Daily Market Outlook, March 12, 2025 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute...

Asian stocks saw gains, with European and US futures also rising, following Trump’s efforts to reassure a business roundtable regarding the economy’s outlook and his initiatives to boost growth. Treasury prices increased, and the Dollar posted a modest recovery against all its G10 peers, ahead of a consumer inflation report expected later on Wednesday. S&P 500 and Nasdaq 100 futures gained after Trump expressed confidence in the US avoiding a recession, easing Wall Street's anxieties about his trade policies. European contracts climbed by as much as 1% following Ukraine's agreement to a US-brokered 30-day ceasefire with Russia. This year, markets have been pressured by Trump's tariff strategy, geopolitical tensions related to Ukraine, persistent inflation, and the uncertain timeline of Federal Reserve interest rate cuts, putting US stocks at risk of a downturn. The VIX index, indicating stock market volatility, is approaching levels not seen since August, while a similar gauge for Treasuries has hit peaks last seen in November, as investors are apprehensive about US economic prospects.

Trump's 25% tariffs on steel and aluminium imports took effect on Wednesday, coinciding with the expiration of prior exemptions, duty-free quotas, and product exclusions. The uncertainty surrounding the tariffs has heavily impacted stocks, resulting in the S&P 500 erasing an astonishing $4 trillion in market value since its peak last month. At a meeting with the CEOs of major U.S. companies on Tuesday, Trump defended his tariff strategy, suggesting that they could increase. The Republican president addressed around 100 CEOs at a regular Business Roundtable meeting, which included leaders from Apple, JPMorgan Chase, and Walmart. Concerns about a recession have prompted traders to raise their bets on the Federal Reserve reducing interest rates, with the market anticipating 76 basis points of cuts this year. In the commodities sector, oil prices increased as the US lowered its forecast for global oversupply. Gold maintained its value, supported by strong demand for safe-haven assets.

The February US CPI report, set for release on Wednesday, is projected to show a 0.3% month-over-month increase in headline inflation, reducing the annual rate from 3.0% to 2.9%. Core inflation is expected to rise by the same monthly amount, leading to a year-over-year rate of 3.2%, a slight dip from the prior month largely due to rounding. Beneath the surface, conditions appear somewhat more favourable, supported by a beneficial base effect for the Fed’s preferred "supercore" measure. Such an outcome could strengthen market confidence in the ongoing disinflation trend, further reinforced by concerns about demand-side pressures. These positive signals, however, are tempered by persistent challenges in survey-based pricing components, which continue to suggest a resurgence in price-setting behaviour. Despite this, it seems the Federal Reserve may prioritise economic growth over the persistence of inflation, attributing certain price pressures to "one-off" factors like tariffs. This stance is underpinned by studies indicating that such fees can have a long-term disinflationary effect on aggregate demand. While this approach might appear pragmatic following the recent inflation shock—and despite evidence that businesses are passing on cost increases—markets remain cautious about the potential for an upside surprise, given the policy risks involved. Fed Chair Jerome Powell seems to share this cautious sentiment, particularly when considering the state of the survey pipeline and current market expectations. Notably, markets are fully pricing in three rate cuts beginning in June, a scenario that could shift depending on how inflationary trends evolve.

Goldman Sachs US Equities trading desk notes, “Core CPI forecast is +29 bps MoM, which translates to an expected PCE forecast of +25 bps—broadly in line with consensus. A higher-than-expected print could heighten concerns about Federal Reserve constraints and the monetary policy "put," especially with inflationary pressures from tariffs looming. Heading into the CPI release, the volatility market reflects heightened stress, with short-dated vols above the 90th percentile on a 10-year lookback. The SPX straddle implies a breakeven move of over 1.5% for tomorrow—the highest implied move for a CPI print since March 2023"

Overnight Newswire Updates of Note

  • EU Targets €26 Billion Of US Goods In Trump Tariff Retaliation

  • Trump’s 25% Tariffs On Metals Take Effect Without Exemptions

  • US CommSec: Tariffs Are "Worth It," Even If They Trigger A Recession

  • Pimco: Tariffs Have Raised Probability Of US Recession To Around 35%

  • TSMC Pitched Intel Foundry JV To Nvidia, AMD And Broadcom

  • Toyota Sees Potential Risk To Deal Brokered With Tesla In Europe

  • Japan Struggles To Adapt To An Era Of Rising Prices

  • BoJ Watchers See Gradual Rate Hikes With Higher Terminal Rate

  • China’s 10Y Bond Yield Eyes Key 2% Level As Pressure Mounts

  • China Auto Tech Suppliers: Trade Barriers Won’t Stop Growth

  • Hedge Funds Speed Up De-Risking, With Focus On Industrials

  • Growing Fears Of Corporate Defaults Hit US Credit Markets

          (Sourced from reliable financial news outlets)

FX Options Expiries For 10am New York Cut 

(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)

https://www.tickmill.com/blog/institutional-insights-bnpp-fx-vol-options-volumes-are-a-leading-indicator

  • USD/MXN: 22.00 ($406.8m), 21.20 ($306.6m)

  • EUR/USD: 1.0405 (EU781.9m), 1.0550 (EU772.9m), 1.0490 (EU660.7m)

  • USD/JPY: 154.75 ($1.41b),150.05 ($1.13b), 150.00 ($801.3m)

  • USD/CNY: 7.1500 ($l.11b),7.2000 ($1.02b), 7.2200 ($lb)

  • USD/CAD: 1.4120 ($762m), 1.4320 ($687m), 1.4380 ($574.2m)

  • AUD/USD: 0.6385 (AUD491.8m), 0.6090 (AUD448.5m), 0.6400 (AUD441.1m)

  • GBP/USD: 1.2300 (GBP500.2m), 1.3000 (GBP446.2m), 1.2150 (GBP424.5m)

  • EUR/GBP: 0.8755 (EU445.5m)

  • NZD/USD: 0.5575 (NZD792.4m), 0.5645 (NZD361.8m), 0.5675 (NZD348.7m)

  • USD/BRL: 5.8400 ($334.1m)

CFTC Data As Of 7/3/25

  • CFTC positions for the week concluding on March 4th

  •  The net long position in Japanese yen stands at 133,651 contracts.

  •  The net short position in euros stands at -10,106 contracts.

  •  The net long position in Bitcoin stands at 614 contracts.

  •  The Swiss franc records a net short position of 37,775 contracts.

  •  The net long position for the British pound stands at 18,574 contracts.

  •  Equity fund speculators reduced the S&P 500 CME net short position by 48,053 contracts, bringing the total to 291,884.

  •  Speculators raise activity at CBOT.  The net short position in US Ultrabond Treasury futures decreased by 4,169 contracts, totalling 231,904. Equity Fund Managers reduced their net long position in the S&P 500 CME by 10,497 contracts, bringing it to 901,555. Speculators have shifted positions on CBOT.  US Treasury bond futures reflect a net short position of 17,797 contracts, a decrease from 40,912 net longs recorded the previous week.

  •  Speculators raised the net short position in CBOT US 2-Year Treasury futures by 21,846 contracts, bringing the total to 1,171,299.

  •  Speculators raised their net short position in CBOT US 10-Year Treasury futures by 12,185 contracts, totalling 712,040. Additionally, they increased their net short position in CBOT US 5-Year Treasury futures by 172,588 contracts, reaching 1,798,361.

Technical & Trade Views

SP500 Pivot 6040

  • Daily VWAP bearish

  • Weekly VWAP bearish

  • Seasonality suggests bearishness Into March 7th

  • Above 6075 target 6195

  • Below 6040 target 5657

EURUSD Pivot 1.05

  • Daily VWAP bullish

  • Weekly VWAP bullish 

  • Seasonality suggests bearishness into March 30th

  • Above 1.0535 target 1.0860

  • Below 1.0505 target 0.9758

GBPUSD Pivot 1.26

  • Daily VWAP bullish

  • Weekly VWAP bullish 

  • Seasonality suggests bearishness into March 10th

  • Above 1.2685 target 1.30

  • Below 1.2560 target 1.2450

USDJPY Pivot 151

  • Daily VWAP bearish

  • Weekly VWAP bearish

  • Seasonality suggests bullishness into Apr 9th

  • Above 1.5330 target 154.40

  • Below 151.30 target 148

XAUUSD Pivot 2800

  • Daily VWAP bullish

  • Weekly VWAP bullish 

  • Seasonality suggests bearishness into mid/late March

  • Above 2800 target 2997

  • Below 2750 target 2650

BTCUSD Pivot 95k

  • Daily VWAP bearish

  • Weekly VWAP bearish 

  • Seasonality suggests bullishness into Apr 9th

  • Above 95k target 105k

  • Below 95k target 65k