Pares Early Gains As Fed Announce New Emergency Bank Term Funding Scheme

Tsy futures initially legged leg higher at the re-open as Asia reacted to Friday’s price action (including softer than expected AHE data, which further exacerbated the compression in pricing re: the Fed hiking cycle, alongside deepening the pricing of cuts come the end of ‘23) and the lack of immediate resolution re: SVB. Short positioning will have also factored into that move. The initial pull higher has been tempered on headlines which have noted that the Fed has announced a new emergency bank term funding scheme.

• Cash tsys finished on Friday 14-28bps richer, the curve bull flattened.
• Tsys firmed in the aftermath of Friday's NFP print, the headline unemployment rate rose and Average Hourly Earnings were softer than expected. The headline payrolls change was stronger than expected however Januarys prints were revised lower.
• Support was seen as weakness in US Equities continued as risk appetite weakened after FDIC took over SVB and appointed a receiver, tsys firmed into the close.
• From a technical perspective 10 Year tsys futures have extended the corrective bull phase. The price breached the resistance level at 113-15+, 50% retracement of 2 Feb-2 Mar bear leg. Next resistance is at 114-00, 14 Feb high.
• In OIS Markets terminal rate pricing sits at 5.27% seen in July. Pricing is down 41bps since Wednesday, with the peak in rates coming forward to July from September.
• There is a thin data calendar in Asia-Pac today, the session will be dominated by the evolving SVB situation. Tomorrow's CPI, flagged by Fed Chair Powell as a key input into this months FOMC decision, headlines the week's docket.