US: INDIA: Modi Touts Progress In Trade Talks w/Trump But Deal Remains Elusive
Indian PM Narendra Modi posts on X, “Spoke to my friend, President Trump and congratulated him on the success of the historic Gaza peace plan. Also reviewed the good progress achieved in trade negotiations. Agreed to stay in close touch over the coming weeks.” Modi’s statement comes amid a thaw in tensions that has yet to translate into progress on a bilateral trade agreement.
- Commerce Minister Piyush Goyal said Tuesday talks with the US are "ongoing continuously,” but declined to outline a timeframe for the completion of a trade agreement: "We never negotiate based on deadlines... Currently, the US government is in shutdown mode. In light of that, we'll have to see how, where, and when the talks can take place.”
- Indian FM S. Jaishankar warned this week that India won’t compromise on interests of farmers or small businesses to facilitate a deal, appearing to throw cold water on US Commerce Secretary Howard Lutnick’s calls for India to 'open its markets'.
- An Indian official told Indian Express this week, “[Trump is] probably looking at [Modi] meeting him before a deal is announced, but that’s not how the Indian system traditionally works.” A second senior official said, “It’s out of the question for the Prime Minister to meet the US President before a deal is signed,” citing concerns over Trump’s unpredictable negotiating style.
- The Indian Express notes, “There is now cautious optimism that the remaining differences could be bridged in the run-up to the ASEAN and East Asia leaders’ summit in Kuala Lumpur from October 26 to 28. If both Modi and Trump attend, it could open a window for a meeting on the sidelines.”
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- EUR/USD: Sep11 $1.1635-50(E3.4bln), $1.1735-50(E1.8bln), $1.1800(E1.2bln), $1.1825(E2.2bln), $1.1850-65(E1.3bln); Sep12 $1.1550(E1.7bln), $1.1600(E1.1bln), $1.1650(E1.1bln), $1.1670-75(E1.2bln), $1.1700(E2.4bln), $1.1800(E1.4bln), $1.1850(E1.4bln)
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US TSYS/SUPPLY: Issuance Deep Dive: Weak August For Coupon Auctions (2/2)
Recapping August's Treasury auction results:
- 2Y Note trade-through: 3.641% vs. 3.656% WI.
- 2Y FRN: 0.195% high margin vs. 0.159% prior
- 3Y Note tail: 3.669% vs. 3.662% WI.
- 5Y Note tail: 3.724% vs 3.716% WI.
- 7Y Note tail: 3.925% vs. 3.920% WI.
- 10Y Note tail: 4.255% vs. 4.245% WI.
- 20Y Bond trade-through: 4.876% vs 4.877% WI.
- 30Y Bond tail: 4.813% vs. 4.791% WI.
- 30Y TIPS: 2.650% high yield vs. 2.403% prior
At the start of the month, each of the 3-, 10- and 30-year sales tailed. The last time three auctions tailed in a row was in late-March/early-April (the 3/5/7-year sales). Meanwhile, the last time both a 10- and 30-year sale tailed in the same month was in February. Long-end weakness came against a backdrop of continued steepening pressure for the UST curve amid ongoing concerns around fiscal sustainability and Fed independence.
- MNI's Relative UST auction Strength Index (RSI) compares the latest auction's results to the last five trade-through/tails and the last ten dealer take-up percentages for each maturity.
- In August, the 10-year sale registered a -1.60 RSI, the lowest since April 2024. The 1bp tail was the largest since February (and before that, May 2024), while the 16.2% primary dealer take-up was the highest since August 2024.
- The 30-year sale saw a -1.50 RSI in August, the lowest since August 2024. The 2.2bp tail followed a -0.1bp tail in July, meaning the 30-year maturity has tailed in five of the eight auctions this year. Primary dealer take-up was 17.5%, the highest in a year.
- At the other end of the curve, the 2-year sale saw a 1.5bp trade-through, the highest since November 2024. This contributed to an RSI score of 1.93, the highest since July 2024.
US: Bessent, Vance Renew Criticism Of BLS, Fed After Downside Jobs Revision
Treasury Secretary Bessent and Vice President Vance make nearly simultaneous comments on x.com on today's 911k downward benchmark job revisions through Q1 2025, criticizing both the Fed and the Bureau of Labor Statistics.
- Bessent: "Now it’s official: 2024 job gains were exaggerated by nearly 1M workers, and this is on top of an already reported 577K in downward revisions. This brings the Biden jobs overstatement to a staggering 1.5M. The truth: President Trump inherited a far worse economy than reported, and he’s right to say the Fed is choking off growth with high rates."
- Vance: "It’s difficult to overstate how useless BLS data had become. A change was necessary ton [sic] restore confidence."
