MNI EXCLUSIVE: Advisor To German Fiscal Watchdog Chief Speaks With MNI

• ADP private sector employment disappointed as it increased 109k (sa, cons 120k) in April after a barely revised 61k (initial 62k) in March and 66k in February.
• The weekly updates had seen a particularly impressive acceleration recently, with three weeks running at circa 160k on a monthly equivalent for the four-week moving average.  
• Whilst a small miss to consensus and weekly tracking, it’s still comfortably above the 75k expected for private payrolls in Friday’s BLS report, and breakeven estimates for nonfarm payrolls drifting closer to zero.
• See the below charts for context behind how much steadier the ADP series has been in recent months compared to heightened volatility in the BLS series.
• ADP chief economist Richardson notes: "Small and large employers are hiring, but we're seeing softness in the middle […] Large companies have resources to deploy, and small ones are the most nimble, both important advantages in a complex labor environment."
• By sector, ADP job creation ex education & healthcare increased 48k for its largest increase since Jul 2025 in the latest vintage. 

Further to the above on the QRA (press release here):

• No surprises on nominal auction sizes - nobody in our preview expected any changes to nominal auction sizes for the upcoming quarter (coupons had held steady for 8 consecutive refundings).
• Analysts had been more split on guidance, however. The prevailing expectation was no change (which materialized, per the above headlines) but a large minority of analysts either saw a change as their base case or considerable risks that it would be. In a close call, we had anticipated that the guidance would be tweaked today, probably by removing the words “at least”, which would keep open the possibility of increases next year (“next several quarters”).
• Buybacks [MNI notes in brackets]: “Treasury anticipates that, over the course of the upcoming quarter, it will purchase up to $38 billion in off-the-run securities across buckets for liquidity support [unchanged from the anticipated amount with last quarter’s update] and up to $25 billion in the 1-month to 2-year maturity bucket for cash management purpose [down from $75billion in last quarter’s update].” Last quarter’s anticipated buybacks covered the tax season.
• 20Y settlement changes: “Treasury is modifying settlement timing for 20-year bond reopening auctions. Beginning with the reopening auction scheduled for June 16, 2026, 20-year bond reopening auctions will settle on the Friday of the auction week, while new issues will continue to settle at month end. Shortening the when-issued period is expected to mitigate repo specialness that often occurs surrounding reopening auctions. This change is consistent with feedback provided by a variety of market participants, including the primary dealers.”

Little net movement in US$ STIRs on the back of the slightly softer-than-expected ADP data, with ongoing focus on geopolitical matters and healthy levels of job growth within the report (as well as the usual questions surrounding short-term correlation with NFPs) limiting reaction. 

• FOMC-dated OIS showing 4bp of cuts through September, before showing ~6bp of hikes through March, indicating low conviction surrounding any movement in the Fed Funds target rate through Q127.
• Dec FOMC-dated OIS showed ~7.5bp of cuts earlier today, when the market was pricing an easing of geopolitical tension centred on the Middle East.
• SOFR futures little changed to +1.0, having pulled back from session highs into the data.