Americas Breakfast Briefing

US OPEN/EVENTS AHEAD

Cash USTs richened during Asia-Pac, although the long-end has since cheapened during European hours. The 30-year yield is now up 1-2bp. The 10-year yield erased a brief move higher to trade flat along 4.4968%. This, as markets absorbed news that Trump will announce 25% tariffs on steel/aluminum imports from all countries on Monday, though no start date was mentioned. He also plans to introduce reciprocal tariffs on countries taxing US imports, likely announced Tuesday or Wednesday and taking effect immediately. Elsewhere and following Friday's labour report, US OIS curves now see a ~7% chance of a rate cut at next month's meeting, down from around 15% seen last week. US equity futures point north, led by Nasdaq minis (+0.60%). SPX minis are up+0.40%. WTI has jumped to a higher-high of $72.06 versus Thursday's YTD low of $70.43. Looking ahead, just the NY Fed 1-yr inflation expectations (16GMT) which will garner interest after Friday's 100bp bump up in the Michigan 1-yr inflation expectations to 4.3%. All this before January CPI tomorrow (Wednesday). There are no CBers scheduled to speak today. Nothing on the supply front.

• The US 2/10yr spread flattens from 43 (8 Jan, 32-month high) to probe support at 19 (6/7 November highs and 20 December low)
• Studies deteriorate and given the '75% lower' rating on this week's Sentiment Matrix, watch for continued near-term flattening towards 11 (18 December trough)
• Sustained flattening would then expose strong support between -2 (25 November/2 December troughs, near 7 October low at -1)
• It would take a return back above 28 (21/22 January former troughs) to offer near-term relief back towards 35/38 (31/24 January highs)

EUROPEAN ROUND UP

A relatively quiet morning for EGB debt futures. The complex traded inside days, within narrow ranges without testing recent extremes nor technical levels. Mar25 Gilts outperformed for the most part with BTPs not far behind. Bunds marginally topped Oats. Dutch front month gas futures hit a 2-year high, more than double the price at the same time last year. There Eur 2-yr ILS was back up through 2%, but well within the recent range. The 10-yr ILS remained just under 2% and towards the bottom of its recent range ergo, despite the price rise, there was no overly upside reaction from inflation space. Brent was up over a dollar at best, posting a higher-high whilst also breaking over Thursday's top, but still within the recent range. SONIA whites were +1.5/4 ticks higher, reds +4 ticks (Dec25 and Mar26) to +3.5/3 ticks. The Euribor strip a more modest +1/1.5 ticks. Equity market were on the front foot with FTSE leading the pack.

• Dutch gas futures have cleared 56.10 (13 October 2023 reaction high) to suggest completion of a major two-year double bottom over 22.85/22.32 (2 June 23/23 Feb 24 lows)
• Strengthening studies suggest initial scope to 60.49/61.27 (1.382 projection of 22.32/42.90 advance from 32.04 and 31 January 2023 minor lower high)
• Sustained gains would then target 65.35 (1.618 projection of 22.32/42.90 advance from 32.04), perhaps 69.00 (23 January 23 minor lower high)
• From here, only a return below 51.00/51.29 (2 January former high and 4 February low) would caution for 47.60/45.65 (27/16 January lows)

MARKET HEADLINES

• Cash USTs mixed, long-end richen
• Trump announces 25% tariff on stee;/aluminium imports from all countries
• JGBs richer, short-end underperforms as Trump warns Japan of its trade deficit with the US
• EGB debt futures higher, OATs the laggard
• ECB Guindos says US trade policy causes 'huge uncertainty'
• Global equity futures higher
• Europe teeters toward energy crisis as Dutch gas reaches two-year high
• Brent/WTI firmer
• Norway CPI rises to 2.3% y/y in Jan from 2.2%. Core CPI accelerates to 2.8% y/y from 2.7%
• Norway PPI jumps to 18.1% y/y from 9.3%
• Sweden industrial orders falls to 5% in Dec from 5% (revised) prior
• Sweden household consumption falls to 0.7% y/y from 1.8% (revised) prior
• Sweden private sector production picks up to 3% from 2.5% (revised)
• Sweden industry production value rises to 9% from 2.6%. Services fall to 1.6% from 3.5% (revised) prev
• EMU investor confidence rises to -12.7 in Feb from -17.7
• BTP/BUND SPREAD TECH - Near-term bounce then risk to 106-98
• OAT/BUND SPREAD TECH - Minor widening ahead of a return to 69/63
• IRON ORE TECH - Bulls seek 883.00-844.50 perhaps 870.00/884.90

DAY AHEAD

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