US NATGAS: Canadian Natural Gas Production Hits Record Highs

• Early price action on Monday saw the USD index fall to a fresh one-month low of 97.54, briefly printing below the post Jackson Hole lows from Sep 22. This continues the theme from late last week where broadly resilient major equity benchmarks have allowed risk sentiment to stabilise, keeping the short-term path of least resistance lower for the US dollar.
• As expected, currency market momentum was lacking, owing to the US Labor Day holiday and the associated dampened liquidity and volumes. This helped the dollar off its worst levels as we approach the APAC crossover.
• Scandinavian FX performed strongly to start the week, clearly outperforming across the G10. USDSEK (-0.67) traded down to a fresh 3-year low of 9.3796 ahead of Thursday’s key inflation data. In similar vein, USDNOK (-0.66%) exhibited similar weakness but remains well shy of the 9.86 lows posted in June.
• Among the majors, GBPUSD rose 0.3% to edge back towards 1.3550. The moves come amid UK Prime Minister Keir Starmer announcing changes to his team to reset his government and give him more influence over economic policy. This helped propel GBPJPY back to 199.50, approaching a key psychological barrier of 200, which has provided pivotal significance over the last year.
• EURUSD had an early leg higher to 1.1736 but remained short of initial resistance at 1.1743 (Sep 22 high). Since then, the pair has edged back to the 1.17 mark as markets await the plethora of US data due this week, which culminates with the US employment report Friday. Key EURUSD resistance and the bull trigger remain at 1.1829, the Jul 1 high. Eurozone inflation data is scheduled tomorrow.
• The Japanese yen bucks the trend very slightly, weaker over the session and USDJPY back at 147.25. Overall, a bear threat in USDJPY remains present and the short-term bear trigger lies at 146.21, the Aug 14 low. US ISM manufacturing PMI data is due Tuesday.

• Main EGB 10Y yields closed between 2.1-2.5bp higher today, extending Friday’s modest sell-off.
• OATs marginally led today’s sell-off, with fiscal uncertainty still weighing but OAT-Bund spreads at 79bps (just +0.2bp on the day) off last week’s highs of ~82.6bps.
• French PM Bayrou over the weekend looked to gain support ahead of the Sept. 8 confidence vote but acknowledged that talks with political parties may fail to save his government.
• BTPs meanwhile clawed back some of their earlier underperformance, having led losses into the mandate announcement for the dual 7- & 30-Year BTP syndication.
• Closing the gap, BTPs closed 0.1bp tighter vs Bunds (85.8bps). The syndication was well within the realm of possibilities, as outlined in our daily/weekly issuance documents, explaining the lack of meaningful subsequent market move.
• RXU5 trades at 129.26 (-29) off earlier lows of 129.07 that probed support at 129.15 (Aug 26 low), potentially opening a test of the bear trigger at 128.64 (Aug 15 low).
• Bear steepening seen on the German curve, with yields 1.1-2.2bp higher. 5s30s saw a fresh cycle closing high of 108.6bps. The March '19 high (111.78bp) presents the next upside target of note.
• This week's uptick in EGB supply, and the impending pricing of the EFSF syndication, provide headwinds for regional bonds.
• Gilts led losses in European hours meanwhile, with 10Y yields closing +3bps.
• Slightly softer-than-flash final manufacturing PMI data did little for the market, but probably helped prevent a breach of early London lows.
• Futures last -26 at 90.26 off lows of 90.20 (both early on and again at 1612BST), breaching initial support (90.22) but leaving key support at late May lows (90.11) untested. Bears remain in technical control.

US Treasury Secretary Scott Bessent told the Washington Examiner that President Donald Trump may declare a ‘national housing emergency’ this fall to address rising house prices. The Washington Examiner notes that there hasn’t been a national housing emergency declared since the 2008 recession. 

• In recent weeks, Trump has repeatedly blamed Fed Chair Jerome Powell for stagnation in the housing market, arguing he’s harming American homeowners and buyers by keeping rates elevated, per Bloombe
• Griffin Funding notes in a post on Trump’s housing strategy: “The Trump housing market outlook in 2025 hinges on policies spanning immigration, tariffs, land use, mortgage finance, and tax incentives.
• “[Trump’s] approach centers on several key areas that could significantly influence housing dynamics: immigration reform, federal land use policies, international trade relationships, and potential changes to government-sponsored enterprises in the mortgage industry.”
• The Wall Street Journal reported on Saturday: “Homeowners with high-rate mortgages are starting to get excited about refinancing. The average 30-year fixed mortgage rate dropped to a 10-month low of 6.56%, mortgage giant Freddie Mac said Thursday. The rate has inched down for nine of the past 12 weeks, tracking expectations that the Federal Reserve will cut its own rates next month.”