US DATA: Labor Secretary Hoping For Sept NFP Report Next Week, Unsure On Oct CPI

The NY Fed's Empire State Manufacturing Survey handily beat expectations with a headline General Business Conditions reading of 10.7 in October (-1.8 expected, -8.7 prior), starting the month's regional Fed manufacturing readings on a strong note (albeit accompanied by higher inflation pressures).

• This was the 2nd highest reading since November 2024 and came after an unexpected pullback in September to a 3-month low. It brings the overall reading back into typical mild expansionary territory (5-year lookback z-score of 0.7).
• The subindices were also solid: New Orders to 3.7 after -19.6 prior, Employment to a 3-month high 6.2 after -1.2 prior, and Shipments to 14.4 after -17.3. And there was optimism evident in the 6-month outlook of 30.3, up from 14.8 prior for a 9-month high, with forward-looking expectations for New Orders and Shipments markedly higher.
• Along with the better activity however came stronger price pressures: current prices paid rebounded to 52.4 from 46.1 prior (which had been a 7-month low), with expected prices paid 6-months ahead rising to 65.0 from 57.8 for a fresh 5-month high.
• Notably, current prices received jumped to 27.2 from 21.6 for a 6-month high, suggestive of manufacturers passing along input price increases (6-month-ahead prices received ticked up 0.6 points to 43.7 also for a 6-month high, suggesting those increases are expected to be sustained).

Long end swap spreads continue to lead the move as yesterday’s widening is extended on.

• A reminder that comments from Fed Chair Powell, pointing to potential end to QT in the coming months, drove Tuesday’s widening.
• 5- & 10-Year swap spreads move to fresh multi-month highs but still trade below pre-Liberation Day levels that prevailed in early April.
• Meanwhile, 30-Year spreads trade close to their March closing high (-73.5bp).
• J.P.Morgan recommended unwinding 3-year swap spread wideners following the comments from Fed Chair Powell.
• They noted that “term funding premium is now below our estimate of fair value. We turn neutral on swap spreads”.

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• President Donald Trump will hold a press conference with FBI Director Kash Patel at 15:00 ET 20:00 BST and host a “Ballroom Dinner,” at 19:30 ET 00:30 BST
• At 14:15 ET 19:15 BST, the Senate will vote a ninth time on the House-passed government funding bill. Senate Majority Leader John Thune (R-SD) is deploying a new strategy to ramp-up pressure on Democrats. US troops will receive paychecks today, but funds are unlikely to extend to the next military payday on October 31.
• Fed Chair Jerome Powell warned labour market risks are a more immediate concern than tariff-driven inflation.
• JPMorgan Chase's investment strategy reflects the private sector's endorsement of Trump's agenda.
• Trump suggested the US could halt purchases of Chinese cooking oil in retaliation for Beijing’s withdrawal from US soybean exports.
• Trump threatened Spain with tariffs for failing to hit NATO spending targets.
• Trump’s upcoming National Security Strategy is expected to focus on the Western Hemisphere.
• NATO defence ministers meet today in Brussels amid speculation that Trump could sell Tomahawk missiles to Ukraine.
• Trump warned the US could disarm Hamas "violently" as the Gaza peace plan faces its first significant test.
• Trump said an economic assistance package for Argentina is contingent on President Javier Milei 'winning' Oct. 26 legislative elections.
• The US military killed another six alleged drug traffickers off the coast of Venezuela.
• Poll of the Day: US voters “resoundingly” support Trump’s Gaza peace plan.

Full Article: US DAILY BRIEF