MNI US MARKETS ANALYSIS - US 10y Yield Hits Fresh YTD High

US TSYS: Eurozone Inflation Caps Tsys

• Yield curves steeper (2s10s +1.902 -87.114) w/ Jun'23 Tsy 2Y futures TUM3 outperforming: steady at 101-21.12 vs. 101-18.25 low, 2YY tapped 4.9352% - new 16 year high at 4.8871% last. Decent volumes in TYM3 futures over 440k after 10Y yield tapped 4.0458% high, 4.0241% last +.0316.
• STIR: Fed funds implied hike for Mar'23 at 31.2bp, May'23 cumulative 57.7bp to 5.153%, Jun'23 76.5bp to 5.341%, terminal at 5.455% in Oct'23 vs. 5.49% high.
• US Data out of the way early, all at 0830ET: Initial Jobless Claims (192k, 195k); Continuing Claims (1.654M, 1.669M); Nonfarm Productivity (3.0%, 2.5%) and Unit Labor Costs (1.1%, 1.6%)
• Tsy auction wrap up the week w/ US Tsy $75B 4W, $60B 8W bills at 1130ET
• Fed speaker scheduled later: Fed Gov Waller eco-outlook, text, moderated virtual event at 1400ET
• MN Fed Kashkari on race, justice and economy w/ MN Supreme Court Justice Alan Page at 1830ET, Livestreamed

G20: As Expected, Foreign Mins Fail To Issue Joint Comm Over Russia Condemnation

Indian Foreign Minister S. Jaishankar states that the G20 foreign ministers meeting 'have agreed to issue a common position where the G20 has arrived at a consensus on many issues through a chair summary.' The issuance of a 'chair summary' means that diplomats were unable to agree on a joint communique, largely to be expected given that Western nations insisted on condemnation of Russia's invasion of Ukraine, predictably blocked by Russia and its allies.

• Jaishankar: 'G20 recognised essentiality of reform and reinvigorated multilateralism....outcome document stresses on reliable food, fertiliser and resilient energy supply chain.'

EUROPE ISSUANCE UPDATE:

EUROZONE ISSUANCE: Decent Spanish and French auctions, UK Linker

• Amongst the data releases, we saw a decent Spanish auction with all of the lowest accepted prices above the pre-auction mid-prices, and E5.978bln (the top of the target range) raised in the nominal auctions.
• The same was seen in the French LT OAT auction with the full amount taken there too with the stop prices above the pre-auction mid-prices.
• Gilt Auction Results: GBP600mln 0.125% Mar-51 linker, Avg yield 0.835% (Prev. 1.5510%), Bid-to-cover 2.40x (Prev. 2.75x)

FOREX: Greenback Recoups Small Part of Recent Losses

• The dollar trades to the better early Thursday, recouping a small part of the Wednesday losses through the first half of the session. The USD Index, however, remains shy of yesterday's highs at 105.087 - a break above which opens the multi-month high at 105.359.
• ECB's Lagarde spoke to the Spanish public, but stuck to the recent comms of the central bank, clearly earmarking a further 50bps in rate hikes for the March meeting, before a switch to data dependency. The EUR trades to the middle of the table, with NZD the weakest performer having rallied substantially yesterday.
• Higher than expected Eurozone CPI prompted little sustained response in the EUR. While inflation was ahead of expectations, the higher than expected German, French and Dutch releases this week provided a decent opportunity for markets to price in a hotter CPI print today.
• JPY has been a focal point, with a Bloomberg sources report that Kuroda's final meeting at the helm of the Bank of Japan will result in a wait-and-see approach rather than any broader policy tweaks. The headlines prompted a swift, but brief, rally for USD/JPY to 136.76, before the day's trends resumed and the uptick fully reversed.
• The data highlight Thursday is the weekly jobless claims releases from the US, while the central bank focus in on the Bank of England, with both Tenreyro and Pill of the MPC scheduled to speak.

FX OPTIONS: Expiries for Mar02 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.0545(E583mln), $1.0595-10(E2.0bln), $1.0620-25(E1.8bln), $1.0660(E797mln), $1.0800(E847mln)
• USD/JPY: Y132.00($1.1bln), Y132.50-60($1.2bln), Y136.00($770mln), Y136.65($855mln)

EQUITIES: Recent Gains in Gold Considered Technically Corrective

• WTI futures remain above last week’s lows and key short-term support has been defined at $73.80, the Feb 22 low. Moving average studies are in a bear-mode position and for now, this continues to highlight a downtrend. A break of the $73.80, would open $72.64, the Feb 6 low. Initial resistance to watch is at $77.91, the 50-day EMA. A clear break of this EMA would be a bullish development and signal scope for a stronger recovery.
• Trend conditions in Gold remain bearish and price is trading below the 50-day EMA, at $1846.4 - recent gains are considered corrective. The break of the 50-day EMA, in mid-February, strengthened the case for bears. Sights are on $1800.0 and $1787.3, the 50.0% retracement of the uptrend between Sep 28 and Feb 2. On the upside, the 50-day EMA marks the first key short-term resistance. A clear breach of this average would ease bearish pressure.

COMMODITIES: Recent Gains in Gold Considered Technically Corrective

• WTI futures remain above last week’s lows and key short-term support has been defined at $73.80, the Feb 22 low. Moving average studies are in a bear-mode position and for now, this continues to highlight a downtrend. A break of the $73.80, would open $72.64, the Feb 6 low. Initial resistance to watch is at $77.91, the 50-day EMA. A clear break of this EMA would be a bullish development and signal scope for a stronger recovery.
• Trend conditions in Gold remain bearish and price is trading below the 50-day EMA, at $1846.4 - recent gains are considered corrective. The break of the 50-day EMA, in mid-February, strengthened the case for bears. Sights are on $1800.0 and $1787.3, the 50.0% retracement of the uptrend between Sep 28 and Feb 2. On the upside, the 50-day EMA marks the first key short-term resistance. A clear breach of this average would ease bearish pressure.