NZD: Kiwi Down On Risk-off Post Auto Tariffs, But Recent Ranges Holding

In post-Tokyo trade on Friday, JGB futures closed sharply higher, +41 compared to settlement levels. Japan markets return today after yesterday’s holiday.

• Overnight, US tsys benefited again from haven buying amid ongoing concerns over the Trump administration's trade policy and multi-week lows for equities.
• Projected US rate cuts through mid-2025 were steady to firmer: Mar'25 at -0.5bp, May'25 at -7.1bp, Jun'25 at -18.0bp, Jul'25 at -25.6bp.
• Cross asset update: Crude mildly higher (WTI +.22 at 70.62; Gold climbing 13.55 at 2949.60; Bbg US$ index off lows at 1286.80 (+.57) as late President Trump comments on Canada & Mexico tariffs proceeding.
• Alibaba and other Chinese tech shares slumped after Trump told the Committee on Foreign Investment to limit Chinese spending on tech and other strategic sectors.
• On the data front we have the Jan PPI for services. Later on, department store sales print, along with machine tool orders (both for Jan).
• There is also an Auction for Enhanced-Liquidity 15.5-39 YR.

The ANZ/Roy Morgan weekly Consumer sentiment reading rose to 4.7pts to 89.8, in one of the first reads on sentiment reaction to last week's RBA cut. 

• Dow Jones noted: "confidence among mortgage holders jumping 10.7 points over the week"., but added "ANZ economist Sophia Angala said the confidence of renters also rose 4.0 points, over the week, but remains weaker than mortgage holders and those who own their homes."
• "Weekly inflation expectations dropped 0.7 percentage points to 4.2%, while the four-week moving average fell 0.2 points to 4.6%, the data showed."
• However, the time to buy a major household item sub-index was barely changed. 

• Tsys futures pushed higher through the US morning session and held gains as equities dumped late in the session. The short-end was supported after a strong 2yr auction stopped more than 1bp through WI level, while drawing record demand. TU closed +01+ at 102-29⅞, while TY closed +06 at 109-28
• Tsys options were skewed towards upside protection, matching the risk-off bid in early US session. Key flows included a short-term play targeting a the 10yr to hit 4.2% within a couple of weeks
• Cash tsys curve flattened slightly, yields closed 2-4bps richer with the belly again out-performing. The 2yr closed -2.3bps at 4.175%, both the 5 & 7yr closed -3.7bps richer, while the 10yr closed -3.1bps at 4.400%, the lowest for the year. The 2s10s fell 0.50bps to 22.350
• Trump stated that tariffs on Canada and Mexico will take effect as scheduled on March 4, after an initial delay. Speaking alongside French President Emmanuel Macron, Trump emphasized that the tariffs aim to curb undocumented migration and drug trafficking. Despite border security measures taken by Canada and Mexico, Trump insisted the tariffs would proceed. He also reaffirmed plans for "reciprocal tariffs," linking US levies to other countries' trade barriers, claiming the policy would strengthen the U.S. economy.
• Projected rate cuts through mid-2025 steady to firmer vs. this morning levels (*) as follows: Mar'25 steady at -0.5bp, May'25 steady at -7.1bp, Jun'25 at -18.0bp (-17.3bp), Jul'25 at -25.6bp (-23.6bp).
• The Fed's Goolsbee is expected to appear of Chicago news shortly for an interview, while later today we have FHFA House Price Index, Conf. Board Consumer Confidence & Richmond Fed Manufact. Index