MNI ASIA MARKETS ANALYSIS: Projected Rate Cuts Cool Ahead FOMC

HIGHLIGHTS

• Treasuries gapped lower after JOLTS job opening data came out higher than expected, projected rate cut pricing cooled ahead what is still expected to be a 25bp cut by the FOMC tomorrow.
• The USD index has mirrored a turbulent session for US yields, and tilts moderately higher after the stronger-than-expected double release of US JOLTS data, painting a better picture of the US labour market.
• 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.

US TSYS

MNI US TSYS: JOLTS Jobs Opening Surge Ahead Final FOMC for 2025

• 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.

REFERENCE RATES
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US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 3.95% (+0.02), volume: $3.209T
• Broad General Collateral Rate (BGCR): 3.93% (+0.03), volume: $1.311T
• Tri-Party General Collateral Rate (TCR): 3.93% (+0.03), volume: $1.290T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 3.89% (+0.00), volume: $84B
• Daily Overnight Bank Funding Rate: 3.89% (+0.00), volume: $160B

FED Reverse Repo Operation

RRP usage rises to $3.211B with 10 counterparties this afternoon from $1.703B Monday. Compares to Tuesday November 18: $0.905B - lowest level since mid-March 2021; this years highest excess liquidity measure: $460.731B on June 30.

US SOFR/TREASURY OPTION SUMMARY

Two-way volumes improved late Tuesday as underlying Tsy futures trade weaker - TYH6 just above 112-00 support - the 1.00 projection of the Oct 17 - Nov 5 - 25 price swing. Curves twist flatter ahead of Wed's final FOMC for 2025 (2s10s -1.385 at 57.339, 5s30s -2.452 at 102.931). Projected rate cut pricing has in turn consolidated from morning levels: Dec'25 at -22.4bp (-24bp), Jan'26 at -29.1bp (-30.6bp), Mar'26 at -34.6bp (-37.5bp), Apr'26 at -39.8bp (-43.6bp).

SOFR Options: Reminder Dec options expire Friday
+20,000 SFRF6 96.37 puts 1.5-1.75 over 96.50/96.75 call spds ref 96.41
Update pit/screen: -58,000 SFRF6 96.56/96.68 call spds, 1.0 ref 96.405 to -.41 offered
-10,000 SFRZ5 96.18/96.25/96.37 2x3x1 broken call flys, 7.5 vs. 96.2675/0.21%
+4,000 SFRZ6 98.00/99.00 call spds, 4.25
+2,500 2FQ6 96.37/96.62 put spds, 6.0 ref 96.705
+5,000 0QM6 96.25 puts, 5.0 ref 96.83
+5,000 SFRF6 96.25/96.31 put spds w/ 96.25/96.37 put spd strip, 3.25 ref 96.43
+5,000 SFRF6 96.25/96.31/96.37 put trees, 1.25 ref 96.43
+20,000 SFRH6 96.12 puts, 1.0 ref 96.43
+4,600 SFRZ5 96.31/96.37 call spds, 0.25 ref 96.27
+1,500 SFRZ5 96.18/96.25/96.31 call flys, 2.75
-2,500 SFRZ5 96.12/96.25 put spds, 1.0
+4,400 0QG6 97.00/97.12 call spds vs. 96.50 puts, 0.0 net ref 96.82
-2,000 2QF6 96.25/96.50/96.75 put flys, 7.5
+1,500 0QZ5 96.87 straddles, 10.0
2,000 0QZ5 96.75 puts

Treasury Options:
+12,000 FVF6 110.75/111 call strip, 2 ref 108-30.25
-16,000 TYH6 103/110/111 put flys, 2 net ref 112-04
Block, 9,989 USG6/USH6 111 put calendar spds, 20 net vs. 115-15/0.05%
+2,600 TYG6 112.5/114 1x2 call spds, 14 vs. 112-11.5/0.10%
+20,000 FVF6 109.25/109.75 call spds, 9.5 ref 109-02.5
+10,000 TYG6 111/112 put spds vs. 114 calls, 6 net ref 112-10.5
-3,500 TYH6 112.5 calls, 62 vs. 112-14.5/0.46%
+5,000 wk2 TY 113 calls, 2 ref 112-11.5
-4,800 wk2 TY 112/112.75 2x1 put spds, 17 ref 112-13.5/0.05%
+2,300 wk2 TY 111.75 puts, 4 ref 112-11
2,000 USH6 115 puts, 2-0 ref 115-06

MNI BONDS: EGBs-GILTS CASH CLOSE: Modest Bounce Ahead Of Fed Meeting

European yields fell modestly Tuesday, with Gilts slightly outperforming Bunds.

• EGBs and Gilts resumed the weakness seen in the prior two sessions in early trade, coming off session lows around 0830ET as European equities pulled back from what would be session highs.
• There was no obvious macro driver to the latter move, with the rest of the session seeing relatively limited movement amid a thin data slate (US job openings saw bonds come off session highs) and events docket and ahead of Wednesday's Federal Reserve decision.
• Ahead of next week's rate decision, BoE Deputy Governor Ramsden leaned a little dovish in TSC testimony though this brought limited market reaction.
• OAT futures gained slightly after hours as the French parliament passed the spending part of the contentious Social Security budget.
• Wednesday's calendar includes Italian industrial production data and appearance by ECB's Lagarde and Makhlouf, but most global attention will be on the Fed meeting where policymakers are set to deliver a "hawkish cut" of 25bp.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.5bps at 2.154%, 5-Yr is down 1.3bps at 2.466%, 10-Yr is down 1.2bps at 2.85%, and 30-Yr is down 0.2bps at 3.459%.
• UK: The 2-Yr yield is down 2.6bps at 3.785%, 5-Yr is down 2.4bps at 3.972%, 10-Yr is down 2.3bps at 4.505%, and 30-Yr is down 3.3bps at 5.195%.
• Italian BTP spread down 0.5bps at 69.5bps / French OAT down 0.5bps at 71.3bps

MNI EGB OPTIONS: Continued Upside Lean In Rates, German Bond Options Tuesday

Tuesday's Europe rates/bond options flow included:

• OEF6 116/115.5ps, sold at 20 and 19.5 in ~9.7k
• RXG6 128/129.50cs 1x2, bought for 22.5 in 3k
• ERF6 98.0625/98.1875/98.3125c fly vs 97.9375/97.875ps, bought the ps for 1.25 in 5k
• ERH6 98.0625/98.1875/98.3125c fly, bought for half in 3k
• ERH7 98.50 call, paper pays 4.5 for 10k
• SFIH6 96.55/96.65cs, bought for 1.5 in 7.6k

MNI FOREX: USD Index Modestly Higher Pre-Fed, AUDJPY Extends Sharp Upswing

• The USD index has mirrored a turbulent session for US yields, and tilts moderately higher on the session. The main boost for the USD index came after the stronger-than-expected double release of US JOLTS data, painting a better picture of the US labour market.
• The next key driver for the greenback will be tomorrow's FOMC, with more attention than usual on the Statement to see how resolutely the easing bias remains. Forward guidance is likely to be amended to reflect a more patient stance on cuts. As such the market reaction to the meeting could hinge on how Chair Powell portrays the burden of proof for further easing ahead.
• Clearer direction was seen elsewhere in G10 FX, with AUD and SEK clear outperformers, while the Japanese yen struggled once more.
• AUD has been primarily driven by a hawkish RBA, following its decision to hold rates at 3.6% and the balance of risks now tilted toward a potential hike next year to contain inflationary pressures. AUDUSD briefly rose to a fresh recovery high at 0.6654, keeping bullish conditions firmly intact. 0.6707 remains the key AUDUSD resistance, the Sep 17 high.
• Downward pressure on the JPY continues to be in focus this week, amid the hawkish repricing for core fixed income markets and regional geopolitical uncertainty taking its toll. Combining this with a firm risk backdrop (major equity indices maintaining a stable tone towards recent highs), Cross/JPY has been a notable beneficiary of the overall dynamics. AUDJPY briefly extended gains to over 1% on the session, printing a high of 104.40.
• In emerging markets, the Mexican peso is performing relatively well today, maintaining its resilient profile of late. Above expectation inflation data has prompted a hawkish repricing across the TIIE-F swaps curve, as the market assesses a potential imminent turning point for Mexican monetary policy.

MNI FX OPTIONS: Expiries for Dec10 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.1580-81(E1.7bln), $1.1610(E779mln), $1.1650-60(E1.5bln), $1.1800(E1.7bln)
• USD/JPY: Y156.00($901mln)
• GBP/USD: $1.3300(Gbp540mln)
• AUD/USD: $0.6600(A$822mln)
• NZD/USD: $0.5700(N$558mln)
• USD/CAD: C$1.3800($520mln)
• USD/CNY: Cny7.1088($1.2bln)

MNI US STOCKS: Late Equities Roundup: DJIA Reverse Course, Pharma/Banks Weaker

• Stocks are trading near steady (SPX eminis) to mixed late Tuesday, the DJIA underperforming as Treasuries tested technical support and forward rate cut pricing projections consolidated ahead what is still expected to be a 25bp cut by the FOMC tomorrow.
• Currently, the DJIA trades down 130.26 points (-0.27%) at 47612.78, S&P E-Mini Futures down 3.25 points (-0.05%) at 6852.5, Nasdaq up 33 points (0.1%) at 23578.05.
• Health Care and Financials sector shares led declines in the second half:
  • Weighing on the former: Solventum Corp -2.77%, Merck & Co -1.94%, Humana Inc -1.90%, Bristol-Myers Squibb -1.55% and Gilead Sciences -1.36%.
  • Of note, Pfizer is down appr 1% as Bloomberg reports the FDA is investigating whether the Covid-19 vaccine shots caused deaths in adults as part of a safety review that appears to be larger in scope than previously thought.
  • Meanwhile, JPMorgan Chase fell -4.39% after warning of higher than expected operating costs, Wells Fargo -1.24%, Citigroup -1.17% and Bank of America -1.06%.
• On the positive side, Energy and Consumer Discretionary sector shares led advances in late trade:
  • Targa Resources +3.42%, Exxon Mobil +2.22%, Halliburton +1.44% and Kinder Morgan +0.99%.
  • Ulta Beauty +2.49%, Airbnb +2.45%, Tesla +2.16% and Best Buy Co +2.03%.

MNI EQUITY TECHS: E-MINI S&P: (Z5) Sights Are On The Key Resistance

• RES 4: 7000.00 Psychological round number
• RES 3: 6953.75 High Oct 30 and bull trigger
• RES 2: 6918.50 High Oct 31
• RES 1: 6905.00 High Dec 5   
• PRICE: 6859.75 @ 1310 ET Dec 9
• SUP 1: 6802.68 20-day EMA 
• SUP 2: 6753.26 50-day EMA
• SUP 3: 6674.50 Low Nov 25
• SUP 4: 6525.00 Low Nov 21 and a key support

A bull cycle in S&P E-Minis remains intact and price is trading above the 20- and 50- day EMAs. Note that recent gains signal the likely end of the corrective cycle between Oct 30 and Nov 21. A continuation higher would highlight potential for a move towards the key resistance and bull trigger at 6953.75, the Oct 30 high. Key support lies at 6525.00, the Nov 21 low. First support is at 6802.68, the 20-day EMA.

MNI COMMODITIES: Crude Falls Amid Oversupply Fears, Silver Surges to Record High

• WTI crude has fallen towards the lower end of the recent trading range on Tuesday oversupply fears as the market awaits updated projections for the future market balance this week.
• With a Ukraine peace deal again looking elusive and Russia likely to continue to find ways around sanctions, the market is focused on the supply outlook with a record market surplus forecast for 2026.
• WTI Jan 26 is down by 1.1% at $58.2/bbl.
• For WTI futures, moving average studies are in a bear-mode position, highlighting a dominant downtrend. Key support and the bear trigger is at $55.99, the Oct 20 low.
• Meanwhile, silver has risen to a fresh record high today, with price up by over 4% to $60.7/oz to take YTD gains to 110%.
• As noted, daily ETF flows have supported upside in silver, which has also been boosted by tight physical supply.
• A breakdown in the Gold/Silver ratio may also have exacerbated recent outperformance in silver. With gold rising by just 0.4% to $4,209/oz today, that ratio has fallen below 70, its lowest level since July 2021.
• Trend signals in silver remain bullish, with sights on $60.852 next, a Fibonacci projection point.
• Elsewhere, copper has fallen by 2.2% to $532/lb, with no obvious trigger for the move. Despite this, price remains 7% above the Nov 5 low, amid concerns over tight global supplies.
• From a technical perspective, next resistance is seen at $550.00, the Jul 9 and 28 lows.

WEDNESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
10/12/2025	0700/0800	***	NO	CPI Norway
10/12/2025	0700/0800	**	SE	Private Sector Production m/m
10/12/2025	0900/1000	*	IT	Industrial Production
10/12/2025	1000/1000	**	GB	Gilt Outright Auction Result
10/12/2025	1000/1000		GB	Chancellor Reeves Testifies at TSC on Budget
10/12/2025	1045/1045		GB	BOE Bailey Pre-recorded Chat on Financial Stability
10/12/2025	1055/1155		EU	ECB Lagarde Interview on Currencies/Digital Euro
10/12/2025	1200/0700	**	US	MBA Weekly Applications Index
10/12/2025	1200/0700	**	BR	Brazil Final CPI
10/12/2025	-	***	CN	Money Supply
10/12/2025	-	***	CN	Social Financing
10/12/2025	-	***	CN	New Loans
10/12/2025	1330/0830	***	US	Employment Cost Index
10/12/2025	1445/0945	***	CA	Bank of Canada Policy Decision
10/12/2025	1530/1030	**	US	DOE Weekly Crude Oil Stocks
10/12/2025	1530/1030		CA	BOC press conference
10/12/2025	1530/1030	**	US	US DOE Petroleum Supply
10/12/2025	1900/1400	**	US	Treasury Budget
10/12/2025	1900/1400	***	US	FOMC Statement
10/12/2025	1930/1430		US	Fed Chair Powell Press Conference
11/12/2025	-		CH	Swiss National Bank Meeting
11/12/2025	0001/0001	*	GB	RICS House Prices
11/12/2025	0030/1130	***	AU	Labor Force Survey