FOREX: USD Index Gains for Third Straight Session

• Fed Funds implied rates are little changed on the day for meetings out to June but as much as 2bp lower by end-2025.
• The decline came 30mins either side of the cash equity open with no clear drivers from what were mixed data. From a potential disinflationary, Putin quoted Trump as saying Ukraine will take part in peace talks.
• Cumulative cuts from 4.33% effective: 0.5bp Mar, 4bp May, 12.5bp Jun, 18bp Jul, 27bp Sep and 37bp Dec.
• Ahead, the FOMC minutes at 1400ET will be scrutinized for: why the Fed shifted its statement language on inflation; was there any discussion of a rate hike scenario; and was there any further discussion over the potential impact of government policy shifts?
• MNI FOMC Minutes Preview.
• Fed VC Jefferson also talks on the household balance sheet at 1700ET with both text and Q&A. He last spoke Feb 4, noting the need for caution as per many FOMC members: “As long as the economy and labor market remain strong, I see it as appropriate for the Committee to be cautious in making further adjustments… Over the medium term, I continue to see a gradual reduction in the level of monetary policy restraint placed on the economy as we move toward a more neutral stance as the most likely outcome…that said, I do not think we need to be in a hurry to change our stance.”

February's $16B 20Y Bond new issue auction was slightly weak, with a 1bp tail on a 4.830% high yield vs 4.820% when-issued yield.

• Peripheral stats were on the soft side: bid-cover of 2.43x was the lowest in 4 auctions (2.54x 5-auction average), with primary dealers taking down 17.5% of competitives (16.8% 5-auction average). Directs took 19.5% (16.4% 5-auction average) with indirects taking 63.0% (66.8% 5-auction average).
• From another perspective, it was much weaker result than January's unusually strong auction, and the 5th tail in the last 6 auctions.
• Treasury futures edged very slightly lower on the result, with front TYs down 0.5 ticks at 108-24.5.
• The first re-open of this 20Y Bond is tentatively scheduled for March 18 ($13B).

• US TSY 20Y BOND AUCTION: HIGH YLD 4.830%; ALLOT 37.10%
• US TSY 20Y BOND AUCTION: DEALERS TAKE 17.51% OF COMPETITIVES
• US TSY 20Y BOND AUCTION: DIRECTS TAKE 19.51% OF COMPETITIVES
• US TSY 20Y BOND AUCTION: INDIRECTS TAKE 62.99% OF COMPETITIVES
• US TSY 20Y BOND AUCTION: BID/COV 2.43