US TSYS: Cash Yields Gap Lower As Tariff Details Digested

• MNI: UK FEB BRC SHOP PRICES +0.4% M/M, -0.7% Y/Y

BRC-NielsenIQ Shop Prices fell by 0.7% Y/Y for the second consecutive month, remaining in the range of -0.8% to -0.6% since September 2024 (excluding December which was distorted by Black Friday). The Shop Price Index remains in deflation for the seventh consecutive month.

• On a sequential basis, Shop Prices rose 0.4% M/M (vs a fall of 0.4% in January), marginally below their February average (2010-2019 average of 0.52% M/M - note none of these data are seasonally adjusted).
• Food price inflation accelerated to 2.1% Y/Y, after softening two-tenths to 1.6% in January. This is the highest Y/Y print since September 2024, after recording the lowest print since November 2021 in January. On a monthly basis, food prices rose 0.4% M/M - this is significantly above the February norm (2010-2019 February average of 0.18% M/M) but followed a 0.5% print in January - which was the weakest January print since 2015.
• The Chief Executive of the BRC highlights "prices on the month saw the biggest increase in the last year...butter, cheese, eggs, bread and cereals all saw price hikes" and expects "food prices to be over 4% up by the second half of the year."
• We estimate food inflation contributed 0.11ppt to the change in January headline CPI, and despite recent divergence between the official ONS series and the BRC-NielsenIQ Shop Price series particularly in December when data was distorted by Black Friday, the current data highlights the potential risk of elevated food prices in the months ahead.
• Non-Food Prices remained in negative territory for the eleventh consecutive month, falling 2.1% Y/Y from -1.8% in January. This marks the lowest reading since October 2024 (excluding December distorted data).
• On a monthly basis, non-food prices rose 0.5% M/M (after -0.9% in January), this is below the February norm (2010-2019 February price growth average of 0.72%). However, bear in mind that this data is showing very little correlation with the ONS non-energy industrial goods reading in recent months, which has moved comfortably into positive territory in Y/Y terms.
• The press release states the rise is driven by January promotions ending.
• Survey Period: 1 to 7 February 2025.

• RES 3: 147.74 - High Jan 15 and bull trigger (cont)
• RES 2: 146.53 - High Aug 6 
• RES 1: 142.73/144.48 - High Dec 9 / High Nov 11  
• PRICE: 139.31 @ 16:21 GMT Mar 3
• SUP 1: 138.71 - Low Feb 19
• SUP 2: 138.62 - 2.0% Lower Bollinger Band
• SUP 3: 138.00 - 1.0% 10-dma envelope

JGBs extended the recent bounce Friday, firming further off recent lows as global equity markets underperformed. The show through 139.99 resistance shows the move could have legs - opening early December highs should the pace be maintained. 144.48 is the medium-term target for bulls.