Highlights:
- Retail sales on the docket, import/export price indices may provide limited insight for PCE
- Lower close for USD Index would mean five consecutive daily declines
- OIS pricing eyes BoE's MPR meetings for opportunistic cuts
US TSYS: Modestly Twist Steeper, Retail Sales And Import Prices Ahead
- Treasuries sit twist steeper overnight, with the front end modestly higher and the long end lower following vague details behind Trump’s anticipated reciprocal tariffs plans.
- Today’s macro focus is on the 0830ET data, primarily retail sales but also with import prices offering the last, albeit minor, steer for core PCE estimates, although there will no doubt be continued sensitivity to US policy headlines.
- Cash yields are between 1.5bps lower and higher, with 2s leading declines and 30s leading increases. Recall that yesterday’s 30Y auction drew a 1.3bp tail along with weaker details although there was little immediate reaction to it.
- 2s10s sits at 23.4bps (+1.4bp), within the week’s range but on the low side for the ytd.
- TYH5 sits at 108-30 (-01) on lighter cumulative volumes of 275k.
- It holds yesterday’s PPI-driven recovery off the post-CPI low of 108-04, which had come close to latest support at 108-00 (Jan 16 low). Those subsequent gains haven’t yet troubled resistance at 109-08+ (50-day EMA).
- Data: Retail sales Jan (0830ET), Import prices Jan (0830ET), IP/cap util Jan (0915ET), Business inventories Dec (1000ET)
- Fedspeak: Logan in moderated discussion (1500ET) – see STIR bullet.
STIR: Fed Rate Path Close To Full Reversal Of CPI Hawkish Shift
- Fed Funds implied rates are up to 1.5bp lower on the day as the lack of specific details behind Trump’s reciprocal tariffs policy and a report from the Commerce Dept due in April has reduced a near-term inflation risk.
- The rate path has now mostly reversed the hawkish shift from Wednesday’s CPI report, with 35bp of cuts for the year vs 26bp after CPI and 37bp pre-CPI.
- Cumulative cuts from 4.33% effective: 0.5bp Mar, 4.5bp May, 11.5bp Jun, 17bp Jul, 25bp Sep and 35bp Dec.
- Dallas Fed’s Logan (non-voter) is the last scheduled Fed speaker of the week, set for a moderated discussion at 1500ET. Whilst not voting this year, her comments could be interesting after this week’s hot CPI report even if it was tempered by a partly offsetting PCE readthrough from PPI.
- Recall that she last week very subtly pointed to a scenario that might include rate hikes: "In some scenarios, it will soon be appropriate to resume reducing the federal funds target range. In other scenarios, we'll need to hold rates at least at the current level for quite some time." Note the "at least", which is about as far as you can go to implying potential rate hikes are possible without explicitly saying so.
STIR: Market continues To Favour Cuts At BoE MPR Meetings
The market continues to assign greater odds of rate cuts to BoE meetings that are accompanied by an MPR vs. non-MPR meetings.
- This makes sense to us at this stage, given the Bank’s reference to careful and gradual easing, alongside clouded policy visibility.
- The clouded policy visibility and lingering inflation risk means that only ~8bp of easing is priced between the end of the September MPC and year-end (albeit front-loaded into the Nov meeting, which equates for 7 of the 8bp).
- Note that 50bp of cuts are almost fully priced through September.
- Extension of the quarterly rate cutting pattern could lead to receiving pressure in the belly of the Sep/Nov/Dec BoE-dated OIS fly, particularly if dovish data and more forthright guidance on BoE rate cuts becomes evident in the coming months (CPI and wage readings continue to dominate BoE thinking)
- Note that GBP STIR pricing echoes the previously covered bias towards pricing ECB rate cuts at meetings that are accompanied by that central bank’s economic projections.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Mar-25 | 4.429 | -2.5 |
May-25 | 4.234 | -22.0 |
Jun-25 | 4.152 | -30.2 |
Aug-25 | 4.002 | -45.2 |
Sep-25 | 3.971 | -48.3 |
Nov-25 | 3.903 | -55.1 |
Dec-25 | 3.891 | -56.3 |
STIR: Vague Reciprocal Tariffs Plan Sees Delay Of Near-Term EU Growth Hit
- European implied yields are modestly higher since the lack of specific details around Trump’s reciprocal tariffs plan and Lutnick’s Commerce Dept conducting studies to report back in April, with the latter confirming a timeline reported by CNBC beforehand.
- The reduction in a very near-term downside growth risk for the EU sees Euribor implied yields some 2-3bp higher since levels around yesterday’s close prior to Trump’s announcement, in contrast to SOFR yields flat to marginally lower.
- It’s helped the Euribor implied terminal yield tick up to 2.00% for some of its highest levels since the Jan 30 ECB meeting.
- Whilst it’s clearly not a direct read on ECB pricing, it sits firmly within the estimated (but regularly downplayed by senior ECB officials) neutral rate range of 1.75-2.25%.
US TSY FUTURES: Mix Of Long Setting & Short Cover Seen Thursday
OI data points to a mix of net long setting (TY, UXY & WN) and short cover (TU, FV & US) across the curve on Thursday, as Tsys rallied on the back of the soft PCE readthrough provided by the PPI data.
- The curve-wide DV01 equivalent move was tilted towards long setting.
| 13-Feb-25 | 12-Feb-25 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 4,058,345 | 4,084,648 | -26,303 | -960,849 |
FV | 6,304,923 | 6,364,793 | -59,870 | -2,455,867 |
TY | 4,878,392 | 4,817,385 | +61,007 | +3,886,146 |
UXY | 2,287,721 | 2,267,376 | +20,345 | +1,775,101 |
US | 1,986,501 | 1,999,751 | -13,250 | -1,668,043 |
WN | 1,799,562 | 1,795,212 | +4,350 | +829,284 |
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| Total | -13,721 | +1,405,773 |
STIR: Net Long Setting & Short Cover Seen In SOFR Futures On Thursday
OI data points to a mix of net long setting and short cover during yesterday’s rally in SOFR futures, as the market reacted to the soft PCE readthrough from the PPI data.
- Net long setting was more prominent in strip-wide terms.
| 13-Feb-25 | 12-Feb-25 | Daily OI Change |
| Daily OI Change In Packs |
SFRZ4 | 1,035,809 | 1,033,216 | +2,593 | Whites | +21,636 |
SFRH5 | 1,210,508 | 1,211,052 | -544 | Reds | -21,368 |
SFRM5 | 1,128,623 | 1,114,878 | +13,745 | Greens | +16,843 |
SFRU5 | 827,841 | 821,999 | +5,842 | Blues | +3,740 |
SFRZ5 | 998,839 | 1,013,020 | -14,181 |
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SFRH6 | 710,792 | 699,124 | +11,668 |
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SFRM6 | 694,283 | 713,185 | -18,902 |
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SFRU6 | 600,376 | 600,329 | +47 |
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SFRZ6 | 756,472 | 743,948 | +12,524 |
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SFRH7 | 477,654 | 483,451 | -5,797 |
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SFRM7 | 461,919 | 461,042 | +877 |
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SFRU7 | 304,195 | 294,956 | +9,239 |
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SFRZ7 | 333,086 | 328,844 | +4,242 |
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SFRH8 | 222,811 | 220,145 | +2,666 |
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SFRM8 | 187,378 | 189,239 | -1,861 |
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SFRU8 | 119,333 | 120,640 | -1,307 |
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UKRAINE: Zelenskyy-I Do Not Think US Has Peace Plan For Ukraine Yet
Speaking to the media, President Volodymyr Zelenskyy at the Munich Security Conference says he does not think the US has a plan for peace in Ukraine yet. Despite this, he says "We are ready for any talks with the US and our allies", but adds he "does not know" about any possible meeting with the Russian side at the MSC.
- Earlier Kremlin spox Dmitry Peskov said when asked if a Russian delegation would go to the MSC, "there's nothing new to say about Ukraine peace efforts." Claims "It will take some days to establish diplomatic contacts after the Putin-Trump call, then we will inform [the press]."
- Zelenskyy also confirms visits to MENA nations the UAE, Saudi Arabia, and Turkey in the near future. Saudi Arabia was mooted as a potential location for a meeting with Russian President Vladimir Putin according to President Trump after their call earlier this week.
FOREX: Lower Close for USD Index Would be Fifth Consecutive Decline
- The greenback is again on the backfoot early Friday, meaning a negative close today would confirm a fifth consecutive session of losses, with the USD Index having already plumbed a new year-to-date low today. This leaves the greenback within ~0.6% of the next major support, crossing at the 106.207 100-dma.
- The non-specific installation date of reciprocal tariffs remains the latest driver of currency price action, with the USD remaining on the backfoot after Trump confirmed that levies will be installed, but declined to provide a specific deadline.
- As a result, growth and risk proxies are trading well - putting AUD and NZD toward the top-end of the G10 table - while the phase of corrective JPY strength into the Thursday close has moderated considerably.
- Focus for the session ahead rests on the US retail sales release for January, as well as import/export prices indices and Industrial production for the same month. The central bank speaker slate is uncharacteristically quiet, with just Fed's Logan on the docket - taking part in a moderated Q&A.
OPTIONS: Expiries for Feb14 NY cut 1000ET (Source DTCC)
- EUR/USD: $1.0200(E1.6bln), $1.0220-25(E1.5bln), $1.0275-80(E1.9bln), $1.0300-20(E4.5bln), $1.0325(E1.6bln), $1.0400(E4.0bln), $1.0435(E1.0bln), $1.0475(E1.6bln), $1.0500(E1.4bln)
- USD/JPY: Y150.00($1.9bln), Y150.90-00($1.6bln), Y152.00($2.8bln), Y153.85($670mln), Y154.00($1.2bln), Y155.00($882mln), Y155.50($1.3bln), Y156.00($1.7bln)
- EUR/JPY: Y157.65(E1.7bln)
- GBP/USD: $1.2080-00(Gbp1.2bln), $1.2380-00(Gbp1.3bln), $1.2500-20(Gbp771mln)
- EUR/GBP: Gbp0.8420-30(E794mln)
- AUD/USD: $0.6200(A$1.3bln), $0.6250(A$610mln), $0.6280-00(A$1.4bln), $0.6350(A$523mln)
- USD/CAD: C$1.4185-00($2.1bln), C$1.4245-55($1.4bln), C$1.4300-20($1.3bln), C$1.4450($1.1bln)
- USD/CNY: Cny7.1500($3.3bln), Cny7.2000($2.6bln), Cny7.3000($2.2bln), Cny7.3400($2.4bln)
EQUITIES: Eurostoxx 50 Target March 2000 All-Time High at 5525.00
- The Eurostoxx 50 futures contract continues to appreciate. The move higher this week confirms once again, a resumption of the uptrend that started on Nov 21 ‘24. Moving average studies are in a bull mode set-up too, highlighting a dominant uptrend. Sights are on a major resistance at 5525.00, the March 2000 all-time high. Clearance of this level would highlight a key bullish break. Initial firm support to watch lies at 5283.40, the 20-day EMA.
- S&P E-Minis have traded higher this week. The recovery undermines a recent bearish threat and attention turns to the next resistance at 6162.25, the Jan 24 high. Clearance of this level would expose key resistance at 6178.75, the Dec 6 ‘24 high. A move above this hurdle would resume the primary uptrend. On the downside, initial key support has been defined at 6014.00, the Feb 10 low. A break would be viewed as a bearish development.
COMMODITIES: Gold Trading Close to This Week's Highs, Bullish Theme Strengthens
- WTI futures have pulled back from Tuesday high and price has again traded below the 50-day EMA - at $72.14. Attention is on $70.43, the Feb 6 low. It has been pierced, a clear break would undermine a bullish theme and confirm a breach of the 50-day EMA. This would strengthen a bearish threat and open $68.05, the Dec 20 ‘24 low. Key S/T resistance has been defined at $75.18. A move above this level is required to reinstate a bull theme.
- A bull cycle in Gold remains in play and the yellow metal is trading closer to its latest highs. Recent gains once again confirm a resumption of the uptrend and maintain the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull mode position too, highlighting a dominant uptrend. Sights are on the $2962.2, a Fibonacci projection. The first key support to watch is $2820.6, the 20-day EMA.
| Date | GMT/Local | Impact | Country | Event |
| 14/02/2025 | 1330/0830 | ** |  CA | Monthly Survey of Manufacturing |
| 14/02/2025 | 1330/0830 | ** | CA | Wholesale Trade |
| 14/02/2025 | 1330/0830 | *** |  US | Retail Sales |
| 14/02/2025 | 1330/0830 | ** | US | Import/Export Price Index |
| 14/02/2025 | 1415/0915 | *** | US | Industrial Production |
| 14/02/2025 | 1500/1000 | * | US | Business Inventories |
| 14/02/2025 | 1800/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 14/02/2025 | 2000/1500 | US | Dallas Fed's Lorie Logan |