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MNI US MARKETS ANALYSIS - Risk Rallies as RU/UK Differences Narrow


  • Risk rallies as Russia/Ukraine differences seen narrowing
  • Chinese equities bounce sharply as authorities intervene
  • Market pricing close to 100bps rate hikes across next three Fed meetings

US TSYS SUMMARY: Twist Steepening On Negotiations, FOMC Ahead

  • A mixed session so far but cash Tsys see a small twist steepening on the day after Zelensky earlier said the stance presented by both sides at talks has ‘become more realistic’.
  • 2YY -0.4bps at 1.845%, 5YY +0.9bps at 2.114%, 10YY +1.4bps at 2.158% and 30YY +1.0bps at 2.488%.
  • TYM2 is almost unchanged on the day at 124-21+ on close to average volumes. Sitting at the bottom end of yesterday’s range, initial support is likely formed at today’s earlier low of 124-10+ after which it could open 124-01 (May 21, 2019 (cont.)).
  • The FOMC dominates today with a 25bp hike almost unanimously expected with attention instead on the dot plot and any guidance on the path of the curve, with markets currently pricing in a relatively front-loaded path.
  • Data: Retail sales for Feb (0830ET) are expected to see a pause in growth after booming January in nominal terms. Also get international trade prices for Feb (0830ET), business inventories for Jan (1000ET) and the NAHB housing index for Mar (1000ET).
  • No Tsy issuance.

STIR FUTURES: Fed Pricing Ahead Of FOMC

  • Hikes implied by Fed Funds futures are little changed on the day despite broader risk-on ahead of today’s FOMC decision.
  • It is still widely expected to hike 25bps today (28bp priced) and has just shy of 100bp of hikes over the three meetings up to and including June.
  • There is 175bp of cumulative tightening priced for 2022, hit for the first time earlier this week, from ~120bps after the Jan 26 meeting.
  • The Dec dot plot had a median estimate of 3x25bp hikes with only two participants at 4x25bp in 2022. Broad consensus is for the dots to now show between 4 and 6 hikes (assuming all hikes of 25bp). 5 is MNI's baseline, with risks of 6. 4 would be a very dovish surprise; 6 would be a modestly hawkish surprise; 7 or more would be very hawkish. (Full preview:

Cumulative hikes from FOMC-dated Fed Funds futuresSource: Bloomberg


RXK2 158.5/156.5/155.5p fly, bought for 28 in 1k

0RM2 99.625/99.50/99.125/99.00 put condor, bought for 5 in 7k

SFIK2 98.80/98.60/98.35p fly, bought for 8.25 in 1.5k

2QM2 97.50/97.25ps, bought for 6 in 1.75k


Germany sells E3.427bln 0% Feb-32 Bund, Avg yield 0.38% (Prev. 0.31%), Bid-to-cover 1.08x (Prev. 1.63x), Buba cover 1.26x (Prev. 1.99x)

CHINA: Regulatory Authorities ‘Mulling Measures To Jointly Crackdown on Malicious Short Sellers’

  • According to ‘China Daily’ Economic news, reporters were told that regulatory authorities are ‘mulling measures to jointly crackdown on malicious short sellers’, which officials have viewed as one of the factors behind equity weakness (source familiar with the matter).
  • China officials have been desperately trying to stabilize the stock market, which has been constantly reaching new lows in the past year, down over 40% from peak to trough before the positive bounce on Wednesday.
  • Other negative drivers of the Chinese equity market in the past year has been the Covid uncertainty, renewed crackdown fears and geopolitical uncertainty.
  • The Hang Seng index is up over 10% since Tuesday’s low, trading back above the 20,000 level.
    • Alibaba share prices were up nearly 20% in pre market trading in the US.

Source: Bloomberg/MNI

FOREX: EUR is underpinned

  • The EUR is underpinned, whilst the USD is under pressure in early European trade. The USD is taking its cue from the risk on tone, with big rallies in Asia,, after China declared that they will be pro active in supporting overseas share listing.
  • EUR has been underpinned, bid, following latest headlines from Russia Lavrov, noting that some formulations of agreements with Ukraine are close to being agreed. This has contributed to some extensions in Equities and in turn the EUR.
  • EUR/USD narrowed in on the Tuesday high printed at 1.1020, while the e-mini S&P broke cleanly back above 4300. A lot of talk of compromise today from both Russia and Ukraine, but notably from Russia - signalling early signs of a softening in its position and gains in negotiations. A Putin-Zelensky meeting would be the next key milestone once terms and a framework for the discussion has been established
  • Best early performer versus the USD is the SEK, with USDSEK testing lowest level since the 1st March, more a function of the USD's weakness, following the Risk On tone, and a continuation from the Asian session in Equities.
  • Next support area for the USDSEK is at the 28/02 low 9.4301USD is in the red against all G10, besides the JPY (trades flat), with the latter helped by the higher yield.
  • Looking ahead, all of the focus is on the FOMC and presser.
  • On the data front, US Retail sales is the notable release.

FX OPTIONS: Expiries for Mar16 NY cut 1000ET (Source DTCC)

  • EUR/USD: $1.0750(E591mln), $1.0955-65(E542mln), $1.0985-00(E1.2bln), $1.1015-35(E716mln), $1.0045-50(E951mln), $1.1100(E823mln), $1.1150(E2.6bln)
  • USD/JPY: Y117.95-05($808mln)
  • USD/CAD: C$1.2600($678mln), C$1.2665-85($1.1bln), C$1.2695-00($1.4bln), C$1.2760-80($1.2bln)

Price Signal Summary - S&P E-Minis Probes The 20-Day EMA

  • In the equity space, the trend in the S&P E-Minis remains bearish. The contract however is trading higher. Attention is on the 20-day EMA that intersects at 4295.37. This has been probed, a clear break of it is required to suggest scope for a stronger short-term recovery. This would open the 50-day EMA at 4399.80. EUROSTOXX 50 futures are firmer too this morning. The move higher is allowing an oversold condition to unwind. Resistance to watch is at 3803.60, the 20-day EMA, that has also been breached today. A clear break would suggest scope for a stronger recovery and open the 50-day EMA at 3966.90.
  • In FX, EURUSD is consolidating and remains below its key short-term resistance of 1.1121, the Jan 28 low, a recent breakout level plus last week’s high. The trend is down and a resumption of weakness would open 1.0767 next, the May 7 2020 low. Clearance of 1.1121 is needed to suggest scope for a stronger short-term correction. GBPUSD traded lower yesterday and touched 1.3000. A bearish theme remains intact and sights are on; 1.2954, the 1.764 projection of the Jan 13 - 27 - Feb 10 price swing and 1.2933, the Nov 5 2020 low. Short-term gains are considered corrective. USDJPY remains in an uptrend. Last week’s key technical development was the break of resistance at 116.34/35, the Feb 10 / Jan 4 highs and a bull trigger. This confirmed a resumption of the broader uptrend and the rally has since accelerated. The next objective is 118.60/66, the Jan 3 ‘17 and Dec 15 ‘16 highs. This zone also represents a key resistance.
  • On the commodity front, Gold traded lower yesterday and breached the 20-day EMA. This suggests scope for a deeper retracement. The next support is at $1901.5 next, the Mar 1 low. Oil markets continue to correct lower. The move down in WTI is still allowing a recent overbought condition to unwind. The 20-day EMA has been breached and this exposes the 50-day EMA, currently at $93.46. This EMA highlights a key area of support. Initial firm resistance is at $110.29, the Mar 11 high.
  • In the FI space, Bund futures maintain a bearish tone and have breached key support at 161.50, the Feb 10 low and a medium-term bear trigger. The break confirms a resumption of this year’s downtrend and opens the 160.00 handle. Gilts remain weak and attention is on the key support at 121.10, Feb 16 low. This support has been probed. A clear break would open 120.00 and confirm a resumption of the broader downtrend.

EQUITIES: China/HK equities lead the way higher

  • Japan's NIKKEI up 415.53 pts or +1.64% at 25762.01 and the TOPIX up 26.62 pts or +1.46% at 1853.25
  • China's SHANGHAI closed up 106.745 pts or +3.48% at 3170.71 and the HANG SENG ended 1672.42 pts higher or +9.08% at 20087.5
  • German Dax up 355.98 pts or +2.56% at 14280.41, FTSE 100 up 85.76 pts or +1.2% at 7260.98, CAC 40 up 172.54 pts or +2.72% at 6518.01 and Euro Stoxx 50 up 108.35 pts or +2.9% at 3849.41.
  • Dow Jones mini up 294 pts or +0.88% at 33822, S&P 500 mini up 47 pts or +1.1% at 4310, NASDAQ mini up 227.25 pts or +1.69% at 13682.75.

COMMODITIES: Silver bucking the trend of commodities a little higher

  • WTI Crude up $1.56 or +1.62% at $97.82
  • Natural Gas (NYM) up $0.16 or +3.57% at $4.729
  • Natural Gas (ICE Dutch TTF) up $0.3 or +0.26% at $115.8
  • Gold spot up $0.93 or +0.05% at $1918.94
  • Copper up $7.55 or +1.67% at $458.65
  • Silver down $0.1 or -0.4% at $24.7921
  • Platinum up $21.81 or +2.21% at $1008.71

16/03/20220930/1030EU ECB Elderson Panels Asia High-level Meeting
16/03/20221100/0700**US MBA Weekly Applications Index
16/03/20221230/0830***US Retail Sales
16/03/20221230/0830**US Import/Export Price Index
16/03/20221230/0830***CA CPI
16/03/20221230/0830**CA Wholesale Trade
16/03/20221400/1000*US Business Inventories
16/03/20221400/1000**US NAHB Home Builder Index
16/03/20221430/1030**US DOE weekly crude oil stocks
16/03/20221530/1130*US US Treasury Auction Result for Cash Management Bill
16/03/20221800/1400***US FOMC Statement
17/03/20222145/1045***NZ GDP
17/03/20220030/1130***AU Labor force survey
17/03/20220930/1030EUECB Lagarde Address at ECB & Its Watchers Conference
17/03/20221000/1100***EU HICP (f)
17/03/20221015/1115EUECB Lane in Debate at ECB & its Watchers Conference
17/03/20221200/1200***UK Bank Of England Interest Rate
17/03/20221230/0830**US Jobless Claims
17/03/20221230/0830***US Housing Starts
17/03/20221230/0830**US Philadelphia Fed Manufacturing Index
17/03/20221230/0830**US WASDE Weekly Import/Export
17/03/20221245/1345EUECB Schnabel in Debate at ECB & its Watchers Conference
17/03/20221315/0915***US Industrial Production
17/03/20221430/1030**US Natural Gas Stocks
17/03/20221530/1130**US NY Fed Weekly Economic Index
17/03/20221530/1130*US US Bill 08 Week Treasury Auction Result
17/03/20221530/1130**US US Bill 04 Week Treasury Auction Result
MNI London Bureau | +44 203-865-3809 |
MNI London Bureau | +44 203-865-3809 |

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