US DATA: Govt Helps NFP Beat And Revisions But Private Still Very Solid

Little net movement in US$ STIRs on the back of the slightly softer-than-expected ADP data, with ongoing focus on geopolitical matters and healthy levels of job growth within the report (as well as the usual questions surrounding short-term correlation with NFPs) limiting reaction. 

• FOMC-dated OIS showing 4bp of cuts through September, before showing ~6bp of hikes through March, indicating low conviction surrounding any movement in the Fed Funds target rate through Q127.
• Dec FOMC-dated OIS showed ~7.5bp of cuts earlier today, when the market was pricing an easing of geopolitical tension centred on the Middle East.
• SOFR futures little changed to +1.0, having pulled back from session highs into the data.

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• President Donald Trump will participate in ‘Executive Time’ at 08:00 ET 13:00 BST, hold a policy meeting at 11:00 ET 16:00 BST, participate in a military event at 12:30 ET 17:30 BST, receive an intel briefing at 15:30 ET 20:30 BST, and attend a reception at 17:30 ET 22:30 BST.
• It's been another whipsawing 24 hours of Iran war news. Senior US officials spent yesterday touting Trump’s new initiative to reopen the Strait of Hormuz. Trump then pulled the rug, suspending the initiative, citing diplomatic progress with Tehran.
• Market optimism strengthened this morning amid reports that the US believes it is close to an agreement with Iran to end the war and initiate nuclear negotiations. The primary focus today will be on the response from key members of the Iranian regime.
• EU negotiators will meet in Brussels today to discuss tensions over the implementation of the US-EU trade deal struck at Trump’s Turnberry golf club in Scotland last year.
• Commerce Secretary Howard Lutnick will appear before the House Oversight Committee today for a closed-door, on-the-record interview about his relationship with Jeffrey Epstein.
• Trump scored a major political victory in a slate of Indiana state Senate primaries.
• Trump will host Brazilian President Luiz Inacio Lula da Silva at the White House on Thursday.
• Trump is ‘privately concerned’ about elements of the Senate-approved bipartisan housing bill.
• Poll of the Day: Americans blame Trump for the increase in gas prices.

Full Article: US DAILY BRIEF

Treasury made no changes to nominal auction sizes for the upcoming quarter and kept its issuance guidance unchanged again, saying its current auction sizes leave it "well positioned to address potential changes to the fiscal outlook and to the size and composition of the SOMA portfolio." 

• Repeats, "Treasury anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters."
• Dealers generally anticipate nominal coupon auction sizes might next increase in early 2027, and expect Treasury to modify its forward guidance several quarters ahead of such a change, according to the TBAC minutes.
• The median primary dealer forecast for privately-held net marketable borrowing implies a USD1.3 trillion funding shortfall in FY2027-28 based on current coupon auction sizes and bill supply, the minutes said.
• TBAC "overwhelmingly" viewed the recently modified Enhanced Supplementary Leverage Ratio (eSLR) and bank capital changes proposed in March as helpful to the Treasury market. Dealers said eSLR had enabled greater intermediation, and the proposed changes to bank capital were expected to result in incremental additional demand for Treasury securities from depository institutions as well as unlock balance sheet space that would most likely be deployed to repo. 

Actual auction sizes for the February to April 2026 quarter and the anticipated auction sizes for the May to July 2026 quarter, in billions of dollars: