EU: Fraud Probe Risks Major Fallout Across EU Institutions
European Commission President Ursula von der Leyen is under threat amid a burgeoning scandal that saw the EU's former foreign policy chief, Federica Mogherini, and former head of the European External Action Service (EEAS, the EU's diplomatic corps) Stefano Sannino detained as part of a fraud investigation (they were released with 'suspect status' earlier today). Politico reports "The European Public Prosecutor’s Office said it had “strong suspicions” that a 2021-2022 tendering process to set up a diplomatic academy attached to the College of Europe, where Mogherini is rector, hadn’t been fair and that the facts, if proven, “could constitute procurement fraud, corruption, conflict of interest and violation of professional secrecy.”"
- There is a web of political intrigue surrounding the fraud probe. Relations between VdL and the current EU High Representative for Foreign Affairs and Security Policy, Kaja Kallas, are viewed as strained after Kallas' preferred pick for a senior position in the EEAS was overlooked for one favoured by VdL, and Kallas' rejection of a Commission-proposed 'intelligence cell'.
- Sannino, having left the EEAS earlier this year, has served as a high-profile diplomat in VdL's Commission as head of the directorate-general overseeing the Middle East, North Africa and the Gulf.
- As Euractiv notes, for the eurosceptic right-wing political groups in the European Parliament, as well as member state gov'ts that have had frequent run-ins with Brussels, "the episode plays into populist claims that Brussels is both self-satisfied and self-dealing."
- VdL has already faced four confidence votes during her second term. The most recent in October were comfortably defeated. However, if the fraud probe does find evidence of wrongdoing, it could spur renewed efforts to remove the head of the Commission.
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US TSY FUTURES: Curve-Wide Positioning Little Changed On Friday
OI data points to a mix of net long cover (TY, UXY & WN) and short setting (US) further out the curve as long end futures settled lower on Friday.
- TU & FV futures were unchanged at settlement, so it is difficult to make any meaningful assertions when it comes to positioning swings in those contracts (outside of exposure being added in TU and trimmed in FV).
- Net curve-wide DV01 equivalent exposure was little changed on the day.
| 31-Oct-25 | 30-Oct-25 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 4,603,126 | 4,565,661 | +37,465 | +1,420,372 |
FV | 6,804,374 | 6,815,692 | -11,318 | -487,624 |
TY | 5,489,795 | 5,509,193 | -19,398 | -1,300,555 |
UXY | 2,486,249 | 2,489,353 | -3,104 | -279,552 |
US | 1,904,209 | 1,895,255 | +8,954 | +1,145,107 |
WN | 2,124,810 | 2,128,266 | -3,456 | -650,824 |
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| Total | +9,143 | -153,076 |
FED: More Dovish Fedspeak Eyed After Friday’s Broad Rate Cut Pushback
Today’s Fedspeak sees more dovish/at most centrist FOMC members scheduled compared to Friday’s mostly more hawkish stance (before a typically dovish Waller late on). We’re set to hear from Miran, Daly and Cook, with our pick being Cook for her first monetary policy relevant remarks in nearly three months.
- ~0715ET – Gov. Miran (voter) on Bloomberg TV. He didn't publish a dissent statement on Friday, having also shied away from tradition after the September meeting, but his dovish stance is well-known. He has been advocating for 50bp cuts and noted after the mid-October deterioration in US-China trade relations that there was more urgency to get rates to neutral. It will be interesting to see whether this latest urgency is dialled back at the margin. Limited headlines from a NYT interview published Saturday morning noted that restrictive policy poses a risk to the labor market and is making the economy more brittle to shocks.
- 1200ET – SF Fed’s Daly (non-voter) in moderated conversation (no text). Recently towards the more dovish end of the FOMC spectrum, she said on Sep 24 that she "fully supported" the Fed's 25bp September cut, and suggested "Moving forward, it is likely that further policy adjustments will be needed as we work to restore price stability while providing needed support to the labor market." She notes that the latest Fed Dot Plot showed that further cuts were expected, "but these are projections, not promises, and making good decisions will require us to anchor on our objectives, assess the tradeoffs, and decide, again and again."
- 1400ET – Gov. Cook (voter) on economy and monetary policy (text + Q&A). We haven’t heard from Cook on monetary policy since the second half of August when President Trump tried to force her resignation and then fire her in what’s been a lengthy legal process. She noted back in early August that the jobs report at the time was concerning as big jobs revisions were somewhat typical of turning points and that the unemployment rate is still a good indicator of slack. We consider her to towards the center of the hawk/dove spectrum, albeit slightly on the dovish side.
- For a review of Friday’s post-FOMC Fedspeak, see the MNI US Macro Weekly here which captured remarks from Bostic, Hammack, Logan and Schmid. It was published before Waller said all the data suggest the Fed should cut rates again in December. He would say yes if President Trump asked him to be Fed Chair.
CHF: USDCHF Strength Will Hinge on US Private Data This Week
- Broad USD strength combined with firmer global equities has helped USDCHF clear the October high, prompting the pair to change hands at its highest level since August 22nd. This clears resistance up to 0.8104. Sustainability of the move higher here will depend on the suite of private US data releases set for this week, specifically: today's US ISM Manufacturing and S&P Global Manufacturing PMI, ISM Services and ADP Employment data on Wednesday ahead of prelim UMich sentiment data on Friday.
- Following the surprising division of the FOMC at last week's rate decision, a presumed December rate cut has been called into question - and absent official US government releases, these private sector numbers will take on greater importance, and should certainly play a part in policy-setting for the hawks into the final decision of the year (indeed, Powell has referenced the Michigan inflation expectations survey in press conferences previously).
- As a result, a strong turnout from the private sector numbers this week would pose upside risks to USDCHF, and clearance of 0.8104 would extend the upside of the range toward 0.8171, the late July rally top.
