US STOCKS: Equities Roundup: Risk Sentiment Sours on Tariff Tiff

Much of the early portion of Fed Chair Powell's  Q&A with the Senate Banking Committee is devoted to financial system regulation; from a monetary policy perspective a few exchanges stand out:

• On tariffs: Powell asked about whether tariffs on China, Canada and Mexico are a wise policy: "I think the standard case for free trade and all that logically still makes sense. It didn't work that well when we have one very large country that doesn't really play by the rules. And in any case, it's not the Fed's job to make or comment on tariff policy."
• On QT: Powell repeats his previous description of reserves as "abundant" and the decision-making process to end-QT (the process still has "a ways to go"): "The most recent data and the feel of the markets is definitely that reserves are still abundant. They're about the level they were at when runoff started, because the runoff has really happened out of the overnight [reverse] repo facility... we're going to be looking at conditions in reserve markets and trying to stop a little bit above what we consider ample and we think we're meaningfully above that. Now we can't put a number on it, because you can't directly know the demand for reserves, other than by observing behavior in the market and then putting a little bit of a buffer on it. So I can't give you an exact number, but for now, it's ongoing, and we have a ways to go."
• On Presidential interference with Fed leadership: Asked "what would you do if the President tried to remove a member of the Federal Reserve Board?" Powell responds, "well, it's pretty clearly not allowed under the law."

ECB-dated OIS price 83bps of easing through year-end, 6bps more hawkish than yesterday’s close, with EUR implied rates marching higher alongside core yields through the session.

• Hawkish repricing has been most notable at the front-end, with 18bps of sequential easing priced into both the April and June decisions (vs 19.5bps and 20bps at yesterday’s close respectively).
• A 25bp cut remains fully priced through March. Focus at that gathering will be on the updated macroeconomic projections and any wording tweaks in the policy statement.
• According to the MNI Policy Team’s latest sources piece, while the bank is likely to adjust its reference to policy restrictiveness in the statement, there would be resistance on the Governing Council to completely removing it, as estimates of the neutral rate have edged downwards but remain uncertain.
• Activity data will be important in the ECB’s assessment of policy restrictiveness ahead of the March 6 decision, leaving focus on the second Q4 GDP estimate on Friday, and the February flash PMIs next week.
• ECB Executive Board member Schnabel participates in a panel appearance this evening (1700GMT). Slides will be released on the ECB’s website. 

• -5,000 TUH5 102-22.25, sell through 102-22.38 post time bid at 1057:00ET, DV01 $185,000. The 2Y contract trades 102-22.38 last (-1.25).