US TSYS: Late Treasury Roundup: Focus on Dec NFP, SCOTUS on Tariffs

• Treasuries look to finish near late session lows Tuesday, initial impetus after Job openings were far higher than expected in October at 7670k (sa, cons 7117k) and were also higher than presumably expected at 7658k in September data also released today. It’s a marked increase compared to the 7227k seen in August shortly before the government shutdown.
• Treasuries extended lows after a block Sale -6,000 TYH6 112-03, post time bid at 1356:11ET, DV01 $403,000. Treasuries extended session lows following the cross - TYH6 tapped yesterday's low of 112-02.5 (-5.5) - before drawing some support to 112-04.
• Round number support in focus: 112-00, the 1.00 projection of the Oct 17 - Nov 5 - 25 price swing. Clearance of this level would open 111-19, the 1.236 projection.
• Curves flattened (2s10s -1.569 at 57.155, 5s30s -2.681 at 102.702) while forward rate cut pricing projections consolidated ahead what is still expected to be a 25bp cut by the FOMC tomorrow.
• Wednesday's FOMC policy annc, includes summary of economic projections at 1400ET, Chairman Powell press conference at 1430ET.
• Inter-meeting communications reinforced that the FOMC is finely split between those who would ease further and those who are resistant - if not outright opposed - to providing further accommodation. Overall there were no members who became more dovish on the rate outlook since October, while there were signs that at least a few have become more hawkish.

The AUD/USD had a range overnight of 0.6631-0.6654, Asia is trading around 0.6640. The AUD continued to trade with an underlying bid thanks to the RBA yesterday. US yields continue to rise, the US 10-Year is approaching the pivotal 4.20% area as we come closer to the FOMC. The AUD price action remains very constructive and it continues to ignore the pullback in the USD for now. While the AUD remains above 0.6500-0.6550 I suspect dips should continue to be supported. In the Asian session, watch to see if price can continue to hold above 0.6620-0.6630 to rebuild momentum to have another look back toward the 0.6700 area at some point. If that support does not hold I suspect bids will return back towards the 0.6570-0.6600 area. The AUD outperformance is being expressed more clearly in the crosses.

• MNI RBA WATCH: Board Sees 2026 Hike Risks, Cuts Ruled Out. The Reserve Bank of Australia Board sees the balance of risks tilted toward a potential rate hike in 2026 to contain inflation, with cuts firmly off the table, Governor Michele Bullock said, adding that policymakers will reassess the restrictiveness of the 3.6% cash rate in the new year.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6600(AUD822m). Upcoming Close Strikes : 0.6550(AUD1.59b Dec 11), 0.6650(AUD767m Dec 12) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 40 Points

Fig 1: AUD/USD spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

• Various major business surveys, an important data source having not been disrupted by the government shutdown, also continue to point to generally robust activity.
• The November ISM services was stronger than expected in November as it surprisingly inched higher to 52.6 (+0.2pts) for its highest since February. The S&P Global US services PMI at 54.1 again offers a more optimistic assessment of current activity despite being revised down in its final November release, albeit with its smallest overshoot since April. More forward-looking implications are mixed though, with ISM services new orders slipping in November (but within a particularly volatile period that makes it hard to get a sense of trend) in contrast to the services PMI noting that activity was “supported by the firmest rise in new work of 2025 so far”.
• Somewhat countering this services resilience, the ISM manufacturing index was lower than expected in November as it fell to 48.2 (-0.5pts) vs expectations of some stabilization. It’s back at the low end a narrow range of 48.0-49.1 since March, having eased since Jan and Feb saw the first expansionary months above 50 since late 2022.
• Alternate anecdotal evidence points to more tepid activity, however. The Beige Book reported economic activity “was little changed since the previous report, according to most of the twelve Federal Reserve Districts, though two Districts noted a modest decline and one reported modest growth." The breadth of district responses did at least see a small improvement compared to the mid-October report.