US TSYS: Cash Open

TYU5 is trading 112-03, up 0-04 from its close. 

• The US 2-year yield opens around 3.698%, down 0.03 from its close.
• The US 10-year yield opens around 4.261%, down 0.01 from its close.
• "TRUMP REMOVES FED'S COOK EFFECTIVE IMMEDIATELY" - BBG
• MNI FED: Low R-Star Era Far From Over – NY Fed Staff. A Liberty Street Economics blog post from NY Fed staff including President John Williams (FOMC permanent voter) writes that “a reasonable estimate is that r-star has risen by a relatively modest 1/4 to 1/2 percentage point from its 2018 level. Thus, despite the recent rise in TIPS yields, the evidence suggests that the low r-star era is far from over.” This is “significantly smaller” than the 1.5pp increase in the longer-term TIPS yield over the same period.
• Bloomberg - “Lorie Logan said money markets may face temporary pressures around quarter-end next month, though the Fed still has room to keep reducing its balance sheet.”
• 10-Year Yields held its 4.35% pivot area when Powell gave the market a reason to add to longs helping yields move lower. While this area continues to hold, bounces should be met with demand. First target the recent lows around 4.18% then the bottom of the range towards 4.10% comes back into focus.
• Data/Events: Philadelphia Fed Non-Man Activity, Durable Goods Orders, FHFA House Price Index, Richmond Fed Man Index/Bus Conditions, Conf. Board Consumer Confidence, Dallas Fed Services Activity

Natural gas prices were a little higher on Monday with Europe up 0.7% to EUR 33.80, close to the intraday high, but still down 4.2% this month. It rose 7.8% last week driven by falling expectations of an easing of sanctions on Russia in the foreseeable future. 

• Russia stated it needs to agree to any security guarantees and appears hesitant about a Putin-Zelenskyy meeting. Trump has again threatened Russia with “massive sanctions or massive tariffs or both” if an agreement isn’t reached in two weeks.
• Ukraine continued to target Russian energy infrastructure striking Russia’s Novatek PJSC gas facility on the Baltic Sea on the weekend.
• Europe’s refilling ahead of the upcoming heating season is progressing but gas prices are likely to be vulnerable to unexpected outages. Norway is now Europe’s main supplier and maintenance at a number of major facilities is ongoing. Unplanned extensions could add volatility to the market.
• US gas rose 0.4% to $2.709 to be down 12.8% in August and the RSI is now signalling that it is oversold, according to Bloomberg. Cooling demand is likely to be lacklustre with Vaisala forecasting below average temperatures across much of the US at the start of September.

The volatility in daily flows continues for Taiwan with a big inflow yesterday adding to a strong inflow for Korea to push total inflows for the major markets followed to over $1bn for the day. 

• South Korea: Recorded inflows of +$251m yesterday, bringing the 5-day total to -$114m. 2025 to date flows are -$4,962. The 5-day average is -$23m, the 20-day average is +$68m and the 100-day average of -$9m.
• Taiwan: Had inflows of +$790m yesterday, with total outflows of -$3,174 m over the past 5 days. YTD flows are positive at +$1,363. The 5-day average is -$635m, the 20-day average of -$28m and the 100-day average of +$196m.
• India: Had inflows of +$39m as of the 22nd, with total inflows of +$55m over the past 5 days.  YTD flows are negative -$12,782m.  The 5-day average is +$11m, the 20-day average of -$189m and the 100-day average of +$12m.
• Indonesia: Had inflows of +$45m yesterday, with total inflows of +$213m over the prior five days.  YTD flows are negative -$3,120m.  The 5-day average is +$43m, the 20-day average +$25m and the 100-day average -$16m.
• Thailand: Recorded outflows of -$16m yesterday, with outflows totaling -$184m over the past 5 days. YTD flows are negative at -$2,141m. The 5-day average is -$37m, the 20-day average of -$7m and the 100-day average of -$11m.
• Malaysia: Recorded outflows as of -$64m yesterday, totaling -$102m over the past 5 days. YTD flows are negative at -$3,492m. The 5-day average is -$20m, the 20-day average of -$30m and the 100-day average of -$13m.
• Philippines: Recorded outflows of -$13m yesterday, with net outflows of -$36m over the past 5 days. YTD flows are negative at -$630m. The 5-day average is -$7m, the 20-day average of -$1m the 100-day average of -$4m.