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#marketreflection 12.03.25 Treasury yields rose on the potentially inflationary impact of a global trade war, offsetting optimism over slowing consumer price gains in February. Underlying components of the data that feed through to personal consumption expenditures, the Federal Reserve’s preferred inflation measure, were higher than expected. “This is the last reading not impacted by tariff distortions, so to some extent the market's a little bit hesitant to over react to a better print,” said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities in New York. “The transmission to PCE is actually a little bit stronger,” he added. Two-year notes fell 3/32 to yield 3.9907%. 30 year bonds slipped 16/32, yielding 4.6335%. Meanwhile, the Treasury Department sold $39 billion in 10-year notes at a high yield of 4.310%. The bid-to-cover ratio was 2.59. The dollar edged higher against major currencies including the yen and the euro as data showed a slowdown in inflation although simmering tensions will continue to weigh on markets. A trade brinkmanship between the U.S. and its trading partners, spurred by President Donald Trump's unpredictable announcements on tariffs, has spread uncertainty among investors. "There was a brief moment of a relief because CPI came in lower than expected and that created some currency volatility but I think the dollar direction is beginning to get a little worn out because of bigger trends and there's so much headline risk with Ukraine-Russia war or tariffs," said John Velis, Americas macro strategist at BNY. The dollar index was up 0.27% at 103.57. Euro fell 0.24% to $1.0892. Against the Japanese yen, the greenback rose 0.35% to 148.29 yen. US Market Focus 13.03.25   3-Month Bill Settlement 6-Month Bill Settlement 6-Week Bill Settlement Jobless Claims  8:30 AM ET PPI-Final Demand  8:30 AM ET Quarterly Services Survey  10:00 AM ET EIA Natural Gas Report  10:30 AM ET 3-Month Bill Announcement  11:00 AM ET 6-Week Bill Announcement  11:00 AM ET 6-Month Bill Announcement  11:00 AM ET 52-Week Bill Announcement  11:00 AM ET 10-Yr TIPS Announcement  11:00 AM ET 20-Yr Bond Announcement  11:00 AM ET 4-Week Bill Auction  11:30 AM ET 8-Week Bill Auction  11:30 AM ET 30-Yr Bond Auction  1:00 PM ET Fed Balance Sheet  4:30 PM ET //

#marketreflection 18.02.25 Treasury yields inched higher as investors returned from a holiday weekend, digesting last week's market swings and another piece of data showing growth remains strong enough to complicate the Federal Reserve's easing path. "On a holiday week like this when volumes might be a little light, sometimes lesser data can move the market a little bit more than usual," Brien said. He added that Wednesday's release of the Federal Open Market Committee meeting minutes for January could give the market an interesting juxtaposition between how the economy looked then and subsequently. Benchmark 10 year notes fell 20/32, yielding 4.5523%. Two-year notes dropped 3/32 to yield 4.3055%. 30-year bonds were down 1-7/32 to yield 4.7737%. The dollar strengthened against major currencies, led by gains versus the euro, as it garnered safe-haven amid tariff worries and tension-filled peace negotiations on the Russia Ukraine conflict. "Markets seem to be concerned with how cold relations are between the U.S. and EU (European Union) that the Saudi Arabia meeting between American and Russian leaders left EU officials out. It puts doubt on any original enthusiasm that emanated from the likelihood that Ukraine and Russia would find a middle ground and thus bring with it a better situation economically for all involved." The euro fell 0.32% to $1.0448. Sterling eased 0.13% to $1.2607. Against the Japanese yen, the dollar edged 0.34% higher to 152.01 yen. The dollar index rose 0.46% to 107.06. US Market Focus 19.02.25 » MBA Mortgage Applications  7:00 AM ET Housing Starts and Permits  8:30 AM ET Atlanta Fed Business Inflation Expectations  10:00 AM ET E-Commerce Retail Sales  10:00 AM ET Treasury Buyback Announcement (Preliminary)  11:00 AM ET 4-Month Bill Auction  11:30 AM ET 20-Yr Bond Auction  1:00 PM ET FOMC Minutes  2:00 PM ET Philip Jefferson Speaks  5:00 PM ET #affinmoneybrokers

#marketreflection 14.02.25 Treasury yields fell after data showed retail sales in the world's largest economy tumbled in Jan, keeping the Fed on track to cut interest rates later this year. Overall, Andy Wells, CIO of investment management firm SanJac Alpha LP in Houston believes the secular inflation environment will remain elevated although growth will slow a litte bit. "We're kind of having a stagflation backdrop, not scary stagflation, just saying that growth is going to be slower, and the lower end of inflation will be a little higher than what we're accusomted to," said Wells. "What that means is that rates will drift a little bit higher on the long end of the curve, but on the short end, it will be rangebound. The two-year we see that as rangebound." Benchmark Treasury 10y notes were up 13/32 to yield 4.4762%. 30-year bonds gained 14/32, yielding 4.6982%. 2y notes added 3/32 with a yield of 4.2610%. The USD fell against the euro as a delay in the introduction of trade tariffs planned by U.S. President Trump raised hopes that they may not be as bad as feared, while optimism about a peace deal between Russia and Ukraine helped the single currency rally. “Markets are still hoping that tariff headwinds are not going to be as significant as perhaps previously feared, then probably the bigger element this week is enthusiasm about potential Russia-Ukraine ceasefire and to what extent that might be positive for European growth in particular,” said Vassili Serebriakov, an FX strategist at UBS in New York. The euro rose 0.27% to $1.0492. The dollar index was down 0.51% at 106.77. Against the Japanese yen the dollar fell 0.35% to 152.25 yen. US Market Focus 17.02.25 On Presidents' Day, Monday, February 17, 2025 all major U.S. financial markets, including the New York Stock Exchange (NYSE) and Nasdaq, will be closed in observance of the federal holiday: US bond markets will also be closed. Patrick Harker Speaks  10:30 PM Michelle Bowman Speaks  11:20 PM US Market Focus 17.02.25 On Presidents' Day, Monday, February 17, 2025 all major U.S. financial markets, including the New York Stock Exchange (NYSE) and Nasdaq was closed in observance of the federal holiday: US bond markets was also closed. US Market Focus 18.02.25 » Christopher Waller Speaks  7:00 AM 4-Week Bill Settlement 8-Week Bill Settlement 4-Month Bill Settlement 3-Yr Note Settlement 10-Yr Note Settlement 30-Yr Bond Settlement Empire State Manufacturing Index  9:30 PM Housing Market Index  11:00 PM Mary Daly Speaks  11:20 PM #affinmoneybrokers

BoA survey shows the US dollar is expected to top out in Q1 2025 (17.02.25) February survey re FX and interest rate sentiment from Bank of America: Bank of America's latest survey re sentiment on FX and rate markets:   USD expected to hit its 2025 peak this quarter Reflecting increased concerns around :-   US economic growth slowdown Doubts over US "exceptionalism" persisting “More investors now simply lack conviction for the rest of the year” High USD dollar valuation Rate differentials moving narrower in favour of other FX Long USD positions the most crowded trade #affinmoneybrokers

EURUSD could climb 5% if (big if) Russia Ukraine ceasefire is followed by gas supply boost. 17.02.25 Via a JP Morgan note: EUR/USD could rise as much as 5% if a Ukraine ceasefire is agreed followed by the resumption of gas supplies   A potential ceasefire between Russia and Ukraine seems more likely. Trump and Russian President Vladimir Putin reportedly agreed to start negotiating an end to the war in Ukraine. Will depend on the details of any agreement Resumption of lower-cost gas supplies, if at all, will likely be a smaller proportion compared to before Russia invaded Ukraine in 2022 On the other hand: Euro is at risk from US trade tariffs, and while the US economy remains strong “A ceasefire wouldn’t mean European’s structural problems will disappear.” #affinmoneybrokers

#marketreflection (14.02.25) Treasury yields fell after data showed retail sales in the world's largest economy tumbled in January, keeping the Federal Reserve on track to cut interest rates later this year. Overall, Andy Wells, chief investment officer of investment management firm SanJac Alpha LP in Houston believes the secular inflation environment will remain elevated although growth will slow a litte bit. "We're kind of having a stagflation backdrop, not scary stagflation, just saying that growth is going to be slower, and the lower end of infltion will be a little higer than what we're accusomted to," said Wells. "What that means is that rates will drift a little bit higher on the long end of the curve, but on the short end, it will be rangebound. The two-year we see that as rangebound." Benchmark Treasury 10-year notes were up 13/32 to yield 4.4762%. 30-year bonds gained 14/32, yielding 4.6982%. Two year notes added 3/32 with a yield of 4.2610%. The dollar fell against the euro as a delay in the introduction of trade tariffs planned by U.S. President Donald Trump raised hopes that they may not be as bad as feared, while optimism about a peace deal between Russia and Ukraine helped the single currency rally. “Markets are still hoping that tariff headwinds are not going to be as significant as perhaps previously feared, then probably the bigger element this week is enthusiasm about potential Russia-Ukraine ceasefire and to what extent that might be positive for European growth in particular,” said Vassili Serebriakov, an FX strategist at UBS in New York. The euro rose 0.27% to $1.0492. The dollar index was down 0.51% at 106.77. Against the Japanese yen the dollar fell 0.35% to 152.25 yen. US Market Focus 17.02.25 On Presidents' Day, Monday, February 17, 2025 all major U.S. financial markets, including the New York Stock Exchange (NYSE) and Nasdaq, will be closed in observance of the federal holiday: US bond markets will also be closed. Patrick Harker Speaks  10:30 PM Michelle Bowman Speaks  11:20 PM #affinmoneybrokers

US dollar falls as the market shrugs off tariffs. Forex news for US trading on Feb 13 2025. Trump announces reciprocal tariffs: Could begin to impose some tariffs "within weeks" US January PPI +3.5% vs +3.2% y/y expected US initial jobless claims 213K versus 215K estimate Trump expressed support in the call for a European peacekeeping force in Zelensky call US treasury sells $25 billion of 30 year bonds at a high yield of 4.748% Ukraine's Zelenskiy warns: Don't trust Putins claims of readiness to end war NY Fed: Q4 total household debt rose 0.5% to $18.04 trillion Senior Trump official: Hope to have bilateral trade deal with India this year Italy economy minister: Will adopt measures in next few weeks to address energy costs Markets: CHF leads, USD lags WTI crude oil up 5-cents to $71.42 US 10-year yields down 10.5 bps to 4.52% Gold up $23 to $2926 S&P 500 up 0.95% If you look at the newsflow -- tariff announcement and hot PPI -- you might have expected to see some US dollar strength today but it was just the opposite. The details of the PPI report weren't nearly as hot as the headlines and the components that go into the PCE report argue for a decline in core PCE -- the Fed's preferred inflation measure. The market took at as a dovish signal and Treasury yields gave back all of yesterday's CPI-inspired gains. On the tariff front, they're certainly not having the effects they used to. The 'reciprocal' announcement was telegraphed for a week so that's some of it but it also has at least a six-week delay and the market is taking the view that these will either be tolerable for partners, negotiated away or never implemented. There was an initial drop of around 30 pips in the euro on the announcement of a focus on the EU VAT but that only lasted minutes as the dip was bough and the euro continued to rise form there, finish 90 pips above the lows. It was a similar story elsewhere as the dollar softened before the tariff announcement, then briefly surged, then gave it all back and more. USD/JPY mirrored the move in bonds as it fell 166 pips to erase yesterday's gain. Another notable signal on tariffs may be USD/CAD, which fell 117 pips today and is back to where it was in mid-December when Trump first announced 25% tariffs on Canada and Mexico. Overall, the moves are were generally uniform as the dollar/risk trade continues to bounce around. On Friday we get US retail sales data and then it's a long weekend for markets. #affinmoneybrokers

MUFG: Bigger downside risks for USD/JPY ahead. 14.02.25 Mitsubishi UFG on the dollar and yen. MUFG expects further JPY strength and downside risks for USD/JPY, driven by reversing global inflation trends, declining US yields, and BoJ rate hikes. While USD/CNY upside could exert short-term pressure on JPY, JPY is likely to weaken less than other G10 currencies due to its safe-haven status. Key Points: JPY Strength Driven by BoJ Policy Shift & Market Dynamics BoJ's 25bp rate hike (to 0.50%) was the biggest increase since 2007, signaling a shift away from ultra-loose policy. Reversing global inflation trends and falling global yields reduce the previous USD/JPY bullish drivers. Trump Tariffs & USD/CNY Upside Pose Short-Term Risks Initial optimism on tariffs faded, leading to renewed USD strength and potential near-term JPY weakness. If USD/CNY moves higher, some JPY selling pressure may emerge, though JPY should outperform other G10 currencies. Long-Term Drivers Point to USD/JPY Decline Ultra-low Japanese rates were a major factor in USD/JPY rising from 115 to 160 in 2022-2023. With those conditions now reversing, JPY is likely to strengthen in the coming quarters. Conclusion: MUFG maintains a bearish USD/JPY outlook, expecting JPY strength to accelerate as global inflation eases, US yields decline, and BoJ policy normalizes further. While short-term risks exist from USD/CNY upside, the broader trend favors USD/JPY downside in 2025. #affinmoneybrokers

#marketreflection (13.02.25) Treasury yields fell after certain components in the January Producer Price Index pointed to lower inflation, suggesting that the Federal Reserve remained on track to cut interest rates later this year. "It looks like core PCE will come out at around 0.3%, which is still high, whereas in January of last year, it was 0.5%. If that forecast is correct, core PCE is going to fall from 2.8% to 2.6% year over year," said Chris Diaz, co-head of fixed income at Brown Advisory in Chicago. The Fed will be able to cut rates more than the market expected, he said. "There's going to be enough downward pressure in the shelter component and wages that will continue to put downward pressure on inflation." The Treasury Department sold $25 billion in 30-year bonds at a high yield of 4.748%. The bid-to-cover ratio was 2.33. The benchmark 10-year notes rose 26/32, with a yield of 4.5327%. The two-year notes gained 3/32, yielding 4.3109%. The dollar slipped after components of January’s producer price report pointed to lower inflation, and fell further after the White House said that reciprocal tariffs on other nations would not be implemented immediately. “There were some subcomponents in there that show that PCE might not be as hot as CPI suggested,” said Noel Dixon, global macro strategist at State Street Global Markets. The dollar index was down 0.8% at 107.08. The euro rose 0.75% to $1.0460. Against the Japanese yen, the dollar fell 1.07% to 152.76 yen. US Market Focus 14.02.25 Retail Sales  8:30 AM ET Import and Export Prices  8:30 AM ET Industrial Production  9:15 AM ET Business Inventories  10:00 AM ET Baker Hughes Rig Count  1:00 PM ET Lorie Logan Speaks  3:00 PM ET #affinmoneybrokers

Goldman Sachs revises core PCE inflation forecast higher after CPI report. (13.02.25) Goldman Sachs already moving ahead considering the next consumer inflation data. Goldman Sachs has adjusted its inflation outlook following the latest Consumer Price Index (CPI) report, now estimating that the core Personal Consumption Expenditures (PCE) price index rose 0.35% in January, slightly above its previous 0.32% forecast. This would place the year-over-year core PCE inflation rate at 2.64%.   The investment bank also expects headline PCE inflation to have increased 0.38% month-over-month, translating to an annual rise of 2.51%. Additionally, they note that residual seasonality effects in core PCE components will likely shift from a 5 basis point drag in December to a 4 basis point boost in January.   Meanwhile, Goldman estimates that market-based core PCE, a measure that excludes imputed and volatile components, rose 0.26% in January.   As for the Federal Open Market Committee (FOMC), Goldman Sachs says the Fed will be on hold at its next meeting. Which seems obvious. #affinmoneybrokers