EMERGING MARKETS: Global News: October 02
Oct-02 10:30
- US (BBG) – The US government shutdown entered its second day with the Trump administration having raised the stakes in its showdown with Democrats, first by punishing the home city of its two leading antagonists and then by signalling a willingness to fire thousands of federal workers, despite some Republicans’ concerns that the strategy could backfire.
- US / UKRAINE (WSJ) – The US will provide Ukraine with intelligence for long-range missile strikes on Russia's energy infrastructure, American officials said, as the Trump administration weighs sending Kyiv powerful weapons that could put in range more targets within Russia. President Trump recently signed off on allowing intelligence agencies and the Pentagon to aid Kyiv with the strikes, the latest sign that Trump is deepening support for Ukraine.
- US (BBG) – Federal Reserve Bank of Chicago President Austan Goolsbee said a lack of official data while the US government is shut down will make it harder for central bankers to interpret the economy. Goolsbee reiterated concerns about a recent pickup in services inflation, which he said could mean price pressures are persistent in parts of the economy least impacted by tariffs.
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STIR: September Fed Cut Seen Mostly Locked In, ISM Mfg Ahead
Sep-02 10:26
- Fed Funds implied rates for near-term meetings are mixed relative to Friday’s levels post-Labor Day, with slightly higher odds of cut later this month but modestly more hawkish further out.
- Strong increases in WTI prices are having relatively little impact on front rates.
- Cumulative cuts from 4.33% effective: 23bp Sep, 35.5bp Oct, 55bp Dec, 66bp Jan and 80.5bp Mar.
- SOFR futures are up to 5 ticks lower in 2027 contracts vs Friday’s close, although with almost half of that coming yesterday in holiday-thinned trade.
- The SOFR implied terminal yield remains in the H7, at 2.995% (+5bp from Fri) having modestly lifted off last week’s recent lows of ~2.95%. It still points to more than 130bp of cuts ahead.
- Directionally, Fed terminal pricing remains at odds with the trend increase in BoE and ECB expectations over the past couple months.
- Today’s macro focus is on the ISM manufacturing survey before labor data comes into focus tomorrow ahead of Friday’s NFP report.
- Next scheduled Fedspeak comes from St Louis Fed’s Musalem (’25 voter, hawk) on the economy and policy tomorrow at 0900ET.
SONIA OPTIONS: Large Call Spread buyer
Sep-02 10:20
SFIU6 97.40/97.50cs, bought for 0.75 in 20k.
US 10YR FUTURE TECHS: (Z5) Pullback Appears Corrective
Sep-02 10:14
- RES 4: 113-06 2.236 proj of the Jul 15 - 22 - 28 price swing
- RES 3: 113-00 Round number resistance
- RES 2: 112-28+ 2.000 proj of the Jul 15 - 22 - 28 price swing
- RES 1: 112-20+ High Aug 28 / 29
- PRICE: 112-04+ @ 11:04 BST Sep 2
- SUP 1: 111-31 20-day EMA
- SUP 2: 111-18+ 50-day EMA
- SUP 3: 111-13+ Low Aug 18 and a key support
- SUP 4: 110-25 Low Aug 1
The trend outlook in Treasury futures is bullish and the latest pullback appears corrective. Last week’s gains delivered a print above 112-15+, the Aug 5 high and a bull trigger. A breach of this hurdle confirms a resumption of the bull cycle and paves the way for a climb towards the 113-00 handle. Moving average studies are in a bull-mode position, reinforcing a bull theme. First support to watch is 111-31, the 20-day EMA.
