MNI ASIA MARKETS OPEN: Fed Remain Patient Post-Jobs

EXECUTIVE SUMMARY

• MNI BRIEF: Bank Regulators To Propose SLR Reform - Bowman
• MNI US: Conservative Rep Massie Warns Senate Against Tinkering w/Big Beautiful Bill
• MNI TARIFFS: US And Chinese Trade Teams To Meet Within Seven Days - Navarro
• MNI US DATA: Mixed Household Survey, Highest Unrounded Unemployment Rate Since Oct 2021
• MNI CANADA DATA: Canada May Jobless Rate 7%, Highest Since 2016 Ex-Pandemic
• MNI US DATA: Large Downward Revisions Concentrated In March

US

MNI BRIEF: Bank Regulators To Propose SLR Reform - Bowman

U.S. bank regulators will soon propose reforms to the supplementary leverage ratio to ensure it acts as a backstop to risk-based capital requirements rather than a binding constraint that creates market distortions, Michelle Bowman, the Fed's new head of regulation, said Friday. "The original calibration of the eSLR was based on forecasts of the level of reserves and other so-called 'safe assets' in the system that are now far out of line with current levels," she said, referring to the enhanced SLR applicable to the largest banks. 

NEWS

MNI US-RUSSIA: White House Wants Graham To Water Down Russia Sanction Bill - WSJ

The Trump administration is trying to get Senator Lindsey Graham (R-SC) to significantly weaken his Russia-sanctions bill while the White House seeks to patch up its relationship with Moscow instead of punishing it for the continued invasion of Ukraine, according to the Wall Street Journal.

• The Journal reports: "Over the past weeks, White House and other administration officials have quietly contacted Graham’s office, urging him to water down his bill, namely by inserting waivers that would allow Trump to choose who or what gets sanctioned, congressional aides said. Another way to weaken the legislation would be to turn the word “shall” into “may” wherever it appears in the bill’s text, removing the mandatory nature of the prescribed reprimands, congressional aides said."

MNI US: Conservative Rep Massie Warns Senate Against Tinkering w/Big Beautiful Bill

Rep Thomas Massie (R-KY), a hardline conservative who voted down the 'Big Beautiful' GOP tax bill in the House, has warned the package will probably fail in the House if the Senate “starts tinkering with it”. Massie told CNN: “And if they start tinkering with it in the Senate, it probably fails in the House. Because people over here are now looking for more reasons to be against it. And if they give them even punctuation changes, that could be a reason to be against it”.

MNI TARIFFS: US And Chinese Trade Teams To Meet Within Seven Days - Navarro

White House Senior Trade Counselor, Peter Navarro, has told reporters at the White House he expects a meeting between US and Chinese trade teams to take place “within seven days", following the call between President Donald Trump and Chinese President Xi Jinping yesterday. When asked about Trump’s claim that progress had been made with Xi on rare earth minerals, Navarro said: “Let’s see what happens with the negotiations but [Trump] was very clear that the rare earth issue will be key to that negotiation and the two presidents have a very clear understanding of the outcomes.

MNI RUSSIA: Kremlin-Russia 'Grateful For US Mediation Efforts' With Ukraine

Kremlin spox Dmitry Peskov, speaking to reporters, is asked whether the major drone and missile strikes on Kyiv, Lutsk and the Ternopil region overnight that killed at least three civilians, were in retaliation to the Ukrainian attacks over the weekend, replies, "all military actions are a response to the actions of a terrorist regime in Kyiv." While Kyiv has overtly claimed responsibility for the drone attacks on Russia's air fleet, and the bombing of the Kerch bridge, the Russian gov't accuses Kyiv of bringing down two bridges in incidents that killed seven and injured dozens. Kyiv has not claimed responsibility for these incidents. 

MNI IRAN: Foreign Min Warns E3 Against Non-Compliance Resolution At IAEA

Foreign Minister Abbas Araghchi has warned the E3 nations (France, Germany, UK) against launching a non-compliance procedure against Iran at the upcoming International Atomic Energy Agency (IAEA) Board of Governors' meeting on 9 June. In a post on X, Araghchi implies that the last non-compliance procedure, launched 20 years ago, was a spur to Iran's move towards a nuclear weapon, saying "When the E3 engaged in the same foul conduct back in 2005, the outcome in many ways was the true birth of uranium enrichment in Iran." 

MNI GERMANY: Merz Says Trump Admin 'Open To Discussions' On Tariffs, Security & NATO

Reuters reports comments from Chancellor Freidrich Merz following his talks on 5 June with US President Donald Trump. Merz says that the Trump administration "is open to discussions" and to hearing other opinions. The chancellor confirms he and Trump discussed the war in Ukraine, tariff policies, and the future of NATO. Merz: "Trump was clear about not taking the US out of NATO, I have no doubts the US will stick with NATO." On foreign policy, Merz says that "In Washington, there does not seem to be a clear understanding of the extent of Russian armament.". 

MNI NETHERLANDS: Legislative Election To Be Set For 29 October

Interior Minister Judith Uitermark has confirmed that snap legislative elections will be set for 29 October, in line with recommendations from the electoral council. This follows the collapse of the governing coalition earlier this week, sparked by the withdrawal of Geert Wilders' right-wing nationalist Party for Freedom (PVV). Wilders claims that he withdrew his party due to the other coalition members' refusal to accept his 10-point plan for asylum reform, claims denied by the other parties. 

US TSYS

MNI US TSYS: Year End Rate Cuts Cool After Better Than Expected May Jobs Gain

• Treasuries continued to extend lower after this morning's jobs report shows modestly higher than estimated job gain for May, the unemployment rate and Labor Force Participation Rate at/near expectations.
• A sizeable beat for AHE growth (0.4% M/M vs 0.3% expected), considering the average work week was as expected at 34.3. It of course follows yesterday's surprisingly strong ULC increase for Q1 at 6.6% annualized.
• Tsy Sep'25 10Y futures currently trades -28 at 109-29.5, near technical support at 109-26, the May 29 low, where a break would open key support and the bear trigger, at 109-12+, the May 22 low.
• Curves mixed: 2s10s +0.473 at 47.104, 5s30s -4.442 at 84.023. projected rate cut pricing continued to consolidate vs. morning levels (*) as follows: Jun'25 at 0.0bp (-0.6bp), Jul'25 at -4.1bp (-8.4bp), Sep'25 at -17.9bp (-24.5bp), Oct'25 at -29.6bp (-37.9bp), Dec'25 at -44.3bp (-54.6bp).
• Cross asset: Stocks rise to earl-mid March high (SPX eminis 64.0 at 6010.0), Gold reversed early support, trades 3314.75 (-37.90).
• USD rallied against broader G10 on the higher-than-expected headline, but the net revisions left a close-to-neutral read for FX markets here: EUR/USD dipped to 1.1372 to 1.1400 by the close.

OVERNIGHT DATA

MNI US DATA: Large Downward Revisions Concentrated In March

• A 13k beat for nonfarm payrolls but large downward revisions, concentrated in February (-30k Apr, -65k Mar).
• It leaves a three-month average of 135k, solid considering a slide in immigration. Long-term breakeven pace is assumed around the 100k mark.
• There’s a similar story in the private sector as well, a 20k beat but -77k revisions.

MNI US DATA: AHE Unrounded - May 2025

A sizeable beat for AHE growth (0.4% M/M vs 0.3% expected), considering the average work week was as expected at 34.3. It of course follows yesterday's surprisingly strong ULC increase for Q1 at 6.6% annualized.

• Total AHE:
  • M/M (SA): 0.416% in May from 0.194% in Apr (initial 0.167%)
  • Y/Y (SA): 3.869% in May from 3.856% in Apr
• AHE Non-Supervisory:
  • M/M (SA): 0.386% in May from 0.291% in Apr (initial 0.323%)
  • Y/Y (SA): 4.037% in May from 4.054% in Apr
  • Source: Bloomberg Finance L.P., MNI

MNI US DATA: Mixed Household Survey, Highest Unrounded Unemployment Rate Since Oct 2021

The main standout statistic from May's Household Survey is the tick up in the unemployment rate to 4.244% from 4.187%, which while keeping the rate at 4.2% in line with consensus suggested that upward pressure on the rate continues. Indeed most statistics underlying the unemployment rate largely pointed to steady weakening in the labor market, though the report was mixed overall.

• This was the highest unrounded unemployment rate since October 2021, has been ticking up 0.06pp monthly on average the last 4 months, which is more or less the steady but not rapid deterioration envisaged by the Fed (4.4% median forecast for Q4). In turn the number of unemployed rose 71k to the highest since October 2021 (7,237k).
• The pullback in the size of the labor force - the denominator in the unemployment calculation - was notable and a possible sign of weakness, dropping 625k, the most in 17 months, leaving the employment to population ratio at - 59.72% the lowest on an unrounded basis since January 2022.
• And the participation rate at 62.37% was the lowest since December 2022, with both prime-age (25-54) and 55+ participation dropping 0.2pp, and 16-24 participation plummeting 0.8pp to a 9-month low 55.5%. The number of people not in the labor force rose 813k, a 4-month high (SA).

MNI CANADA DATA: Canada May Jobless Rate 7%, Highest Since 2016 Ex-Pandemic

• Unemployment rate 7% in May, the third straight increase. Rate was in line with economist expectations and followed 6.9% in April. Employment +8.8K vs MNI consensus -15K, after+7.4K in April. Despite uncertainty over US-Canada tariffs, the increase was driven by wholesale and trade +43K, which was offset by public administration -32K after the elections in prior month.
• Full-time employment in May +57.7K on private sector hiring but part-time jobs -48.8K as temporary election hiring in April reversed.
• Hours worked unchanged in May and +0.9% YOY.
• Average hourly wages +3.4% YOY, matching growth rate in April.
• Youth unemployment about highest since 2009 at 20%, up about 3pp from year earlier.
• BOC held key rate at 2.75% Wednesday and said it may cut if economy weakens and inflation stays under control. 

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA up 463.6 points (1.1%) at 42781.79
S&P E-Mini Future up 64.5 points (1.08%) at 6010.5
Nasdaq up 246 points (1.3%) at 19543.94
US 10-Yr yield is up 11.7 bps at 4.5076%
US Sep 10-Yr futures are down 28/32 at 109-29.5
EURUSD down 0.0047 (-0.41%) at 1.1399
USDJPY up 1.28 (0.89%) at 144.81
WTI Crude Oil (front-month) up $1.28 (2.02%) at $64.65
Gold is down $39.32 (-1.17%) at $3313.34

European bourses closing levels:
EuroStoxx 50 up 19.62 points (0.36%) at 5430.17
FTSE 100 up 26.87 points (0.31%) at 8837.91
German DAX down 19.12 points (-0.08%) at 24304.46
French CAC 40 up 14.6 points (0.19%) at 7804.87

US TREASURY FUTURES CLOSE

3M10Y +11.337, 15.901 (L: 1.079 / H: 16.558)
2Y10Y +0.264, 46.895 (L: 42.01 / H: 47.814)
2Y30Y -2.844, 92.482 (L: 89.694 / H: 96.761)
5Y30Y -4.545, 83.92 (L: 82.459 / H:89.742)
Current futures levels:
Sep 2-Yr futures down 7.5/32 at 103-14.375 (L: 103-13.875 / H: 103-23)
Sep 5-Yr futures down 19.25/32 at 107-16.5 (L: 107-16 / H: 108-06)
Sep 10-Yr futures down 28/32 at 109-29.5 (L: 109-28 / H: 110-29.5)
Sep 30-Yr futures down 1-12/32 at 112-2 (L: 112-01 / H: 113-23)
Sep Ultra futures down 1-16/32 at 115-12 (L: 115-10 / H: 117-09)

MNI US 10YR FUTURE TECHS: (U5) Reversal Extends

• RES 4: 112-04+ High May 2
• RES 3: 111-30   76.4% retracement of the May 1 - 22 downleg
• RES 2: 111-19+ 1.0% 10-dma envelope
• RES 1: 111-14+ High Jun 5 & 61.8% of the May 1 - 22 downleg  
• PRICE:‌‌ 109-25+ @ 1510 ET Jun 6
• SUP 1: 109-26   Low May 29         
• SUP 2: 109-12+ Low May 22 and the bear trigger
• SUP 3: 109-09+ Low Apr 11 and key support
• SUP 4: 108-25+ 0.764 proj of the Apr 7 - 11 - May 1 price swing

Treasury futures traded sharply lower Friday, extending the reversal from Thursday’s high. The move down does undermine a recent bullish theme. An extension would expose support at 109-26, the May 29 low, where a break would open key support and the bear trigger, at 109-12+, the May 22 low. Key short-term resistance has been defined at 111-14+, a Fibonacci retracement and Thursday’s high. A break of this hurdle would be bullish.         

SOFR FUTURES CLOSE

Jun 25 -0.015 at 95.678
Sep 25 -0.075 at 95.855
Dec 25 -0.110 at 96.090
Mar 26 -0.135 at 96.285
Red Pack (Jun 26-Mar 27) -0.155 to -0.145
Green Pack (Jun 27-Mar 28) -0.155 to -0.135
Blue Pack (Jun 28-Mar 29) -0.125 to -0.12
Gold Pack (Jun 29-Mar 30) -0.12 to -0.11

REFERENCE RATES (PRIOR SESSION)
​​​​​​​
US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 4.29% (+0.01), volume: $2.685T
• Broad General Collateral Rate (BGCR): 4.27% (+0.00), volume: $1.087T
• Tri-Party General Collateral Rate (TCR): 4.27% (+0.00), volume: $1.054T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $118B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $298B

FED Reverse Repo Operation

RRP usage slips to $149.284B this afternoon from $152.727B yesterday, total number of counterparties at 24. Usage had fallen to $54.772B on Wednesday, April 16 -- lowest level since April 2021. Conversely, usage had surged to the highest level since December 31, 2024 on Monday, March 31: $399.167B.

MNI BONDS: EGBs-GILTS CASH CLOSE: Bunds Partially Fade Post-ECB Selloff

Core EGBs erased most of a nascent rally Friday, with Gilt yields finishing wider.

• The German curve bull flattened in early trade, fading the bear steepening following Thursday's ECB meeting, and weak French and German industrial production numbers helping the bid.
• Gilts ticked higher in sympathy but didn't keep pace with core EGBs.
• A solid US employment report in early afternoon saw Bunds and Gilts weaken in line with Treasuries, reversing much of the earlier yield drop.
• On the day, the German curve twist flattened, with Gilts underperforming Bunds and the UK belly underperforming.
• For the week however, Gilts outperformed Bunds. There was light bear steepening registered in both the German (2Y +1.8bp, 10Y +8bp) and UK (2Y -1.0bp, 10Y -0.3bp) curves.
• 10Y BTP/Bund spreads closed at another 4-year low. with periphery/semi-core EGBs broadly strengthening.
• Next week brings the UK April/May labour market report (Tuesday) and 2025 Spending Review (Wednesday), with the ECB Wage Tracker also out (Wednesday).

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.7bps at 1.88%, 5-Yr is up 0.4bps at 2.175%, 10-Yr is down 0.6bps at 2.576%, and 30-Yr is down 1.6bps at 3.009%.
• UK: The 2-Yr yield is up 0.6bps at 4.013%, 5-Yr is up 2.9bps at 4.155%, 10-Yr is up 2.8bps at 4.644%, and 30-Yr is up 1.4bps at 5.339%.
• Italian BTP spread down 1.8bps at 92.6bps / Greek down 2.4bps at 69.8bps

MNI FOREX: USD Index Rises 0.5% Following ‘Solid’ Jobs Report

• After some initial two-way price action in the immediate aftermath of the US employment report, the greenback has strengthened, prompting the USD index to rise 0.5% and look set to close back above the 99.00 mark. Optimistic price action for equities has weighed on the Japanese Yen, which underperforms across G10.
• A higher-than-expected 139k change in nonfarm payrolls was offset by lower revisions to the April figure and a high unrounded unemployment rate of 4.244%. However, the dollar was well supported as markets focus on the sizeable beat for average hourly earnings growth, which of course follows yesterday's surprisingly strong ULC increase for Q1 at 6.6% annualized. The Fed’s Harker said he sees steadiness in 'solid' latest job data.
• After a quick spike to 144.68, USDJPY quickly faded but the pair was subsequently well supported on a dip to 144.10. Fresh weekly highs then ensued, with the pair rallying as high as 145.09, essentially matching the initial target of the 50-day exponential moving average. The latest headlines/timeline on a US/China meeting has likely provided an additional tailwind, feeding into the cautious optimism surrounding global trade negotiations.
• While moving average studies have remained in a bear-mode position, they have continued to be tested in recent weeks. A close above the 50-day EMA, intersecting at 145.15, would bolster a bullish threat for USDJPY, while key short-term resistance has been defined at 146.28, the May 29 high.
• Elsewhere, adjustments for the likes of EUR, AUD, NZD and GBP are more reflective of the broader dollar index shift, with the Canadian dollar slightly outperforming following the above-expected Canadian employment data. USDCAD temporarily breached support on Thursday – trading below 1.3643 for the first time since early October last year. Below here, attention will be on 1.3579, the 1.5 Fibonacci projection of the Feb 3 - 14 - Mar 4 price swing, before the September lows at 1.3420 will garner attention.
• The most recent trend of a strengthening Mexican peso is prevailing as we approach the weekend. A close at current levels below 19.15 would provide another lowest USDMXN close for the cycle, bolstering bearish conditions following the significant range breakout in April. Potential is seen for an extension towards 18.7774, the 50.0% retracement of the Apr 9 ‘24 - Feb 3 bull leg, followed by the Aug ’24 lows around the 18.60 mark.
• Chinese CPI/PPI and trade data will take focus on Monday. US CPI is due Wednesday.

MONDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
09/06/2025	0500/1400		JP	Economy Watchers Survey
09/06/2025	0900/1100		EU	ECB Elderson On Rule Of Law At Italian Court
09/06/2025	-	***	CN	Trade
09/06/2025	1400/1000	**	US	Wholesale Trade
09/06/2025	1400/1000	**	US	Wholesale Trade
09/06/2025	1500/1100	**	US	NY Fed Survey of Consumer Expectations
09/06/2025	1530/1130	*	US	US Treasury Auction Result for 26 Week Bill
09/06/2025	1530/1130	*	US	US Treasury Auction Result for 13 Week Bill
10/06/2025	2301/0001	*	GB	BRC-KPMG Shop Sales Monitor