US FINANCIALS: Jefferies: More details on First Brands exposure
Oct-09 11:28
(Baa2/BBB/BBB+)
Credit Negative. JEF’s exposure comes from its Asset Management unit, which is ~10% of JEF’s revenues. Bloomberg reports that BlackRock and others have initiated redemption requests. JEF reported $36B of cash and Level I-II marketable securities as of 8/31. The stock price reacted by dropping ~9% yesterday, while 5Y CDS widened ~5bps. At this point we see this as manageable for JEF, though this is a quickly evolving situation and further details are coming out. JEF is not a retail deposit taker.
- JEF/Leucadia Asset Management’s Point Bonita trade finance portfolio holds $715MM receivables due from WMT, TGT and other auto parts retailers, purchased from and serviced by First Brands. First Brands suspended payouts last month, and claims the receivables have been double-pledged and other fraud. This Point Bonita fund holds $3B of trade finance assets, supported by $1.9B total invested equity, of which $113mm or 6% owned by Leucadia.
- JEF via its 50% owned Apex Credit Partners asset management unit has $48MM cumulative exposure to First Brands from tranche holdings across 13 CLOs that hold First Brands term loans.
- JEF’s Asset Management had net revenues of $523MM in 9M2025, while the Investment Bank generated $2.6B net revenues and Capital Markets generated $2.1B.
- JEF reported CSE of $11.5B. Additionally, it reported Level I+II financial investment holdings of $26B comprised 2/3rd of corporate debt/MBS/ABS/CMBS/Munis and the remaining 1/3rd loans & derivatives.
- Tangible BV $8.5B, tangible leverage 8X as of 8/31 earnings release, with 10Q filing expected soon.
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FOREX: USDJPY Approaching Bear Trigger amid Hawkish BOJ Rhetoric
Sep-09 11:24
- The Japanese yen continues to lead gains across G10 currency markets, bolstered by the relatively hawkish BOJ comments earlier in the session and the broad weakening of the dollar following the US employment report last week.
- USDJPY sits 0.66% lower on the session in sympathy, narrowing the gap substantially to a key short-term support at 146.21, the Aug 14 low and bear trigger. Short-term positioning dynamics may have assisted the move lower, after an aggressive pop higher for USDJPY on Monday following PM Ishiba’s resignation may have put pressure on shorts.
- A break of this level would highlight a stronger bearish threat and initially expose 145.86 (Jul 24 low) before 145.40, a Fibonacci retracement.
- Yen demand has also prompted an impressive turnaround for EURJPY. The cross traded within 6 pips of key resistance and the bull trigger at 173.97 on Monday, but now resides around 1% lower at 172.22. Key support at the 50-day EMA moves up to 171.15.
- The focus for the duration of Tuesday trade rests on the annual benchmark payrolls revisions - which are expected to be marked notably lower for the 12 months into March - helping bolster the Oval Office's case for a more aggressive approach to monetary easing from the Fed.
OUTLOOK: Price Signal Summary - S&P E-Minis Bull Cycle Intact
Sep-09 11:21
- In the equity space, a bull cycle in S&P E-Minis remains intact and the latest pullback has once again proved to be a shallow correction. The contract traded to a fresh cycle high last week, breaching the Aug 28 high of 6523.00. This confirms a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Sights are on 6543.75 next, a 2.00 projection of the Apr 7 - 10 - 21 price swing. Initial support to watch is 6456.35, the 20-day EMA.
- A corrective bear cycle in EUROSTOXX 50 futures remains in play. Recent weakness resulted in a breach of 5368.87, the 50-day EMA. The clear break of this average strengthens a short-term bearish threat and signals scope for a deeper retracement towards 5166.00, the Aug 1 low and a key support. On the upside, initial resistance to watch is 5377.49, the 20-day EMA. It has been pierced, a clear break of it would be a bullish development.
US TSYS: Off Yesterday’s Highs With Payroll Revisions and 3Y Supply Ahead
Sep-09 10:51
- Treasuries are mildly cheaper overnight, gently pushing back against yesterday’s bull flattening but comfortably within yesterday’s ranges.
- Today is highlighted by preliminary benchmark payrolls revisions at 1000ET (MNI Preview link), added attention on Trump administration BLS criticism, 3Y supply and then broader Trump comments. The docket will be seen in light of PPI and CPI coming on Wed and Thu respectively.
- Cash yields are 1.2-1.9bp higher on the day, with increases marginally led by 30s.
- Curves are marginally steeper but broadly consolidate yesterday's second day of flattening, including 5s30s at 113.9bp vs a briefly seen post-NFP high of 126.9bp (multi-year steeps).
- TYZ5 trades at 113-15+ (-02) off earlier lows of 113-11, on limited overnight volumes of 250k.
- Friday’s post-payrolls high of 113-21+ still carries weight having hit another fresh short-term cycle high. It marks the next resistance level after which lies 113-26+ (2.764 proj of Jul 15-22-28 price swing) whilst support is seen at 112-28+ (Sep 5 low).
- Data: Preliminary benchmark payrolls revision (1000ET).
- Coupon issuance: US Tsy $58B 3Y Note auction - 91282CNY3 (1300ET). Last month’s 3Y saw another small tail of 0.7bp although the bid-to-cover firmed a touch from 2.51 to 2.53.
- Bill issuance: US Tsy $85B 6W bill auction
- Politics: Press briefing with WH Press Sec Leavitt (1300ET), Trump participates in swearing-in ceremony for US Ambassador to Portugal (1600ET), Trump signs proclamation (1630ET)
