Highlights:
- CPI to paint picture of pre-tariff price pressures
- Bank of Canada seen trimming a further 25bps off the benchmark rate
- JPY weaker, accompanying global equities looking more stable above lows
US TSYS: Awaiting CPI Before Potential BoC Spillover and 10Y Supply
- Treasuries have pared earlier gains to broadly consolidate yesterday’s sell-off, with a move continuing later in the session on partial tariff reprieve.
- Focus is firmly on the February CPI report but there is also potential spillover from the BoC decision, almost fully expected to cut 25bp but, again from a spillover angle, likely risks from any dovish surprises.
- It’s followed by 10Y supply after last month’s auction saw a 1bp tail but some better details on take-up distribution.
- Cash yields are within +/- 0.5bps of yesterday’s close.
- 2s10s at 33.5bp (-0.4bp) is still towards the higher end of the past month’s range.
- TYM5 at 110-28+ (+ 01+) holds close to yesterday’s low of 110-25+, on more modest cumulative volumes of 310k after some heavy overnight sessions recently.
- Support is seen at 110-12+ (Mar 6 low) before 110-00 (Feb 7 high) but the trend structure is still bullish. Yesterday’s high of 111-25 pierced resistance to open 112-021 (Mar 4 high) and 112-02 (Fibo projection).
- Data: CPI Feb (0830ET), Federal budget balance Feb (1400ET)
- Coupon issuance: US Tsy to sell $39bn 10Y Note reopen - 91282CMM0 (1300ET)
- Bill issuance: US Tsy to sell $60bn 17-W bills (1130ET)
STIR: Back To Three Cuts In 2025 Ahead Of CPI, Off 90bps Yesterday
- Fed Funds implied rates are up to 2bp higher overnight, with largest increases for the September FOMC, as they continue yesterday’s recovery off recent dovish extremes.
- Yesterday’s late tariff reprieve from the briefly threatened 50% tariffs on Canadian aluminum and steel (back to ‘only’ 25% implemented today as part of broader aluminum and steel tariffs) saw a resumption of the move higher as growth implications currently outweigh the inflation angle.
- Cumulative cuts from 4.33% effective: 0.5bp Mar, 10bp May, 26.5bp Jun, 38bp Jul and 74bp Dec.
- Today’s focus is firmly on the February CPI report with the FOMC in media blackout ahead of next week’s decision.
- To see the MNI US CPI preview: Download Full Report Here
US INFLATION: MNI US CPI Preview: Calm Before The Tariff Storm
We've just published our preview of the February CPI report, due for release on Wednesday March 12 at 0830ET.
CANADA: MNI BoC Preview: Easing Amidst Even Greater Uncertainty
We have published and e-mailed to subscribers the MNI BoC Preview ahead of tomorrow’s decision.
Please find the full report here: https://media.marketnews.com/BOC_Preview_Mar2025_032b75b9b1.pdf
US TSY FUTURES: Short Setting Seen Across Much Of Curve On Tuesday
OI data points to net short setting across most contracts on Tuesday, with FV futures once again seeing the largest positioning swing.
- Only modest long cover in UXY futures broke the wider theme.
| 11-Mar-25 | 10-Mar-25 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 3,915,055 | 3,883,551 | +31,504 | +1,243,953 |
FV | 6,245,246 | 6,173,325 | +71,921 | +3,159,198 |
TY | 4,700,117 | 4,698,104 | +2,013 | +130,039 |
UXY | 2,216,680 | 2,227,328 | -10,648 | -952,498 |
US | 1,770,567 | 1,766,363 | +4,204 | +550,412 |
WN | 1,760,309 | 1,759,527 | +782 | +153,333 |
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| Total | +99,776 | +4,284,439 |
STIR: Long Cover In Front Of SOFR Futures On Tuesday, Short Setting Further Out
OI data points to long cover dominating in the very front end of the SOFR futures strip on Tuesday, before short setting became more prominent further out.
| 11-Mar-25 | 10-Mar-25 | Daily OI Change |
| Daily OI Change In Packs |
SFRZ4 | 1,056,906 | 1,079,491 | -22,585 | Whites | -41,448 |
SFRH5 | 1,291,116 | 1,314,776 | -23,660 | Reds | +21,936 |
SFRM5 | 1,131,627 | 1,146,898 | -15,271 | Greens | +37,240 |
SFRU5 | 912,638 | 892,570 | +20,068 | Blues | +16,289 |
SFRZ5 | 989,100 | 1,005,516 | -16,416 |
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SFRH6 | 673,552 | 654,601 | +18,951 |
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SFRM6 | 606,206 | 600,060 | +6,146 |
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SFRU6 | 602,649 | 589,394 | +13,255 |
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SFRZ6 | 772,861 | 753,128 | +19,733 |
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SFRH7 | 474,186 | 460,011 | +14,175 |
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SFRM7 | 464,759 | 461,290 | +3,469 |
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SFRU7 | 304,272 | 304,409 | -137 |
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SFRZ7 | 402,254 | 392,529 | +9,725 |
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SFRH8 | 216,343 | 214,356 | +1,987 |
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SFRM8 | 178,696 | 177,787 | +909 |
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SFRU8 | 128,253 | 124,585 | +3,668 |
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EUROPE ISSUANCE UPDATE:
GERMANY 2.50% Feb-35 Bund
- A better 10-year Bund auction than yesterday's Schatz auction - but still relatively soft.
- The stop price was above the pre-auction mid-price (unlike yesterday) and broadly the same amount was allotted as in the February auction.
- However the volume of bids was smaller than previously and led to lower bid-to-cover and bid-to-offers.
- In fact the volume of bids was the smallest at a 10-year Bund auction since December (a month when bids are normally a little lower). Bids were similar in October last year and the last time they were lower (ex-Dec) was June last year.
- The price of the 2.50% Feb-35 Bund fell a little post-auction results.
- E4.5bln (E3.455bln allotted) of the 2.50% Feb-35 Bund. Avg yield 2.92% (bid-to-offer 1.62x; bid-to-cover 2.12x).
PORTUGAL 10/13-OTs
- E563mln of the 3.00% Jun-35 OT. Avg yield 3.381% (bid-to-cover 1.99x).
- E537mln of the 3.50% Jun-38 OT. Avg yield 3.6333% (bid-to-cover 1.98x).
GILT RESULTS:
- Decent Gilt auction relative to the re-openings of the previous on-the-run 10-year 4.25% Jul-34 Gilt. The bid-to-cover ratio of 2.92x is broadly in line (if not a bit higher) than seen for re-openings of the Jul-34 line.
- Meanwhile, the yield tail of 0.5bps is tighter than the 0.8-1.3bp range observed for re-openings of the Jul-34 Gilt since September.
- GBP4bln of the 4.50% Mar-35 Gilt. Avg yield 4.679% (bid-to-cover 2.92x, tail 0.5bp).
DMO releases first three week of April calendar
- The DMO has announced its auction calendar for the first 3 weeks of April.
- On offer are the 5-year 4.375% Mar-30 gilt, 10-year 4.50% Mar-35 gilt, 30-year 4.375% Jul-54 gilt (all as we expected).
- Also on offer will be the 15-year 4.375% Jan-40 gilt and the 10-year linker (1.125% Sep-35 I/L gilt).
- The final calendar will be released on Friday at 7:30GMT.
RUSSIA: Kremlin Spox-US-Ukraine Talks Debrief Needed Before Ceasefire Decision
Reuters carrying comments from Kremlin spox Dmitry Peskov, saying that the Russian gov't is "carefully studying the statements issued after US-Ukraine talks." He warns against 'getting ahead of ourselves'. Peskov: Gov't "expects [US Secretary of State Marco] Rubio and [White House national security adviser Mike] Waltz to brief Russia on the details of talks with Ukraine in the coming days".
- Peskov does not rule out a phone call between presidents Vladimir Putin and Donald Trump, and "this could be organised very fast if needed". Peskov says that Russia needs to hear from the two US officials in talks "before it will comment on the acceptability of a ceasefire for Russia."
- Reuters reported earlier that according to its sources, Putin is sceptical as to the idea of a 30-day ceasefire.
- As Rubio stated following the US-Ukraine talks, "the ball is now in [Russia's] court". With Ukraine now acceding to a ceasefire plan, there is the prospect that the US will turn its attention to forcing Russia to the table at a point when its forces continue to make slow but steady advances in the Donbas and the partially occupied Kursk region.
- As CNN reports, "Even if Russian negotiators can impose their own conditions on the ceasefire [...] it is hard to imagine its greater territorial demands, yet alone the goal of removing NATO from its western flank, would be met. This may also become a decisive crossroads in Putin’s oddly warm relationship with Trump who, in exchange for recent concessions and praise, may now expect the Kremlin leader to play ball."
UKRAINE: Kyiv Ready For Ceasefire Talks But RTRS Reports Russia Sceptical
Speaking in the Polish capital, Warsaw, Ukrainian Foreign Minister Andrii Sybiha says that the Ukrainian gov't is 'ready to form a team to work on a roadmap to reach a ceasefire with Russia,' adds that 'Ukraine is the country that wants the war to end the most', and 'wants a just peace'. This comes after the 11 March talks between Ukrainian officials (including Sybiha) and their US counterparts in Saudi Arabia. In the wake of the talks the US has restored aid to and intelligence sharing with the United States and is now seeking to push Russia towards accepting Ukraine's proposed 30-day ceasefire.
- US President Donald Trump has said that he will seek to talk to Russian President Vladimir Putin in the coming days to push a ceasefire.
- Reuters reports that, according to a senior Russian source, "It is difficult for Putin to agree to this in its current form," the source, [...] told Reuters. "Putin has a strong position because Russia is advancing." The source said that without guarantees alongside a ceasefire, Russia's position could swiftly become weaker and that Russia could then be blamed by the West for failing to end the war." The article reports another Russian source saying that the main focus should be on the US' resumption in aid and intel that has been 'decorated' in the ceasefire proposal.
- Alongside Sybiha, Polish Foreign Minister Radosław Sikorski, who has engaged in a spat with Rubio and Elon Musk in recent days, confirmed that the supplies of arms from Poland to Ukraine has resumed and that Starlinks are working.
FOREX: JPY Slippage Stands Out as Equity Bounce Holds
- JPY slippage is the standout currency move early Wednesday, as equity futures globally smoothly absorb the formal installation of tariffs on aluminium and steel headed to the US. Risk sentiment is seemingly underpinned by hopes for a formal 30-day ceasefire between Ukraine and Russia. While Ukraine have agreed to the terms, Reuters sources this morning report that Russian sources are more wary on the approach - which leaves today's negotiations between Washington and Moscow in focus - particularly after Trump suggested he may talk to Putin as soon as today.
- EUR/USD gains slowed as the leader of Germany's Green party re-stated their opposition to debt brake reform in its current structure - while rejecting the defence spending plan, the door seemingly remains open to negotiations, which have extended across this week, leaving Merz and CDU / SPD officials still hopeful of a last minute deal here.
- The US inflation print and Bank of Canada decision take focus today, with CPI seen moderating to 2.9% from 3.0% for the headline, and down to 3.2% from 3.3% for the ex-food and energy figure. Covering February, the data will be the last look at price pressures in a pre-tariff era, although the sharp run higher for prices paid in sentiment surveys over the past few weeks may mean company stockpiling will still show through in headline stats.
- The Bank of Canada are seen trimming another 25bps off the benchmark policy rate today, and the accompanying policy statement will be carefully watched for any observations on tariff pressure or US-Canada tensions.
OPTIONS: Expiries for Mar12 NY cut 1000ET (Source DTCC)
- USD/JPY: Y146.85-00($516mln), Y148.00($1.3bln)
- USD/CAD: C$1.4380($574mln)
- USD/CNY: Cny7.2000($1.0bln), Cny7.2200($1.0bln), Cny7.2500($953mln)
COMMODITIES: WTI Future Trend Bearish, Contract Remains Close to Recent Lows
- A bearish trend condition in WTI futures remains intact and the contract is trading at its recent lows. The latest sell-off has resulted in a clear breach of support at $70.20, the Feb 6 low. This confirmed a resumption of the downtrend that started Jan 15 and has paved the way for an extension towards $63.61 next, the Oct 10 ‘24 low. Key short-term pivot resistance is seen at $70.20, the 50-day EMA.
- Gold is in consolidation mode. The trend condition is unchanged, it remains bullish and the recent pullback appears corrective. A resumption of gains would refocus attention on $2962.2, a Fibonacci projection. This would also open the $3000.0 handle. On the downside, a move lower would instead suggest scope for a deeper correction and expose support around the 50-day EMA, at $2829.8. The 50-day average marks a key support.
EQUITIES: Fresh Cycle Lows in E-Mini S&P Reinforces Bearish Theme
- A bear threat in S&P E-Minis remains present and fresh cycle lows this week reinforce current conditions. MA studies are in a bear-mode set-up and this highlights a dominant downtrend and bearish market sentiment. Sights are set on the next important support at 5499.25, the Sep 9 2024 low. Note that the short-term trend condition is oversold, a corrective bounce would allow this set-up to unwind. Firm resistance to watch is 5963.30, the 50-day EMA.
- The medium-term trend in the Eurostoxx 50 futures contract remains bullish and the latest pullback appears corrective. However, support at the 50-day EMA, at 5309.17, has been pierced. A clear break of this average would highlight a strong short-term bear threat and suggest scope for a deeper retracement. This would open 5202.00, a Fibonacci retracement. For bulls, a resumption of gains would refocus attention on the 5600.00 handle.
| Date | GMT/Local | Impact | Country | Event |
| 12/03/2025 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 12/03/2025 | 1100/0700 | ** |  US | MBA Weekly Applications Index |
| 12/03/2025 | 1100/1200 |  EU | ECB Wage Tracker | |
| 12/03/2025 | - | *** |  CN | New Loans |
| 12/03/2025 | - | *** | CN | Money Supply |
| 12/03/2025 | - | *** | CN | Social Financing |
| 12/03/2025 | 1230/0830 | *** | US | CPI |
| 12/03/2025 | 1345/0945 | *** |  CA | Bank of Canada Policy Decision |
| 12/03/2025 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 12/03/2025 | 1515/1615 | EU | Lane at "ECB and Its Watchers" conference Frankfurt | |
| 12/03/2025 | 1700/1300 | ** | US | US Note 10 Year Treasury Auction Result |
| 12/03/2025 | 1800/1400 | ** | US | Treasury Budget |
| 13/03/2025 | 0700/0800 | *** |  SE | Inflation Report |
| 13/03/2025 | 0950/1050 | EU | de Guindos in fireside chat at EIOPA Sustainable Finance Conference | |
| 13/03/2025 | 1000/1100 | ** | EU | Industrial Production |
| 13/03/2025 | 1230/0830 | * | CA | Building Permits |
| 13/03/2025 | 1230/0830 | * | CA | Household debt-to-income |
| 13/03/2025 | 1230/0830 | *** | US | Jobless Claims |
| 13/03/2025 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 13/03/2025 | 1230/0830 | *** | US | PPI |
| 13/03/2025 | 1400/1000 | * | US | Services Revenues |
| 13/03/2025 | 1430/1030 | ** | US | Natural Gas Stocks |
| 13/03/2025 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 13/03/2025 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 13/03/2025 | 1700/1300 | *** | US | US Treasury Auction Result for 30 Year Bond |