SONIA: SONIA FIX - 06/03/25

• Treasuries have bear steepened today, with the front-end somewhat pinned by Fed rate expectations ahead of today’s data including the JOLTS report for December but with the longer end extending a sell-off seen after the US delayed tariffs on Canada following similar developments for Mexico earlier in the day.
• The deadline for setting 10% tariffs on China has passed and China has since announced targeted retaliatory measures of its own due to be effective Feb 10, leaving scope for negotiations.
• Cash yields are 0.6-2.7bp higher, with 20s leading the increase.
• 2s10s has pushed to 32.4bps (+1.4bp) but remains below Friday’s 35bps prior to the original Feb 1 tariff deadline.
• TYH5 sits at 108-25 off earlier lows of 108-23. Cumulative volumes of 375k are reasonable but far from yesterday’s outsized 770k at the same time of day.
• A corrective cycle remains in play and the contract is holding on to the bulk of its recent gains. Key resistance at 109-10 (50-day EMA) has been pierced. A clear break would strengthen a bullish theme and open 109-31 (Dec 18 high). The medium-term trend condition remains bearish, with initial firm support seen at 108-06 (Jan 23 low).
• Data: JOLTS Dec (1000ET), Factory orders Dec (1000ET)
• Fedspeak: Bostic (1100ET), Daly (1400ET) and Vice Chair Jefferson on the economic outlook and mon pol (1930ET, incl text). An addendum for Jefferson who we missed in the earlier STIR comment, his prepared remarks are worth watching having last spoken on Oct 9. We’ve previously seen him as on the dovish side of the spectrum but a lot has changed since then.
• Bill issuance: US Tsy $85B 42D CMB auction (1130ET)
• See our take on yesterday’s borrowing estimates, including how requirements were at the low end of expectations (here) and cash level assumptions are subject to downside risk (here).

• THIS IS A TEST FROM MNI

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