currently, Mar'25 10Y futures are through initial technical resistance of 109-24 to 109-27.5 (+5.5), nearing a Bull Trigger level at 110-00. Next resistance at 110-14 (High Dec 14). Curves off lows: 2s10 +0.143 at 23.047%, 5s30s +1.987 at 42.416%.
- Projected rate cuts through mid-2025 steady to firmer vs. this morning levels (*) as follows: Mar'25 steady at -0.5bp, May'25 steady at -7.1bp, Jun'25 at -18.0bp (-17.3bp), Jul'25 at -25.6bp (-23.6bp).
- Cross asset update: Crude mildly higher (WTI +.22 at 70.62; Gold climbing 13.55 at 2949.60; Bbg US$ index off lows at 1286.80 (+.57) as late President Trump comments on Canada & Mexico tariffs proceeding.
OVERNIGHT DATA
MNI US DATA: Tariffs Sink Texas Manufacturing Survey Activity, Boost Inflation
The Dallas Fed's Texas Manufacturing Outlook Survey general business activity index fell much more sharply than expected in February, to -8.3 from a January's 39-month high 14.1. Consensus was for a 7.7 point drop to 6.4 - instead, the index fell by 22.4 points, the most since the start of the pandemic and the 4th largest M/M fall in survey history.
- This survey result mirrored those seen last week in the New York and Philadelphia Fed surveys, pointing to higher uncertainty and inflationary pressures. The Dallas survey was conducted Feb. 11–19 and from both the anecdotal commentary in the report and the indices themselves, it is clear that both potential future tariffs (including with neighboring Mexico) and those already-implemented are hitting confidence and activity, and underpinning perceived price pressures.
- There was weakness in activity across the board: production fell 21 points to -9.1, new orders fell 11 points to -3.5, with capacity utilization, shipments, employment, and hours worked all lower vs January.
- Forward-looking indicators were no better: the "outlook uncertainty index" rose from flat to a 7-month high 29.2, with future production falling 26 points to 28.3 and future general business activity dropping nearly 28 points to 7.7.
- And on prices: current prices paid rose 17 points to 35.0, a 29-month high, with prices received up over 6 points to 42.0, a 34-month highs. 6-month-ahead prices paid rose 19 points to 59.0, a 42-month high (Aug 2021), with 6-month prices received up just over 6 points to 42 (a 34-month high).
MNI US OUTLOOK/OPINION: Dallas Manufacturing Survey Anecdotes Point To Tariff Hit
One of the standout findings of February's Dallas Fed manufacturing survey was the jump in inflation pressures - but we also noted that these appear to be more prevalent in prices paid, and not prices received. The biggest driver is tariffs, both those implemented and those threatened to be implemented, though there are other policy shifts as well including on immigration that are causing uncertainty.
- The full list of anecdotes from Texas manufacturing firms is worth a read, as it's really the first we've had of tariff discussions since the Trump administration came into office (the NY and Philly Fed surveys don't have such anecdotes and we haven't yet had the ISM Manufacturing survey). Link here.
- They are mixed - some respondents see robust activity and tariffs being a postiive for their industries in the medium-term, while others discuss a sudden slowdown in activity and potentially going out of business on policy shifts. One notes front-loading imports of inventories ahead of potential tariffs (which as MNI has noted could potentially account for stronger activity around the turn of the year).
- The question of tariff cost passthrough to consumers is a big one for the US macro picture, and the anecdotes are mixed, but: one Texas firm notes "we will have no choice but to pass [higher input costs from tariffs] along to our customers", while a food manufacturer suggests that "Imposing tariffs on our major trading partners will lead to higher consumer prices."
- It seems that regional firms are largely planning to absorb at least some portion of higher input costs. The spread of prices received minus prices paid is back to the most negative level since February 2022 levels for current "margins", and August 2023 levels for future margins.
- This could be a more benign scenario for inflation were it repeated nationwide, but in the longer run it could spell weakness for manufacturing businesses and activity.
MARKETS SUMMARY
Key market levels of markets in late NY trade:
DJIA up 135.2 points (0.31%) at 43564.23
S&P E-Mini Future down 6 points (-0.1%) at 6022.75
Nasdaq down 124 points (-0.6%) at 19399.79
US 10-Yr yield is down 3.5 bps at 4.3964%
US Mar 10-Yr futures are up 5.5/32 at 109-27.5
EURUSD up 0.0014 (0.13%) at 1.0472
USDJPY up 0.47 (0.31%) at 149.74
WTI Crude Oil (front-month) up $0.39 (0.55%) at $70.79
Gold is up $12.85 (0.44%) at $2948.99
European bourses closing levels:
EuroStoxx 50 down 21.09 points (-0.39%) at 5453.76
FTSE 100 down 0.39 points (0%) at 8658.98
German DAX up 138.37 points (0.62%) at 22425.93
French CAC 40 down 63.52 points (-0.78%) at 8090.99
US TREASURY FUTURES CLOSE
3M10Y -2.402, 9.752 (L: 7.753 / H: 14.268)
2Y10Y -0.302, 22.602 (L: 20.066 / H: 23.529)
2Y30Y +0.838, 48.464 (L: 45.167 / H: 49.602)
5Y30Y +1.731, 42.16 (L: 39.511 / H: 42.861)
Current futures levels:
Mar 2-Yr futures up 1.5/32 at 102-29.875 (L: 102-26.5 / H: 102-30.125)
Mar 5-Yr futures up 3.5/32 at 106-29.75 (L: 106-21 / H: 106-30.75)
Mar 10-Yr futures up 5.5/32 at 109-27.5 (L: 109-13.5 / H: 109-29)
Mar 30-Yr futures up 5/32 at 116-8 (L: 115-18 / H: 116-16)
Mar Ultra futures up 5/32 at 121-15 (L: 120-17 / H: 121-25)
MNI US 10YR FUTURE TECHS: (H5) Key Resistance Remains Exposed
- 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: 109-24/110-00 High Feb 21 / 7 and the bull trigger
- PRICE: 109-16+ @ 10:55 GMT Feb 24
- SUP 1: 108-21+ Low Feb 19
- SUP 2: 108-04/00 Low Feb 12 / Low Jan 16
- SUP 3: 107-06 Low Jan 13 and the bear trigger
- SUP 4: 107-04 Low Apr 25 ‘24 and a key support
Treasury futures are holding on to the bulk of their most recent gains. A resumption of the move higher would expose the next important resistance and a bull trigger at 110-00, the Feb 7 high. Clearance of this level would strengthen a bullish theme and open 110-19, a Fibonacci retracement. On the downside, key short-term support has been defined at 108-04, the Feb 12 low. Clearance of this support would reinstate a bearish theme.
SOFR FUTURES CLOSE
Mar 25 -0.003 at 95.705
Jun 25 -0.005 at 95.865
Sep 25 +0.010 at 96.025
Dec 25 +0.025 at 96.125
Red Pack (Mar 26-Dec 26) +0.035 to +0.045
Green Pack (Mar 27-Dec 27) +0.030 to +0.035
Blue Pack (Mar 28-Dec 28) +0.025 to +0.030
Gold Pack (Mar 29-Dec 29) +0.020 to +0.025
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M +0.00429 to 4.32359 (+0.00565 total last wk)
- 3M -0.00349 to 4.31804 (-0.00146 total last wk)
- 6M -0.01560 to 4.27516 (-0.02023 total last wk)
- 12M -0.03156 to 4.19186 (-0.05145 total last wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.34% (+0.01), volume: $2.400T
- Broad General Collateral Rate (BGCR): 4.32% (+0.01), volume: $922B
- Tri-Party General Collateral Rate (TCR): 4.32% (+0.01), volume: $906B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $103B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $293B
FED Reverse Repo Operation
RRP usage inches up to $76.818B this afternoon from $68.983B on Friday. Compares to Friday, February 14 low of $58.770B - the lowest level since mid-April 2021. The number of counterparties at 30 from 24 prior.
MNI PIPELINE: Late Corporate Bond Update: $5.5B Chevron 7Pt Launched
$19.7B total US$ corporate debt issuance to price Monday:
- Date $MM Issuer (Priced *, Launch #)
- 02/24 $5.5B #Chevron $750M 2Y +23, $750M 2Y SOFR, $1B 3Y +30, $500M 3Y SOFR+42, $1.1B 5Y +45, $650M 7Y +50, $750M 10Y +58
- 02/24 $2B #Marriott Int $500M 7Y +90, $1.5B 12Y +125
- 02/24 $2B #Targa Resources $1B +10Y +120, $1B 30Y +147
- 02/24 $1.75B #Pacific Gas & Electric $1B 10Y +130, $750M 30Y +150
- 02/24 $1.6B #Georgia Power $400M 1.5Y SOFR+28, $500M 6Y +65, $700M 10Y +83
- 02/24 $1.5B #HSBC PerpNC7 6.95%
- 02/24 $1.25B #LPL Holdings $750M 5Y +100, $500M 10Y +128
- 02/24 $800M *American Water Capital 10Y +90
- 02/24 $800M #NSTAR WNG $400M 5Y +65, $400M 10Y +85
- 02/24 $750M #Vale Overseas WNG 2054 tap +173
- 02/24 $750M #Citizens Financial 6NC5 +102
- 02/24 $500M #Entergy Texas WNG 10Y +88
- 02/24 $500M *CenterPoint Energy WNG 5Y +60
MNI BONDS: EGBs-GILTS CASH CLOSE: German Short-End Outperforms Post Election
Core European curves closed mixed Monday, with divergent short-end performances in EGBs and Gilts.
- Political headlines were prevalent with the German election not delivering major surprises with conservative Merz potentially forming a "grand coalition", while there was continued uncertainty over US-Ukraine-Russia negotiations.
- Equity weakness spilling over from Friday's weak US stock close helped buoy core FI. Data was not particularly impactful (Eurozone final January inflation in-line, German IFO mixed).
- 2025 ECB OIS-implied rate cut pricing deepened by 2bp to 81bp, most since Feb 13; BOE pricing was static at 53bp of cuts.
- Consequently, German short-end outperformed its UK counterpart, conversely Gilts outperformed Bunds across the rest of the curve.
- Periphery/semi-core EGBs were mixed too, with Spain underperforming on supply (15Y syndication mandate).
- BOE's Dhingra (who earlier in the day was reappointed to the MPC through Aug 2028) speaks after the cash close (MNI's Gilt Week Ahead is here).
- Tuesday's schedule includes final German GDP and UK CBI sales, with the data highlight likely to be the ECB's negotiated wages indicator. We also hear from ECB's Centeno and Schnabel, and BOE's Pill.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 1.7bps at 2.088%, 5-Yr is down 0.5bps at 2.236%, 10-Yr is up 0.7bps at 2.477%, and 30-Yr is up 3.2bps at 2.753%.
- UK: The 2-Yr yield is up 0.1bps at 4.228%, 5-Yr is down 0.8bps at 4.245%, 10-Yr is down 0.7bps at 4.564%, and 30-Yr is down 0.5bps at 5.16%.
- Italian BTP spread flat at 114.2bps / Spanish up 0.9bps at 63.5bps
MNI FOREX: Euro Remains Slightly Firmer Following German Election
- Overall, the smooth passage of the German election results has allowed currency markets to trade with a sense of calm on Monday, with the victory for Merz' CDU/CSU and the likely formation of a coalition with the SPD steering markets clear of any abrupt U-turns on policy - leaving the EUR to very modestly outperform on Monday.
- An initial rally to 1.0528 fell just shy of the January highs for EURUSD, which have capped the topside for now. Spot did edge lower across the US session and a brief bout of dollar strength helped EURUSD to bridge the gap to Friday’s close, briefly printing a session low of 1.0453.
- The aforementioned greenback strength was a result of a sharp selloff for major equity benchmarks, where notably the S&P 500 fell around 1.1% following the cash open. Coinciding with a bump lower for US yields, the Japanese Yen was boosted and AUDJPY fell quickly to a fresh session low in tandem.
- Equities have since recovered, leaving the USD index in very moderate negative territory on Monday. EURUSD has risen back to 1.0480 ahead of the APAC crossover and stands 0.25% higher on the session, with the Swiss Franc exhibiting similar strength vs the dollar. Elsewhere in G10, adjustments have been more moderate as markets continue to digest headlines from President Trump regarding the latest developments regarding a deal to end the Russia/Ukraine conflict.
- The Polish Zloty outperforms in the emerging market space, with recent fresh cycle lows in EURPLN (-0.51%) confirming a resumption of the downtrend. Sights are on the 2018 low of 4.1293, of which a break would place the cross at its lowest level since 2015.
- Upcoming - FOMC’s Goolsbee and Logan may speak and German final GDP will cross early Tuesday.
TUESDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 25/02/2025 | 0700/0800 | *** |  DE | GDP (f) |
| 25/02/2025 | 0920/0420 |  US | Dallas Fed's Lorie Logan | |
| 25/02/2025 | 1000/1000 | * |  GB | Index Linked Gilt Outright Auction Result |
| 25/02/2025 | 1100/1100 | ** | GB | CBI Distributive Trades |
| 25/02/2025 | 1300/1400 |  EU | ECB's Schnabel at BOE's Annual Conference on Balance Sheet | |
| 25/02/2025 | 1330/0830 | ** | US | Philadelphia Fed Nonmanufacturing Index |
| 25/02/2025 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 25/02/2025 | 1400/0900 | ** | US | S&P Case-Shiller Home Price Index |
| 25/02/2025 | 1400/0900 | ** | US | FHFA Home Price Index |
| 25/02/2025 | 1400/0900 | ** | US | FHFA Home Price Index |
| 25/02/2025 | 1400/0900 | ** | US | FHFA Quarterly Price Index |
| 25/02/2025 | 1400/0900 | ** | US | FHFA Quarterly Price Index |
| 25/02/2025 | 1400/1400 | GB | BOE's Pill remarks at BEAR Conference | |
| 25/02/2025 | 1500/1000 | *** | US | Conference Board Consumer Confidence |
| 25/02/2025 | 1500/1000 | ** | US | Richmond Fed Survey |
| 25/02/2025 | 1530/1030 | ** | US | Dallas Fed Services Survey |
| 25/02/2025 | 1645/1145 | US | Fed Governor Michael Barr | |
| 25/02/2025 | 1800/1300 | US | Richmond Fed's Tom Barkin | |
| 25/02/2025 | 1800/1300 | * | US | US Treasury Auction Result for 5 Year Note |
| 26/02/2025 | 0030/1130 | *** |  AU | CPI Inflation Monthly |
| 26/02/2025 | 0030/1130 | *** | AU | Quarterly construction work done |