US DATA: Empire And Philly Manufacturing Start Year Strong, Except Jobs (1/2)
Manufacturing activity in the neighboring New York and Philadelphia Fed regions picked up in January after a weak December, boding well for a national pickup in industrial activity at the start of the year. That included better new orders and shipments across both surveys. However if there was a note of caution in activity, it was in employment, which deteriorated in both region - particularly New York.
- The Empire State Manufacturing Survey's General Business Conditions index jumped to 7.7 from -3.7 in December, and vs the 1.0 expected - partially retracing the large drop from 18.7 in November.
- And the Philadelphia Fed's Manufacturing Business Outlook Survey showed a general activity index that likewise surprised to the upside in reversing a negative print prior, printing 12.6 after -8.8 in December, and better than the -1.4 expected. This was a 4-month high for the Philly index.
- The NY Fed sums up a solid Empire report which carried some caution on the employment and supply availability fronts (we note the recent tightness in the same Fed's global supply chain index): "New orders increased, and shipments grew at a solid pace. Delivery times were unchanged and inventories edged down, while supply availability worsened slightly." Additionally, "Firms remained fairly optimistic that conditions would improve."
- However, a weakening in employment levels and hours worked was the clear standout in terms of a month-to-month move in Empire, with the number of employees index dropping to -9.0 from +7.5 prior for the weakest since the end of 2023 (though expected future employment ticked up).
- In the Philadelphia report, "The survey’s indicator for general activity rose and turned positive. The new orders and shipments indexes also moved higher... Most of the survey’s broad indicators for future activity declined but continued to suggest expectations for overall growth over the next six months."
- But again, employment was a weak spot, with number of employees falling to 9.7 from 13.0 in January, with a similar drop in hour worked.
- (Note that both the Empire and Philly surveys incorporated adjusted seasonal factors which affects prior years' monthly readings.)
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RIKSBANK: MNI Riksbank Preview: December 2025 – No Policy Pivot Yet
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EXECUTIVE SUMMARY:
- The Riksbank is expected to hold the policy rate at 1.75% on Thursday, in a quarterly decision which includes an updated MPR and rate path projection. We expect the policy statement to re-iterate that the policy rate will be kept at 1.75% for “some time”.
- The main focus should be on the first three quarters of the updated rate path. This is the part of the curve that is “owned” by the Executive Board, and therefore constitutes a policy signal (beyond that is a staff forecast). ee basis points, owing to strengthening activity momentum, supportive monetary policy and the anticipated expansion of fiscal policy from next year.
- Such a revision to the Q3 point would be an acknowledgement from the Board that the risk of a hike to 2% is marginally greater than the risk of another cut in H2 2026. However, we don’t expect this to provide a meaningful hawkish impulse to markets, which have moved to almost fully price in a hike by the end of 2026 over the past few weeks.
- Instead, the risk to market pricing is probably skewed in a dovish direction, in a scenario where the Board holds the first three quarters of the path at 1.75%. We note that this scenario is the current consensus amongst analysts, even if not endorsed by SEK rates markets.
US 10YR FUTURE TECHS: (H6) Bearish Outlook
- RES 4: 113-09 76.4% retracement of the Nov 25 - Dec 10 bear leg
- RES 3: 113-00+ 61.8% retracement of the Nov 25 - Dec 10 bear leg
- RES 2: 112-27+ High Dec 5
- RES 1: 112-23 High Dec 11
- PRICE: 112-11+ @ 13:50 GMT Dec 16
- SUP 1: 111-29 Low Dec 10 and the bear trigger
- SUP 2: 111-19 1.236 proj of the Oct 17 - Nov 5 - 25 price swing
- SUP 3: 111-11 1.382 proj of the Oct 17 - Nov 5 - 25 price swing
- SUP 4: 111-00 Round number support
A bear theme in Treasuries remains intact. Today’s volatile activity resulted in a brief test above the 20-day EMA, at 112-20. The outlook remains bearish. A continuation lower would refocus attention on key support at 111-29, the Dec 10 low. Clearance of this level would confirm a resumption of the bear leg and open 111-19, a Fibonacci projection. On the upside, a clear breach of 112-23, the Dec 12 high would strengthen a S/T bull cycle.
US TSY OPTIONS: Post-Open/Data Trade
Derivatives trade turns mixed with underlying rejecting post-data knee-jerk bid, TYH6 back in overnight range at 112-11 (+2) vs. 112-22.5 high - briefly through 20-day EMA at 112-20. Projected rate cut pricing gaining cool slightly vs. early morning levels (*): Jan'26 steady at -6.1bp, Mar'26 at -13.5bp (-14.3bp), Apr'26 at -20.6bp (-20.8bp), Jun'26 at -34.5bp (-34.2bp).
- 5,000 TYF6 113/113.5 1x2 call spds ref 112-11
- 6,000 TYG6 111/112/113 2x3x1 put flys ref 112-12.5
- +12,000 Weds Wkly 10Y 112 puts, 6-7
- -8,000 TYG6/TYH6 112.5 straddle spd, 33 vs. 112-09.5
