OAT: AFT Creates E20bln Securities Reserve

• US TSY 17W BILL AUCTION: HIGH 3.620%(ALLOT 53.30%)
• US TSY 17W BILL AUCTION: DEALERS TAKE 37.13% OF COMPETITIVES
• US TSY 17W BILL AUCTION: DIRECTS TAKE 5.59% OF COMPETITIVES
• US TSY 17W BILL AUCTION: INDIRECTS TAKE 57.28% OF COMPETITIVES
• US TSY 17W BILL AUCTION: BID/CVR 3.17

• *JP Morgan: Weakness in Q3 GDP was concentrated in inventories, while annual growth is now tracking at 2.1%, just above the RBA’s forecast of 2.0%. There was nothing in the data to alarm the RBA, which prompted AUD to reverse its earlier losses. Also encouraging the AUD view, was a headline that orders for LME copper rose to its highest level since 2013, led by demand from Taiwan and South Korea, while HF’s who had built YTD shorts with JPM, were big buyers of AUD yesterday.
• *MUFG: Rates markets have moved to almost fully price the next move as a hike from the RBA in light of the tighter than expected labour market conditions and the pick-up in inflation pressures. Those expectations were encouraged overnight by comments from RBA Governor Bullock.
• *BBVA anticipate AUDUSD will attack the September highs of 0.67 in the short term and continue to gradually rise in 2026 should this cooling in spending not worsen going forward.
• *Standard Chartered: Barring a US hard landing triggering a further sell-off in risky assets, SC see scope for a recovery in the AUD in 2026, and see upside risk to their current forecasts. The domestic economic backdrop remains positive for the AUD amid a still-tight labour market and persistent inflationary pressure, which SC think will keep the RBA on extended pause.

Charles Gasparino at Fox Business reports on X that there is a 'last-ditch' effort by Wall Street and corporate America insiders to caution President Donald Trump against nominating National Economic Council Director Kevin Hassett as Federal Reserve Chair. 

• According to Gasparino, "They’re saying that his appointment sets the stage for higher long term interest rates because 1) The Fed will be a disorganized mess with leader lacking credibility inside 2) If Hassett manages to cut short term rates (as Trump wants) with divided vote because of sticky inflationary pressures, it will be perceived as political and inflationary."
• Gasparinmo notes, "Of course Trump will PROBABLY ignore all of the above but that’s the latest in the Fed race. Other candidates are Kevin Warsh and Fed gov Christopher Waller, both of whom could be fall back choices."
• At two White House events yesterday, Trump appeared to explicitly suggest that Hassett was on track to get the nod. First by saying that he had narrowed his shortlist down to one, and then singling out Hassett - who was in the room - as a “potential Fed chair.”
• Gasparino's comments appear to have prompted - or coincided with - a slight pullback in Hassett's implied probability of taking the nomination from 85% to 80%, per Polymarket.

Figure 1: Who will Trump Nominate as Fed Chair

Source: Polymarket