MNI US MARKETS ANALYSIS - NYCB Slide Reignites CRE Concerns

US TSYS: NYCB Worries Front Of Mind Again, QT Discussion Highlight Of Heavy Fedspeak

• Cash Tsy yields sit 2.5-4bp lower, for a modest bull steepening (2s10s at -36bps, +0.5bp), primarily from NYCB-related worry after the bank highlighted material weakness re: internal controls, missed the deadline re: filing its annual report and changed its CEO late on Thursday.
• Pre-market indications for the name have extended yesterday's post-market weakness (indicated 25-30% weaker). Our credit team believes that most of the issues appear to be name-specific, not systemic. That doesn't rule out pressure in related/linked names in NY equity trade.
• TYM4 has touched session highs of 110-23+ (+09+) on strong volumes of 480k. It sits close to resistance at 110-25+ (20-day EMA) after which lies 111-07 (50-day EMA), with gains considered corrective as they move away from support at 109-25+ (Feb 23 low).
• ISM mfg headlines today’s data after most regional Fed surveys beat expectations before yesterday's surprise slide in the MNI Chicago PMI. There is also heavy Fedspeak through the day, likely highlighted by Waller & Logan’s QT discussion.

• Data: S&P Global US mfg PMI Feb final (0945ET), ISM mfg Feb (1000ET), U.Mich sentiment Feb final (1000ET), Construction spending Jan (1000ET), KC Fed services Feb (1100ET)
• Fedspeak: Richmond Fed’s Barkin on CNBC (0830ET), Chic Fed’s Goolsbee on CNBC (1000ET), Gov. Waller & Dallas Fed’s Logan on QT (1015ET, incl text), Atlanta Fed’s Bostic on economic outlook (1215ET), SF Fed’s Daly moderated by KC Fed’s Schmid (1330ET), Gov. Kugler on dual mandate (1530ET, incl text) and Chic Fed’s Goolsbee on Fox (1600ET) – see STIR bullet for details.

STIR: Fed Rate Path Extends Post-Data Dip On NYCB Worries

• Fed Funds implied rates have pulled lower in reaction to NYCB highlighting material weakness following yesterday’s results. The Dec’24 implied effective rate of 4.45% is ~10bps below yesterday’s pre-data levels.
• Cumulative cuts: 1bp May, 7bp May, 22.5bp Jun, 38bp Jul and 88bp Dec.
• NY Fed’s Williams (voter) late yesterday didn’t add to comments from earlier in the week when he had said three cuts this year is a reasonable starting point. Goolsbee (’25 voter) meanwhile warned against overreacting to the increase in the six-month rate of core PCE inflation in yesterday’s data, whilst seeing further spillover benefits from previous supply chain normalization.
• A busy day for Fedspeak ahead. In voting order: Waller (voter)/Logan (non-voter) discuss a QT paper at 1015ET and Kugler (voter) speaks on the dual mandate incl text at 1520ET.
• Barkin (’24) appears on CNBC at 0830ET (he said Feb 21 that he worries that once goods deflation ends service inflation is still too high), Bostic (’24) speaks on the economic outlook and Daly (’24) is in a panel discussion.
• Double media appearances from Goolsbee (’25).

EUROPE ISSUANCE UPDATE:

ITALY: BTP Valore Books At E18.17bln As Books Approach Close

• Books for the MEF's 6-year Mar-30 BTP Valore stand at E18.17bln as the 13:00CET close approaches (E6.44bln sold on day 1, E4.61bln sold on day 2, E3.60bln sold on day 3, E2.29bln sold on day 4 and E1.23bln so far on day 5). This is essentially the same as the 4-year launch in June and E1.0bln above final books in October.
• The previous 5-year BTP Valore in October saw a total of E17.19bln sold across the week with E4.77bln of take-up on day 1, day 2 saw a further E4.54bln, day 3 saw E3.58bln and day 4 saw E2.73bln.
• The inaugural 4-year BTP Valore in June saw a total of E18.19bln sold across the week with E5.43bln of take-up on day 1, day 2 saw a further E5.20bln, day 3 saw E4.22bln and day 4 saw E2.22bln.
• There will be a step-up coupon with a 3.25% rate for years 1-3 and 4.00% for years 4-6 with a bonus of 0.7% for those who hold from the initial issue through to maturity. Unless there is an early close, books are due to close at 13:00CET today.

Jordan to step down as SNB Chairman at end of September

• The SNB Chairman Thomas Jordan has announced he will step down at the end of September.
• This will make Jordan's last monpol meeting 26 September and since the SNB only holds quarterly monpol meetings there should be plenty of time to get a replacement in for Jordan in place in time for the following meeting on 12 December.
• Although there are 3 members of the SNB Executive Board, the setup of the SNB gives the Chairman a lot more influence over monpol than with other central banks.
• There is not much reasoning in the statement to explain his early departure and the SNB has expressed that it "greatly regrets" Jordan's decision. Some point to Credit Suisse's issues as a potential catalyst, although we can't be certain, especially with the decision seemingly driven by Jordan, not the SNB.
• Jordan's term hadn't been due to end until 2027.
• The full press release is available here.

FOREX: JPY Gives Back Gains, CHF Sinks as Jordan Resigns

• Having been the strongest performing currency across the Thursday session - JPY is giving back the gains headed through Friday morning, with Y150.50 being topped ahead of the NY crossover. Moves build on the solid equity rally into the Thursday close (triggered by a particularly soft MNI Chicago PMI), and support from the 3bps uptick in yields through the European morning.
• For now, the USD/JPY bounce is infitting with the underlying uptrend, which faces fierce resistance at Y150.89 - above which markets may garner the attention of the Japanese authorities and their discomfort with JPY weakness.
• EUR/USD inched higher to touch new session highs of 1.0822 following a 0.1ppts beat on forecast for the Eurozone prelim CPI headline - but gains are short-lived and the rally contained given the track higher for regional inflation releases out over the past ~24 hours. EURUSD remains well below the Feb 22 heigh and resistance clustered around the 50-day EMA - at 1.0834.
• CHF sits alongside the JPY in trading poorly, with markets selling the currency on the unexpected announcement of the departure of President Jordan later this year. The SNB President is set to leave his position early - at the end of September - opening the position for either an outside candidate, or for Vice President Schlegel to step up into the role. Either way, the uptrend in EUR/CHF remains on track, with the cross touching new 2024 highs of 0.9596 today and breaking the 200-dma in the process.
• Focus for the Friday session turns to final US PMI data for February, the ISM manufacturing release as well as the final UMich survey for the latest month.

EGBS: Little Impact From EZ Flash HICP; NYCB Worries Prompt Core FI Bid

A strong move off intraday lows for core FI markets came as headlines related to NYC Bancorp's "material weaknesses" crossed, prompting a safe haven bid for core FI.

• The Eurozone flash February inflation release had little lasting impact on core/semi-core EGBs, with the firmer-than-expected print telegraphed by the national data released over the past two days.
• Upward revisions to the Eurozone manufacturing PMI may have helped cap rallies prior to the NYCB headlines, while Eurozone unemployment was in line with consensus at 6.4%.
• Bunds are flat at 132.65, trading at intraday highs after coming under pressure earlier in the session.
• 10-year periphery spreads to Bunds are a wider as equities come under pressure.
• ECB-dated OIS contracts operate within yesterday's range, with 91bps of rate cuts priced through the remainder of 2024. ECB Holzmann's comments were in line with his hawkish bias.
• The remainder of today's calendar is US centric - with ISM manufacturing highlighting on the data side alongside a number of Fed speakers.

EQUITIES: E-Mini S&P Trading Close to Recent Highs

• A bull cycle in Eurostoxx 50 futures remains firmly intact and the contract has again traded higher this week. Moving average studies remain in a bull-mode position, highlighting positive market sentiment. Sights are on 4939.30 next, a Fibonacci projection. Further out, scope is seen for a climb towards a bull channel top at 4988.60. The channel is drawn from the Oct 27 low. Initial firm support lies at 4785.90, the 20-day EMA.
• The trend condition in S&P E-Minis remains bullish and the contract continues to trade closer to its recent highs. Price action continues to highlight the fact that corrections remain shallow - a bullish signal. Support to watch is 5024.54, the 20-day EMA. A clear break of this average would signal potential for a deeper retracement towards 4936.50, the Feb 13 low. A resumption of gains would open vol-band based resistance at 5153.29.

COMMODITIES: Gold Holds Onto Bulk of Thursday's Gains

• WTI futures traded higher Wednesday and in the process, the contract delivered a print above key resistance at $79.09, the Jan 29 high. This threatens the recent bearish theme and instead highlights potential for a continuation higher near-term, towards $81.70, a Fibonacci retracement. On the downside, support to watch is at $75.90, the 50-day EMA. A break would instead signal a possible top.
• Gold has traded higher this week and the yellow metal is holding on to its latest gains. Recent activity has defined a key resistance at $2065.5, Feb 1 high, and a key support at $1984.3, Feb 14 low. They represent important short-term directional triggers. A clear break of the Feb 1 high would highlight a reversal and open $2088.5, the Dec 28 high. For bears, clearance of $1984.3 would expose an important support at $1973.2, the Dec 13 low.