MNI ASIA OPEN: Verbal Assault on Fed Independence Continues

EXECUTIVE SUMMARY

• MNI FED: Chicago's Goolsbee: Central Bank Independence Key To Anchor L-R Infl Exp
• MNI FED: Citi: 125bp Cuts This Year, But Next One Pushed Back From May To June
• MNI FED: Trump Warns Of Slowing Economy Unless Fed Cuts Rates "Now"
• MNI US DATA: Weak LEI Reflects Of Weaker Manufacturing, Tighter Financial Conditions

US

MNI FED: Chicago's Goolsbee: Central Bank Independence Key To Anchor L-R Infl Exp

CNBC anchors trying to pin down Chicago Fed President Goolsbee (2025 voter, dove) on the impact of President Trump potentially replacing Fed Chair Powell - Goolsbee won't be drawn into the speculation but he is emphatic that central bank independence is crucial to keeping longer-run inflation expectations down.

• Goolsbee says without central bank independence, you get "higher inflation, worse growth, higher unemployment." And he cites Paul Volcker's example of tightening policy to quell inflation, saying "sometimes the Fed has to do the hard job".
• That said, asked if he still sees rates being lower 12 - 18 months from now: "I still think that", identifying the March Dot Plot as a guide to the overall direction of rates.

NEWS

MNI FED: Citi: 125bp Cuts This Year, But Next One Pushed Back From May To June

Citi has pushed back its expectation for the next Fed rate cut to June, from May previously, as Fed officials "have guided against a May cut" amid government policy uncertainty. They still expect 125bp of cuts this year, however, which is more than the just-under-100bp currently priced by Fed funds futures. Citi: "we expect a range of data to have pushed Fed officials more dovish by June. That would include weaker "soft" data (including PMI this week) and signs that the labor market is loosening with the unemployment rate rising in the next few jobs reports."

MNI FED: Trump Warns Of Slowing Economy Unless Fed Cuts Rates "Now"

S&P futures dip to session lows with Treasuries ticking up following President Trump's latest Truth Social missive on Fed rate policy. Trump says that "preemptive" rate cuts are being "called for by many", and labels Fed Chair Powell "Mr. Too Late, a major loser". Notably, he also warns of a "SLOWING of the economy" if the Fed doesn't cut rates "now", and appears to accuse the rate cuts last year as being politically motivated.

• In other words, the White House doesn't appear to be backing down from its criticism of the Fed, which is weighing on investor perceptions of US monetary policy independence - we covered last week's developments on this front in our US Macro publication out Friday (PDF).
• @realDonaldTrump:“Preemptive Cuts” in Interest Rates are being called for by many. With Energy Costs way down, food prices (including Biden’s egg disaster!) substantially lower, and most other “things” trending down, there is virtually No Inflation. With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW. Europe has already “lowered” seven times. Powell has always been “To Late,” except when it came to the Election period when he lowered in order to help Sleepy Joe Biden, later Kamala, get elected. How did that work out?"

MNI US TSYS: Tariff Tied Headline Risk & Fed Independence Meddling

• Treasuries look to finish mostly lower Monday, curves twist steeper as the short end outperforms a sell-off in the long end, risk sentiment hampered as stocks hold at or near session lows.
• Headline risk continues to rattle markets, latest focus partially tied to headlines that the WH is in the process of replacing Sec of Defense Hegseth following reports of another Signal Chat leak made the rounds. Politico reported GOP Rep Bacon said "Hegseth should Go". Conversely, WH Press Sec Leavitt just said the NPR report is false.
• Global trade remains the greater concerns, markets await something concrete in tariff negotiations vs. hopes and promises that talks with dozens of countries is going well, while Pres Trump berates Fed Chairman Powell and reiterating a call for "preemptive cuts".
• Curves near late highs: 2s10s currently +13.246 65.492 vs. 66.377 high, 5s30s +8.604 at 94.411. Jun'25 10Y futures -13.5 at 110-24 vs. late overnight low of 110-22. Technical at 110-15/109-08 (Low Apr 15 / 11 and the bear trigger). In turn, projected rate hike pricing gain momentum vs. morning levels (*) as follows: May'25 at -4bp (-3.4bp), Jun'25 at -19.8bp (-19bp), Jul'25 at -43.6bp (-40.1bp), Sep'25 -63.4bp (-59.9bp).
• Stocks reacting negatively, extending lows with SPX eminis slipping to 5127.25 low, Consume Discretionary and IT sectors underperforming. US$ broadly weaker, BBG index -8.47 at 1216.21.
• Tuesday Data Calendar: several Fed speakers, Richmond Fed data and Tsy $69B 2Y Note Sale.

OVERNIGHT DATA

MNI US DATA: Weak LEI Reflects Of Weaker Manufacturing, Tighter Financial Conditions

March's Conference Board leading economic index (LEI) was softer than expected at -0.7% M/M (-0.5% survey, -0.2% prior which is an upward revision from -0.3%). The coincident index rose 0.1% (0.3% prior), with the lagging index -0.1% (+0.3% prior). This was the weakest monthly change in the LEI since October 2023, in keeping with other indicators that appear to have been negatively impact by tariff uncertainty.

• The Conference Board release notes "the data does not suggest that a recession has begun or is about to start", though the LEI hasn't been a particularly reliable indicator of recession in this cycle, having printed in negative territory for a few years now. On a 6-month basis, the index is actually trending up from the early 2023 lows, but this doesn't offer much confidence in the outlook in and of itself.
• MNI interprets the LEI more as a manufacturing cycle indicator: it is very heavily weighted toward cyclicality in manufacturing: avg weekly  manufacturing hours (25%) and ISM New Orders (17%) are combined over 40% of the index, when added to core capital goods orders (5%) and manufacturers' new orders (consumer goods and materials, 8%).
• That being said, the biggest contributor to March's LEI drop was financial conditions (equity prices, leading credit index, spreads) for the weakest such conditions since October 2023. The accompanying chart shows MNI's grouping of contributing sectors to the LEI.

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 1071.63 points (-2.74%) at 38058.7
S&P E-Mini Future down 146.5 points (-2.76%) at 5164.5
Nasdaq down 479.6 points (-2.9%) at 15802.05
US 10-Yr yield is up 8.4 bps at 4.4087%
US Jun 10-Yr futures are down 13.5/32 at 110-24
EURUSD up 0.0123 (1.08%) at 1.1516
USDJPY down 1.42 (-1%) at 140.76
WTI Crude Oil (front-month) down $1.28 (-1.98%) at $63.40
Gold is up $94.08 (2.83%) at $3420.57

US TREASURY FUTURES CLOSE

3M10Y +8.688, 8.39 (L: -2.452 / H: 9.69)
2Y10Y +12.811, 65.057 (L: 55.677 / H: 66.377)
2Y30Y +15.696, 115.248 (L: 105.091 / H: 117.247)
5Y30Y +8.46, 94.267 (L: 89.986 / H: 96.556)
Current futures levels:
Jun 2-Yr futures up 2.5/32 at 103-27.875 (L: 103-25.25 / H: 103-30.5)
Jun 5-Yr futures down 3/32 at 108-10.25 (L: 108-08 / H: 108-20.75)
Jun 10-Yr futures down 13.5/32 at 110-24 (L: 110-22 / H: 111-09) 
Jun 30-Yr futures down 1-19/32 at 112-31 (L: 112-28 / H: 114-13)
Jun Ultra futures down 1-29/32 at 116-22 (L: 116-18 / H: 118-13)

MNI US 10YR FUTURE TECHS: (M5) Gains Considered Corrective

• RES 4: 113-04   76.4% retracement of the Apr 7 - 11 bear leg
• RES 3: 112-12   61.8% retracement of the Apr 7 - 11 bear leg
• RES 2: 111-25   50.0% retracement of the Apr 7 - 11 bear leg  
• RES 1: 111-17+ High Apr 16
• PRICE:‌‌ 110-24 @ 1513 ET Apr 21
• SUP 1: 110-15/109-08   Low Apr 15 / 11 and the bear trigger
• SUP 2: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
• SUP 3: 108-21   Low Feb 19
• SUP 4: 108-03+ Low Dec 12 ‘24 and a key support 

Treasury futures traded higher last week. The climb has resulted in a breach of both the 20- and 50-day EMAs. For now, the latest bounce is considered corrective and the contract is retracing the steep sell-off between Apr 7 - 11. The next resistance to watch is 111-25, 50.0% of the Apr 7 - 11 bear leg. A resumption of weakness would refocus attention on 109-08, the Apr 11 low. A break of this level would resume the downtrend.  

SOFR FUTURES CLOSE

Jun 25 +0.025 at 95.930
Sep 25 +0.060 at 96.325
Dec 25 +0.075 at 96.610
Mar 26 +0.085 at 96.795
Red Pack (Jun 26-Mar 27) +0.040 to +0.085
Green Pack (Jun 27-Mar 28) -0.025 to +0.020
Blue Pack (Jun 28-Mar 29) -0.065 to -0.04
Gold Pack (Jun 29-Mar 30) -0.09 to -0.07

REFERENCE RATES (PRIOR SESSION)
​​​​​​​
US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 4.32% (+0.01), volume: $2.505T
• Broad General Collateral Rate (BGCR): 4.31% (+0.01), volume: $1.047T
• Tri-Party General Collateral Rate (TCR): 4.31% (+0.01), volume: $1.016T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $94B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $114B

FED Reverse Repo Operation

RRP usage rebounds to $114.114B this after noon from $58.600B last Thursday. Usage had fallen to $54.772B last Wednesday, April 16 -- lowest level since April 2021. Usage had surged to the highest level since December 31, 2024 last Monday, March 31: $399.167B. The number of counterparties at 38.

MNI PIPELINE: Corporate Bond Update, $5B American Express 4Pt Priced

• Date $MM Issuer (Priced *, Launch #)
• 04/21 $5B *American Express $1.6B 4NC3 +98, $400M 4NC3 SOFR+126, $1.5B 6NC5 +108, $1.5B 11NC10 +128
• 04/21 $700M Excelerate Energy 5NC2
• 04/21 $2B QXO Inc. 7NC3 investor calls

EGBS

European markets were closed for Easter Monday holiday

FOREX

TUESDAY DAYA CALENDAR

Date	GMT/Local	Impact	Country	Event
22/04/2025	0600/0800	**	SE	Unemployment
22/04/2025	1230/0830	*	CA	Industrial Product and Raw Material Price Index
22/04/2025	1230/0830	**	US	Philadelphia Fed Nonmanufacturing Index
22/04/2025	1255/0855	**	US	Redbook Retail Sales Index
22/04/2025	1300/0900		US	Fed Vice Chair Philip Jefferson
22/04/2025	1330/0930		US	Philly Fed's Pat Harker
22/04/2025	1400/1000	**	US	Richmond Fed Survey
22/04/2025	1400/1600	**	EU	Consumer Confidence Indicator (p)
22/04/2025	1700/1900		EU	ECB's De Guindos at MIT/ICADE Finance Club
22/04/2025	1700/1300	*	US	US Treasury Auction Result for 2 Year Note
22/04/2025	1740/1340		US	Minneapolis Fed's Neel Kashkari
22/04/2025	1830/1430		US	Richmond Fed's Tom Barkin
22/04/2025	2200/1800		US	Fed Governor Adriana Kugler
23/04/2025	2300/0900	***	AU	Judo Bank Flash Australia PMI
23/04/2025	2301/0001	*	GB	Brightmine pay deals for whole economy
23/04/2025	0030/0930	**	JP	Jibun Bank Flash Japan PMI