JGBS: Sharp Bear-Steepener Ahead Of Tomorrow's 20Y Supply
Apr-14 05:29
JGB futures are stronger, +8 compared to the settlement levels, sitting near the middle of today’s range.
- In the final report, Feb. industrial production was revised down to 2.3% m/m from 2.5%. Japan’s operating ratio fell to 104.1 in Feb. compared to 105.3 in the previous month.
- (MNI) The BoJ will manage monetary policy appropriately to achieve the 2% price target sustainably and stably, Governor Kazuo Ueda told lawmakers Monday. The BoJ will examine the future economy, prices and financial markets without precondition, he added.
- Cash US tsys are 2-3bps richer in today's Asia-Pac session. The US calendar is light this week, with the highlights being Retail Sales data and Fedspeak from Powell and Waller on Wednesday.
- Cash JGBs are flat to 11bps cheaper across benchmarks, with a steepener curve. The benchmark 20-year yield is 7.9bps higher at 2.407% ahead of tomorrow's supply. The current yield is 10-15bps higher than last month’s auction level.
- The swap curve has twist-steepened, with rates 2bps lower to 5bps higher. Swap spreads are mixed.
- Tomorrow, the local calendar will be empty apart from 20-year supply.
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
Mar-14 21:28
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Mar-14 21:25
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
Mar-14 21:17
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
