EURGBP TECHS: Key Support Holds For Now

Tuesday's US rates/bond options flow included:

• SFRH5 96.06c, traded for half in 4k.
• SFRJ5 95.87/95.81/95.62p ladder, traded for 4 in 2k.
• SFRK5 97.43c, traded for 0.75 in 2k.
• SFRM5 95.93/96.06cs, traded for 1.5 in 7.5k.
• SFRM5 95.68p, traded for 2.5 in 3k.
• SFRM5 95.56/95.68/96.00/96.12 Iron Condor, sold at 2.25 in 3k.
• SFRQ5 95.93^, bought for 34.5 in 2k.
• SFRU5 95.93^, sold at 37 and 36.5 in 8k total
• SFRU5 95.93^, traded for 37 in 2k and 36.5 in 3.5k.
• SFRZ5 96.37/96.12/95.68p ladder, sold at 6.25 in 3k.
• 0QH5 95.93/96.06/96.18/96.43c condor, traded 3.5 in 5k.
• 0QM5 96.06 with 2QM5 96.00 straddle strip, bought for 93 in 1.5k.
• 2QU5 96.62/97.00cs, traded 5 in 3k.

Overnight reverse repo facility takeup dipped by $4.6B to $73.2B Wednesday, a retracement from Tuesday's $19.0B jump but still higher vs the month's multi-year low of $58.8B set last week. 

• Takeup is expected to remain relatively steady until late next week, at which time it would be unsurprising to see it rise above $100B for the first time in February amid month-end dynamics.

A new survey from Ipsos has found that, “An increasingly large majority (now 70%) believe that tariffs will raise prices on the goods they buy. But only one in three think it’s fair for companies to pass along the cost of tariffs in the form of higher prices.”

• Ipsos notes: “That’s a tension worth watching in a number of ways. One is the consumer side and how much people will push back on price hikes, especially as inflation stubbornly persists. The administration is already “softening its tone” on how quickly prices will come down.”
• Comes after President Donald Trump said on Tuesday he could impose a 25% tariff on automobile, semiconductor, and pharmaceutical imports as soon as April 2, when an interagency trade review is completed.
• Trump added that tariff measures could “go very substantially higher over the course of the year,” and reiterated that countries could avoid tariffs if they move manufacturing operations to the United States.
• Semafor reports: “Experts have debated the impact of Trump’s policies so far: One Natixis economist wrote that Southeast Asian countries stood to gain, Goldman Sachs’ chief economist said little had changed, while another prominent analyst warned that recent data suggested American consumers may bear the full brunt of tariffs.”

Figure 1: To what Extent do Voters Agree with the Following Statements

Source: Ipsos