STIR: Fed Rates Extend Hawkish Reaction To U.Mich, 65bp Cuts For 2025

• Despite the hotter-than-expected inflation data in the US, EURUSD’s attempt lower remained contained, with spot only printing a 1.0317 low in the direct aftermath.
• Subsequently, the reversal higher for major equity indices and the single currency’s outperformance against the likes of the Yen, AUD and NZD has helped propel EURUSD back above pre-data levels, narrowing the gap to the early European highs at 1.0386.
• EURUSD resilience may have also been fuelled by most recent commentary on tariffs. First of all, the Hasset comments on reciprocal tariffs being a “work in progress”, may have boosted risk sentiment at the margin, while the latest headline from the EU trade chief on finding a tariff solution may also be supportive.
• A short-term bull theme in EURUSD remains intact for now. Attention is on the candle formation on Feb 3 - a hammer - that signals a possible reversal. 1.0427, the 50-day EMA, marks a key resistance. A clear break of it would be a bullish development.

Details of the latest Tsy quarterly futures from March'25 to June'25 below, FVH5/FVM5 continues to lead volumes while overall percentage complete remains low, appr 2%-3% across the curve ahead the "First Notice" date on February 28. Current roll details:

• TUH5/TUM5 appr 19,400 from -5.62 to -4.62, -4.75 last
• FVH5/FVM5 appr 136,600 from -2.5 to -1.0, -1.0 last
• TYH5/TYM5 appr 33,200 from 0.25 to +1.0, +1.0 last
• UXYH5/UXYM5 appr 1,300 from 4.5 to 4.75, 4.75 last
• USH5/USM5 appr 4,200 from 5.5 to 6.75, 6.75 last
• WNH5/WNM5 less than 100 from 4.0 to 4.25, 4.0 last
• Reminder, March futures won't expire until next month: 10s, 30s and Ultras on March 20, 2s and 5s on March 31. March Tsy options expire February 21.

The DMO has announced it will be looking to sell GBP4.25bln of the 4.375% Mar-28 Gilt (ISIN: GB00BSQNRC93) at its auction next Wednesday, February 19.