MNI ASIA OPEN: Bessent Tariff Truce vs World Bank Support
EXECUTIVE SUMMARY
- MNI FED BRIEF: Miran Not Convincing Fed Colleagues On Larger Cuts
- MNI US-CHINA: Bessent Suggests Possible Longer Tariff Truce with China
- "BESSENT URGES WORLD BANK TO END SUPPORT FOR CHINA" Bbg
- MNI FED: Beige Book: Labor Market Remains Subdued
- MNI US Employment Report, Oct 2025: Labor Market Stays Soft
- MNI US DATA: Empire Starts Oct Manufacturing Data On Solid Note (And Firm Prices)
- MNI US DATA: Mortgage Applications Ebb Lower, Spread Tightening Slows
- MNI US TSYS/OVERNIGHT REPO: Fed Standing Repo Takeup Jump Part Of Wider Pressure
US
MNI FED BRIEF: Miran Urges Fed Cuts As China Trade War Heats Up
Federal Reserve Governor Stephen Miran said Wednesday the intensification of U.S.-China trade tensions over the past week create more urgency to cut interest rates. "There's now more downside risks than there was a week ago, and I think it's incumbent upon us as policymakers to recognize that should be reflected in policy," he said. "With the change to the balance of risks, I think it becomes even more urgent that we get to a more neutral place in policy quickly."
MNI FED BRIEF: Miran Not Convincing Fed Colleagues On Larger Cuts
Stephen Miran said Wednesday he doesn't think he is yet convincing Federal Open Market Committee colleagues the economy needs faster and larger interest rate cuts to catch up with a lower neutral rate. "I don't think I'm yet at the point where I'm convincing large swaths of the economy of my underlying view, because I think that a lot of people want to see it in the data," Miran said at a Nomura Research Forum in Washington. "For me, it's important to set policy based on the forecast."
NEWS
MNI US-CHINA: Bessent Suggests Possible Longer Tariff Truce with China
- "BESSENT SUGGESTS POSSIBILITY OF LONGER CHINA TARIFF TRUCE, TARIFF-TRUCE COMMENT TIED TO CHINA RARE-EARTH DELAY" Bbg
- "BESSENT URGES WORLD BANK TO END SUPPORT FOR CHINA" Bbg
MNI SECURITY: US Edges Closer To Imposing New Penalties On Russia
US Treasury Secretary Scott Bessent told reporters, “anyone purchasing Russian energy is subsidizing attacks on the Ukrainian people,” per Reuters. Bessent’s comment comes as the US appears to be edging towards imposing new penalties on Russia, and the Trump administration weighs up selling Ukraine long-range Tomahawk missiles. Earlier today, US Defense Secretary Pete Hegseth said at the NATO defence ministerial meeting in Brussels, “If this war does not end, if there is no path to peace in the short term, then the United States, along with our allies, will take the steps necessary to impose costs on Russia for its continued aggression.”
MNI TARIFFS: Brazil And US To Hold Trade Negotiations In Washington On Thursday
Reuters reports that Brazilian President Luiz Inácio Lula da Silva said Brazil and the US will hold “negotiation talks on tariffs on Thursday.” Reuters notes, “Brazilian Foreign Minister Mauro Vieira and United States State Secretary Marco Rubio agreed last week on a meeting between teams from both countries in Washington to discuss trade.”
MNI FRANCE: Le Pen Cannot Stand In Any Snap Election After Court Ruling
The Council of State, France's supreme administrative court, has rejected Marine Le Pen's appeal against her immediate ineligibility to run for political office after she was found guilty of embezzlement in March. The sentence saw the parliamentary leader of the far-right Rassemblement National (National Rally, RN) given four years in prison (two suspended), a EUR500k fine, and, most politically relevant: a five-year ban on running for public office. The Council's ruling that the ban is effective immediately means she cannot run in any snap legislative or presidential election.
MNI HUNGARY: Oppo. Ldr Magyar Calls Out EU Commissioner On Spying Allegations
Leader of the anti-Orban Tisza Party Peter Magyar has alleged that Hungary's European Commissioner, Oliver Varhelyi, did "not reveal all the details of the truth" to an investigation into an alleged spy ring operating out of his office when serving as Hungary's ambassador to the EU. Media reports over the past week have claimed that the then-permanent representative's office was used as cover for the gov't of PM Viktor Orban's alleged efforts to recruit EU employees to channel confidential information and kompromat to the Hungarian security services.
MNI CHINA: Reflationary Process Expected to Remain Slow
The marginally softer-than-expected headline CPI inflation data for September primarily reflected a drag from the food component, as well as a dip in transportation prices. Excluding food and energy, core consumer prices rose 0.1% on the month, with the annual rate rising to a fresh 19-month high (+1.0% y/y). Producer prices were flat on the month, with the pace of deflation narrowing as deflationary pressures in the metals and energy goods sectors lessened.
MNI JAPAN: LDP-Ishin Talks Could Pave Way For Takaichi's Election As PM
A meeting between the leaders of the libertarian-federalist Japan Innovation Party (Ishin) and governing Liberal Democratic Party (LDP) President Sanae Takaichi may increase the chances of a governing coalition that could ensure Takaichi's election as PM on 21 October. Ishin leader and Osaka Governor Hirofumi Yoshimura said that Takaichi had asked for support in the Diet vote to elect a new PM, with the prospect of forming a governing coalition.
US TSYS
MNI US TSYS: Tsys Whipsaw Lower, Risk Sentiment Tested on Policy & Trade
- Treasuries ratcheted lower Wednesday, buffeted by several rounds of selling and a reversal in overall sentiment that triggered selling in equities.
- Treasuries retreated through early overnight levels, coinciding with EU headlines that the EU is discussing "preferential treatment to give domestic firms bidding for public contracts worth about €2.5 trillion ($2.9 trillion) a year," Bbg. Note, however, 10Y Bund also declined and is rebounding.
- Treasuries moderated near session lows following comments by Fed Gov Miran (voter) at a Nomura Research Forum stated that US-China trade tensions tied to rare-earth curbs "pose significant downside risks". Ironically, this comes after after Treasury Sec Bessent suggested the possibility of a "longer tariff truce with China tied to rare-earth imports" helped risk sentiment earlier.
- Currently, Tsy Dec'25 10Y contract trades 113-09 (-4) vs. 113-06.5 low, yld tapped 4.0455% high; curves flatter/off lows: 2s10s -1.490 at 53.445 (51.608 low), 5s30s -1.561 at 100.734 (98.827 low). Initial technical support at 112-26 (20-day EMA) followed by the 50-day EMA at 112-16. A clear break of the average would expose 111-13+, the Aug 18 low and a key support.
- Cross asset: Bbg US$ index off lows, -3.35 at 1211.09 (1210.10 low), stocks off early highs: DJIA down down 72.67 points (-0.16%) at 46,200.11, S&P E-Minis up 12.5 points (0.19%) at 6,699.25, Nasdaq up 91.7 points (0.4%) at 22,611.45.
- Look ahead: Thursday's Retail Sales, PPI and Business Inventories suspended due to the Gov shutdown. On the other hand, Weekly Jobless Claims on a state level likely to be gradually parsed out.
OVERNIGHT DATA
MNI FED: Beige Book: Labor Market Remains Subdued
Compared with the previous Beige Book, October's arguably shows a slight improvement on the labor market front, though considerably weaker than earlier in the year - mirroring broader employment data. Just 2 regional Fed banks (Philadelphia, Cleveland) of 12 reported increases in employment, albeit that was better than August/September's report which saw only 1. Three saw decreases, with 2 "slightly" (Minneapolis, KC) and one outright "declined" (Dallas). 7 regions saw no change in employment.
MNI US Employment Report, Oct 2025: Labor Market Stays Soft
With the BLS’s nonfarm payrolls report for September delayed indefinitely, MNI has compiled a “Shadow” Employment Report that assesses latest developments via the data we do have for the month. Alternative private sector indicators of jobs growth paint a mixed picture on the extent of the latest additional softening beyond that seen in latest BLS payrolls data to August.
- With ratios keenly watched by FOMC members, various unemployment rate metrics point to further increases including to new recent highs in the Chicago Fed’s final indicators report. State-level jobless claims data look contained though, with the labor market still best characterized as in a low fire, low hire state.
MNI US DATA: Empire Starts Oct Manufacturing Data On Solid Note (And Firm Prices)
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).
- 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).
MNI US DATA: Mortgage Applications Ebb Lower, Spread Tightening Slows
MBA composite mortgage applications continued to retrace the refi-driven surge back in the first half of September, most recently with only a small decline. Tighter spreads have been offering a small tailwind from a trend sense but progress looks to have slowed recently.
- Composite applications fell -1.8% (sa) last week after -4.7% and -12.7%, backtracking a 30% jump in the week to Sep 12 and 9% in the week to Sep 5. New purchases led the latest decline, with -2.7% after -1.2%, compared to refis of -1.0% after -7.7%. They remain elevated by recent month standards, courtesy of refis, but are unsurprisingly still depressed historically.
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA down 17.15 points (-0.04%) at 46253.31
S&P E-Mini Future up 29 points (0.43%) at 6715.25
Nasdaq up 148.4 points (0.7%) at 22670.08
US 10-Yr yield is up 0.2 bps at 4.034%
US Dec 10-Yr futures are down 3.5/32 at 113-9.5
EURUSD up 0.0039 (0.34%) at 1.1646
USDJPY down 0.63 (-0.41%) at 151.21
WTI Crude Oil (front-month) down $0.26 (-0.44%) at $58.44
Gold is up $68.11 (1.64%) at $4210.93
European bourses closing levels:
EuroStoxx 50 up 52.98 points (0.95%) at 5605.03
FTSE 100 down 28.02 points (-0.3%) at 9424.75
German DAX down 55.57 points (-0.23%) at 24181.37
French CAC 40 up 157.38 points (1.99%) at 8077
US TREASURY FUTURES CLOSE
3M10Y -1.17, 7.145 (L: 4.076 / H: 9.023)
2Y10Y -1.474, 53.461 (L: 51.608 / H: 55.142)
2Y30Y -1.852, 112.983 (L: 110.287 / H: 115.043)
5Y30Y -1.674, 100.621 (L: 98.827 / H: 102.163)
Current futures levels:
Dec 2-Yr futures down 1.625/32 at 104-11.875 (L: 104-11.25 / H: 104-14.125)
Dec 5-Yr futures down 2.75/32 at 109-21.25 (L: 109-19.5 / H: 109-26)
Dec 10-Yr futures down 4/32 at 113-9 (L: 113-06.5 / H: 113-17.5)
Dec 30-Yr futures down 7/32 at 118-2 (L: 117-28 / H: 118-24)
Dec Ultra futures down 5/32 at 122-5 (L: 121-27 / H: 123-00)
MNI US 10YR FUTURE TECHS: (Z5) Sights Are On The Bull Trigger
- RES 4: 114-10 High Apr 7 (cont.)
- RES 3: 114-00 Round number resistance
- RES 2: 113-29 High Sep 11 and the bull trigger
- RES 1: 113-17+ High Oct 14
- PRICE: 113-08 @ 1535 ET Oct 15
- SUP 1: 112-26 20-day EMA
- SUP 2: 112-16/01 50-day EMA / 50.0% of Jul 15 - Sep 11 upleg
- SUP 3: 111-26 Low Aug 26
- SUP 4: 111-13+ Low Aug 18 and a key support
Treasuries are holding on to this week’s gains and a bullish theme remains intact. Last Friday’s climb resulted in a break of the 113-00 handle, signaling scope for stronger rally towards 113-29, the Sep 11 high and a bull trigger. Clearance of this hurdle would confirm a resumption of the M/T uptrend. Support at the 50-day EMA at 112-16 remains intact for now. A clear break of the average would expose 111-13+, the Aug 18 low and a key support.
SOFR FUTURES CLOSE
Current White pack (Dec 25-Sep 26):
Dec 25 -0.015 at 96.360
Mar 26 -0.010 at 96.60
Jun 26 -0.010 at 96.830
Sep 26 -0.015 at 96.975
Red Pack (Dec 26-Sep 27) -0.02 to -0.01
Green Pack (Dec 27-Sep 28) -0.01 to -0.005
Blue Pack (Dec 28-Sep 29) -0.015 to -0.01
Gold Pack (Dec 29-Sep 30) -0.015 to -0.01
REFERENCE RATES
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.19% (+0.04), volume: $2.932T
- Broad General Collateral Rate (BGCR): 4.16% (+0.04), volume: $1.144T
- Tri-Party General Collateral Rate (TCR): 4.16% (+0.04), volume: $1.113T
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.10% (+0.00), volume: $80B
- Daily Overnight Bank Funding Rate: 4.10% (+0.00), volume: $168B
MNI US TSYS/OVERNIGHT REPO: Fed Standing Repo Takeup Jump Part Of Wider Pressure
The Fed's Standing Repo Facility (SRF) saw its highest takeup this morning since the quarter-/month-end date of June 30. The $6.8B usage of the facility comes as SOFR printed 4bp above IORB (4.19% vs 4.15%) yesterday, with a variety of other indicators suggesting mounting funding market pressures. It compares with the $6.0B takeup at the last month-/quarter end date of September, and is the 2rd-highest takeup (after June 30) since Q2 2020. (The SRF was made permanent in 2021).
FED Reverse Repo Operation
RRP usage bounces to $5.484B with 20 counterparties from $3,516B Tuesday (lowest level since early April 2021). Compares to this year's high usage of $460.731B on June 30.
MNI PIPELINE: Corporate Bond Update: $5B JPM 2Pt/Sans SOFR Leg Launched
- Date $MM Issuer (Priced *, Launch #)
- 10/15 $5B #JPMorgan $2B 6NC5 +63, $3B11NC10 +77 (6NC5 SOFR leg dropped)
- 10/15 $900M Eversource $600M 5Y +87, $300M 2035 tap +82
- 10/15 $500M *MAF 10Y Sukuk +95
MNI BONDS: EGBs-GILTS CASH CLOSE: OATs' Continued Gains Buoys Broader Space
European curves continued to bull flatten Wednesday, with French outperformance continuing.
- Longer-end yields gapped lower on the open and continued lower for most of the session, buoyed by comments after Tuesday's cash close by Fed Chair Powell pointing to a possible end to QT in coming months, as well as a perception of easing French political risks.
- In a light session for data (including some final national-level Eurozone September inflation readings), Euro area industrial production shrank less than expected in August but all four of the largest countries saw declines.
- On the day, Gilts twist flattened with Bunds bull flattening. UK 2s10s had their flattest close since early July; for Germany, March.
- Periphery/semi-core EGB spreads closed tighter, led by Italy and France.
- Thursday's scheduled highlight is UK monthly activity data, while we get multiple central bank speakers including BOE's Mann and Greene, and ECB''s Wunsch, Kocher, Lane, and Lagarde. On the French political front we also get no-confidence motions on the government.
Closing Yields / 10-Yr EGB Spreads To Germany:
- Germany: The 2-Yr yield is down 1.3bps at 1.922%, 5-Yr is down 3.6bps at 2.166%, 10-Yr is down 3.9bps at 2.571%, and 30-Yr is down 4.6bps at 3.146%.
- UK: The 2-Yr yield is up 0.1bps at 3.902%, 5-Yr is down 3.7bps at 4.001%, 10-Yr is down 4.7bps at 4.543%, and 30-Yr is down 5.1bps at 5.343%.
- Italian BTP spread up 2.6bps at 80.9bps / French OAT down 2.3bps at 77.5bps
MNI FOREX: USD Index Weaker Again, Despite Bessent Optimism
- The USD Index started the session weaker and generally maintained those losses through the London close. Powell's relative easing bias late on Tuesday provided the initial trigger, but the much firmer-than-expected CNY fix from the PBOC also worked against the greenback.
- An appearance at the IMF / World Bank forum helped trigger a brief spell of USD support. Bessent's optimism on growth, laying out the groundwork for US growth akin to the "late 1800's or 1990's" is helping the USD higher at the margins and pressing EURUSD toward flat (thereby erasing the ~40 pip gains at the European open). The better-than-expected Empire Manufacturing print will also be helping.
- US 10y yields finding a base at 4.00% has proved a key catalyst, although markets have looked through the persistent S/T uptrend in equities across Wednesday.
- Focus for the duration of the Thursday session turns to the Australian jobs print for September, expected to show employment change of +20k in the month with an unchanged participation rate. AUD had a quieter Wednesday session, despite Treasury Secretary Bessent talking up the possibility of a longer rare earths trade truce with China. This keeps the near-term picture unchanged after Tuesday's new cycle low. However, Tuesday’s recovery highlights a possible reversal pattern - a hammer candle formation. If correct, it signals the end of the bear leg that started Sep 17.
- UK data are also in focus Thursday - with GDP stats as well as industrial and manufacturing production. Ahead of the Thursday print, a late rally in GBP saw GBP/USD rally back to 1.34 on decent volumes. While there was no specific UK newsflow or headlines to drive the move, it helped EURGBP drift into the London finish, closing the gap with the French pension reform-tied rally from earlier in the week.
THURSDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 16/10/2025 | 0600/0700 | *** |  GB | UK Monthly GDP |
| 16/10/2025 | 0600/0700 | ** | GB | Trade Balance |
| 16/10/2025 | 0600/0700 | ** | GB | Index of Services |
| 16/10/2025 | 0600/0700 | ** | GB | Index of Production |
| 16/10/2025 | 0600/0700 | ** | GB | Output in the Construction Industry |
| 16/10/2025 | 0800/1000 | *** |  IT | HICP (f) |
| 16/10/2025 | 0830/0930 | GB | BOE Credit Conditions Survey | |
| 16/10/2025 | 0900/1100 | * |  EU | Trade Balance |
| 16/10/2025 | 0900/0500 | * |  CA | CREA Existing Home Sales |
| 16/10/2025 | 0900/1100 | IT | Foreign Trade | |
| 16/10/2025 | 1200/0800 |  US | Richmond Fed's Tom Barkin | |
| 16/10/2025 | 1215/0815 | ** | CA | CMHC Housing Starts |
| 16/10/2025 | 1230/0830 | *** | US | Jobless Claims |
| 16/10/2025 | 1230/0830 | *** | US | Retail Sales |
| 16/10/2025 | 1230/0830 | *** | US | PPI |
| 16/10/2025 | 1230/0830 | ** | US | Philadelphia Fed Manufacturing Index |
| 16/10/2025 | 1230/0830 | *** | US | PPI |
| 16/10/2025 | 1230/0830 | *** | US | Retail Sales |
| 16/10/2025 | 1300/1400 | GB | BOE Mann in Panel on MonPol and Trade Shocks | |
| 16/10/2025 | 1300/0900 | US | Fed Governor Christopher Waller | |
| 16/10/2025 | 1300/0900 | US | Fed Governor Michael Barr | |
| 16/10/2025 | 1300/0900 | US | Fed Governor Stephen Miran | |
| 16/10/2025 | 1400/1000 | * | US | Business Inventories |
| 16/10/2025 | 1400/1000 | ** | US | NAHB Home Builder Index |
| 16/10/2025 | 1400/1000 | * | US | Business Inventories |
| 16/10/2025 | 1400/1000 | US | Fed Governor Michelle Bowman | |
| 16/10/2025 | 1430/1030 | ** | US | Natural Gas Stocks |
| 16/10/2025 | 1445/1545 | GB | BOE Mann in MonPol Panel at IMF/World Bank Meetings | |
| 16/10/2025 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 16/10/2025 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 16/10/2025 | 1545/1745 | EU | ECB Lane in Policy Panel at IIF Annual Meeting | |
| 16/10/2025 | 1600/1200 | ** | US | DOE Weekly Crude Oil Stocks |
| 16/10/2025 | 1600/1200 | ** | US | US DOE Petroleum Supply |
| 16/10/2025 | 1600/1800 | EU | ECB Lagarde in IMF Policy Debate | |
| 16/10/2025 | 1645/1245 | US | Richmond Fed's Tom Barkin | |
| 16/10/2025 | 1730/1330 | CA | BOC Governor Macklem speaks at Peterson Institute event in Washington. | |
| 16/10/2025 | 1830/1930 | GB | BOE Greene in Panel on UK/EU Relations | |
| 16/10/2025 | 2015/1615 | US | Fed Governor Stephen Miran | |
| 16/10/2025 | 2030/1630 | US | Richmond Fed's Tom Barkin | |
| 16/10/2025 | 2200/1800 | US | Minneapolis Fed's Neel Kashkari |
