US 10YR FUTURE TECHS: (M5) Trend Needle Points North

Massive for UK Bonds, decent for Europe, and small for the US.

Bloomberg Bonds projected:

• US Tsys: +0.07yr (small, average).
• EU Govies: +0.10yr (decent).
• UK Govies: +0.23yr (HUGE).

MS Bonds:

• US Tsys: +0.05yr (small).
• EU Govies: +0.07yr (small, average).
• UK Govies: +0.17yr (LARGE).

Citi Bonds:

• EU Govies: +0.10yr (decent).
• UK Govies: +0.19yr (HUGE).

Barclays FX:

• Their rebalancing model indicates a moderate dollar selling signal against most majors and the signal for Cable is borderline strong.

Credit Agricole FX:

• They see mild USD selling across the board with the strongest sell signal vs the Yen. Their corporate flow model points to EUR selling also.

Deutsche FX:

• They see mild USD buying (vs EUR and SEK, NOK), while seasonality points toward broad USD selling.

• Fed Funds implied rates have firmed a touch recently to sit unchanged from yesterday’s close, fading a modest rally in European rates as markets eye today’s FOMC decision.
• The 50bp of cuts for 2025 is exactly in line with the median dot from last month’s SEP, having at one point in mid-Jan briefly priced less than 25bp for the year on spillover from a strong payrolls report.
• Cumulative cuts from 4.33% effective: 0.5bp for today, 8bp Mar, 15.5bp May, 27.5bp Jun, 32.5bp Jul and 50bp Dec.
• MNI Fed Preview: https://media.marketnews.com/Fed_Prev_Jan2025_With_Analysts_c155c1a3c6.pdf

OI data points to a mix of net short setting (TU. FV. TY & UXY) and long cover (US & WN) during yesterday’s downtick in Tsy futures.

• The net short setting seen through UXY futures was more prominent in net DV01 terms.
• This bought an end to two consecutive days of fairly meaningful net long setting across most contracts.