MNI ASIA OPEN: BoE Cuts, Trump Picks, Putin Meet & Greet

EXECUTIVE SUMMARY

• MNI UK: BOE: 5-4 Vote For 'Finely Balanced' 25bp Cut In First Ever Second Ballot
• MNI FED: Trump Set To Nominate Miran To Short-Term Fed Board Vacancy: Bloomberg
• MNI FED: "Waller Emerges as Favorite For Fed Chair Among Trump Team" - Bloomberg
• MNI US-RUSSIA: Trump-Putin Summit Possible "In The Coming Days"-Kremlin Aide
• MNI SWITZERLAND: Gov't-No US Tariff Countermeasures, "Trade War Not In Our Interest"
• MNI US DATA: Mixed But Still More Modest Inflation Expectations In NY Fed Survey
• MNI US DATA: Productivity And ULCs Suggest Disinflationary Progress Stalling
• MNI US DATA: Relative Stability In Jobless Claims Data After NFP Weakness

US

MNI FED: "Waller Emerges as Favorite For Fed Chair Among Trump Team" - Bloomberg

Bloomberg reports that "Federal Reserve Governor Christopher Waller is emerging as a top candidate to serve as the central bank’s chair among President Donald Trump’s advisers as they look for a replacement for Jerome Powell, according to people familiar with the matter."

MNI FED: Trump Set To Nominate Miran To Short-Term Fed Board Vacancy: Bloomberg

Bloomberg reports: "White House officials are preparing for President Donald Trump to nominate Council of Economic Advisers Chairman Stephen Miran to serve as a Federal Reserve governor, according to a person familiar with the search." Bloomberg reports a source saying that Miran would fill the short-term vacancy (to January) created by the resignation of Gov Kugler.

NEWS

MNI UK: BOE: 5-4 Vote For 'Finely Balanced' 25bp Cut In First Ever Second Ballot

The BOE MPC voted 5-4 to cut Bank Rate to 4.00% after a second ballot: Four members (Greene, Lombardelli, Mann and Pill) voted to maintain Bank Rate at 4.25%, as the "disinflationary process had slowed and the risk of inflation expectations feeding through to second-round effects had risen". 

• There were subtle, but important changes in to the guidance. While a "gradual and careful" approach to cuts is still warranted, MPC emphasised that  "the restrictiveness of monetary policy has fallen" and that "the timing and pace" of future cuts would depend on "the extent to which underlying disinflation pressures continue to ease".
• Headline inflation forecasts were raised a tenth to 2.0% Y/Y at 2/3-year horizons. The MPS said that "the upside risks around medium-term inflationary pressures have moved slightly higher since May".

MNI SWITZERLAND: Gov't-No US Tariff Countermeasures, "Trade War Not In Our Interest"

Speaking in a press conference following an extraordinary Federal Council meeting, the president of the Swiss Confederation Karin Keller-Sutter says that the gov't will continue trade negotiations with the US. Keller-Sutter: "We will also shortly engage in detailed discussions on potential relief measures for Swiss businesses and continue to assess the need for further economic policy action." She calls the situation "extraordinarily difficult" but says "At present, tariff countermeasures in response to the US tariff increases are not being considered."

MNI INDIA: BRAZIL: Modi And Lula Hold Call To Discuss Trump Tariffs

The Indian government has noted that Prime Minister Narendra Modi “exchanged views on various regional and global issues of mutual interest,” in a recently concluded call with Brazilian President Luiz Inacio Lula da Silva. The statement said Modi and Lula agreed to “enhance cooperation in trade, technology, energy, defence, agriculture, health and people-to-people ties,” and “iterated their commitment to take India-Brazil strategic partnership to new heights,” per Reuters.

MNI US: Saudi Crown Prince To Meet Trump In Nov To Finalise Investment Pledges - BBG

Bloomberg reports that Saudi Crown Prince Mohammed Bin Salman will travel to Washington in November to meet President Donald Trump. The report notes that MBS is expected to "finalize many of the pledges" made during Trump's May visit to the Gulf, "with a focus on sectors like artificial intelligence, chemicals, defense and energy". 

MNI US-RUSSIA: Trump-Putin Summit Possible "In The Coming Days"-Kremlin Aide

Tass reporting comments from Kremlin aide Yuri Ushakov claiming that an agreement has been reached on holding a summit between Russian President Vladimir Putin and US President Donald Trump "in the coming days", with both sides working out the details. Adds that next week was designated as the target date, but that "it is difficult to say how many days preparations will take." Ushakov claims a venue has been agreed upon. Acknowledges that US Middle East envoy Steve Witkoff touched on the idea of a trilateral meeting involving Ukrainian President Volodymyr Zelensky, but Moscow has not responded.

MNI INDIA: RUSSIA-NSA Doval Holds Talks w/Counterpart Shoigu As Tariffs Bite

Secretary of the Russian Security Council Sergei Shoigu says in a meeting with India's National Security Adviser Ajit Doval that, "[Russia] are committed to further active cooperation in order to form a new, more just and sustainable world order, ensure the supremacy of international law and jointly combat modern challenges and threats...Regular consultations help deepen Russian-Indian relations and take them to a new, higher level in the current difficult international situation,"

US TSYS

MNI US TSYS: Tsys Weaker After 30Y Tail, Miran Nominated for Fed Gov, BoE Cut

• Treasuries look to finish mildly lower across the board Thursday, bonds reversing midday support after Tsy $28B 30Y auction (912810UM8) tailed 2.2bp: 4.813% high yield vs. 4.791% WI; 2.27x bid-to-cover vs. 2.38x in the prior month.
• Treasury futures pared early losses after slightly higher than expected weekly & continuing jobless claims (prior down-revised for continuing claims): Initial jobless claims 226k (sa, cons 222k) in the week to Aug 2 after a marginally upward revised 219k (initial 218k). Continuing claims 1974k (sa, cons 1950k) in the week to Jul 26 after a downward revised 1936k (initial 1946k).
• Unit Labor Costs higher with an up-revision to prior: +1.6% Q/Q SAAR (1.5% expected, prior rev up to 6.9% from 6.6%).
• Tsy Sep'25 10Y futures currently trades -3.5 at 112-04 (112-01 low, 112-09 high). Curves mixed: 2s10s +1.271 at 52.264, 5s30s -0.111 at 104.033.
• Trump nominated Council of Economic Advisers Chair Miran to serve as a Federal Reserve governor while Fed Gov Waller is emerging as a top candidate to serve as the central bank’s chair, Bbg reported.

OVERNIGHT DATA

MNI US DATA: Mixed But Still More Modest Inflation Expectations In NY Fed Survey

The NY Fed consumer survey saw mixed results for inflation expectations, with a small increase for 1Y, no change for 3Y and a more notable increase for 5Y. It remains a much more measured survey than the swings seen in U.Mich equivalent, for example. 

• 1Y inflation expectations: 3.09% in July after 3.02% in June and 3.20% in May.
• 3Y inflation expectations: 3.00% in July, unchanged for what has been a particularly sticky series with six of the last seven months at 3.0%.
• 5Y inflation expectations: 2.88% in July after 2.61% in June for its highest since February.

MNI US DATA: Relative Stability In Jobless Claims Data After NFP Weakness

Jobless claims were a little higher than expected in latest weekly data. Neither are for a payrolls reference period but they nevertheless provide a sign of relative stability compared to the large downward revisions in last week’s July payrolls report. Initial claims remain close to periods of historical tightness whilst continuing claims saw a more notable push to fresh recent highs but could be due yet another downward revision. 

• Initial jobless claims 226k (sa, cons 222k) in the week to Aug 2 after a marginally upward revised 219k (initial 218k). Continuing claims 1974k (sa, cons 1950k) in the week to Jul 26 after a downward revised 1936k (initial 1946k). It came about from no sign of a tick lower in non-seasonally adjusted claims.

MNI US DATA: Productivity And ULCs Suggest Disinflationary Progress Stalling

The BLS's preliminary report on Q2 Productivity and Costs was mixed: productivity growth exceeded expectations though saw a downward revision to Q1, while unit labor costs have been running a little hotter than previously thought. The data doesn't contradict many Federal Reserve officials' view that the labor market is not a significant source of inflation pressure, but disinflationary progress on this front has certainly stalled.

• Nonfarm productivity growth rose by 2.4% Q/Q SAAR in the preliminary estimate for Q2 2025 (2.0% SAAR expected, prior -1.8% rev from -1.5%). The breakdown: output increased by 3.7% while hours worked rose 1.3%.
• Unit labor costs meanwhile rose 1.6% Q/Q SAAR (1.5% expected, prior rev up to 6.9% from 6.6%). That was composed of a 4.0% rise in hourly compensation, offset by the aforementioned 2.4% increase in productivity. This is a reversion from Q1's very high reading which came amid a drop in productivity which now is recorded as even worse than previously estimated due to a downward revision to output.

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 224.48 points (-0.51%) at 43968.64
S&P E-Mini Future down 0.5 points (-0.01%) at 6370.75
Nasdaq up 73.3 points (0.3%) at 21242.7
US 10-Yr yield is up 1.3 bps at 4.2384%
US Sep 10-Yr futures are down 3/32 at 112-4.5
EURUSD down 0.0002 (-0.02%) at 1.1659
USDJPY down 0.32 (-0.22%) at 147.05
WTI Crude Oil (front-month) down $0.63 (-0.98%) at $63.72
Gold is up $30.13 (0.89%) at $3399.55

European bourses closing levels:
EuroStoxx 50 up 68.78 points (1.31%) at 5332.07
FTSE 100 down 63.54 points (-0.69%) at 9100.77
German DAX up 268.14 points (1.12%) at 24192.5
French CAC 40 up 74.29 points (0.97%) at 7709.32

US TREASURY FUTURES CLOSE

3M10Y +1.321, -0.559 (L: -3.049 / H: 1.184)
2Y10Y +1.091, 52.084 (L: 49.495 / H: 53.488)
2Y30Y +0.22, 110.556 (L: 106.03 / H: 111.782)
5Y30Y +0.408, 104.552 (L: 100.962 / H: 105.3)
Current futures levels:
Sep 2-Yr futures down 1/32 at 103-29.625 (L: 103-28.25 / H: 103-30.625)
Sep 5-Yr futures down 2.5/32 at 108-31.25 (L: 108-28.25 / H: 109-01.75)
Sep 10-Yr futures down 2.5/32 at 112-5 (L: 112-01 / H: 112-09.5) 
Sep 30-Yr futures down 1/32 at 115-17 (L: 115-09 / H: 115-29)
Sep Ultra futures down 6/32 at 118-20 (L: 118-15 / H: 119-13)

MNI US 10YR FUTURE TECHS: (U5) Holds Firm

• RES 4: 113-23   76.4% retracement of the Sep’24 - Jan’25 sell-off
• RES 3: 113-07   76.4% retracement of the Apr 7 - 11 sell-off
• RES 2: 112-23   High May 1
• RES 1: 112-15+ High Aug 5
• PRICE:‌‌ 112-08 @ 13:37 BST Aug 7
• SUP 1: 110-19+/08+ Low Jul 24 / Low Jul 14 & 16       
• SUP 2: 110-03   76.4% retracement of the May 22 - Jul 1 bull leg
• SUP 3: 109-28   Low Jun 6 and 11
• SUP 4: 109.25   Low May 27

Treasury futures remain strong on the back of the post-NFP rally - barring an erratic and quickly reversed intraday slip on Wednesday. Having cleared resistance into the bull trigger at 112-12+, the Jul 1 high, Treasuries have opened the May 1 high for direction at 112-23, a multi-month high. Clearance here opens retracement levels layered between 113-07 and 113-23. On the downside, key support is 110-08+, the Jul 14 and 16 low. First support lies at 110-19+, the Jul 24 low.

SOFR FUTURES CLOSE

Sep 25 -0.005 at 95.945
Dec 25 -0.005 at 96.280
Mar 26 -0.010 at 96.505
Jun 26 -0.025 at 96.720
Red Pack (Sep 26-Jun 27) -0.035 to -0.03
Green Pack (Sep 27-Jun 28) -0.025 to -0.02
Blue Pack (Sep 28-Jun 29) -0.025 to -0.02
Gold Pack (Sep 29-Jun 30) -0.02 to -0.015

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

• Secured Overnight Financing Rate (SOFR): 4.34% (+0.00), volume: $2.866T
• Broad General Collateral Rate (BGCR): 4.32% (-0.01), volume: $1.176T
• Tri-Party General Collateral Rate (TCR): 4.32% (-0.01), volume: $1.147T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $112B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $264B

FED Reverse Repo Operation

RRP usage falls to $77.961B this afternoon (lowest levels since mid-April when levels fell to the mid-50s) from $91.966B yesterday, total number of counterparties at 26. Lowest usage of the year at $54.772B on Wednesday, April 16 -- in turn the lowest level since April 2021 - compares to July 1: $460.731B highest usage since December 31.

MNI PIPELINE: Corporate Bond Update: $4.5B MPLX 4Pt Launched

• Date $MM Issuer (Priced *, Launch #)
• 08/07 $4.5B #MPLX $1.25B +5Y +103, $750M +7Y +118, $1B 10Y +130, $1.5B 30Y +150
• 08/07 $2B #Roper $500M 3Y +55, $50M 5Y +70, $1B 10Y +90
• 08/07 $1.5B #Verisk $750M 5Y +72, $750M +10Y +92
• 08/07 $750M Ball Corp 8NC 5.5%a
• 08/07 $650M PennyMac 8.5NC3
• 08/07 $500M Snap Inc 8NC3 7%a
• 08/07 $500M WR Grace Holdings 7NC3
• 08/07 $500M *Apollo Global WNG 10Y +95

MNI BONDS: EGBs-GILTS CASH CLOSE: Gilts Underperform After Hawkish BOE

Gilts underperformed Thursday after a more hawkish-than-expected Bank of England decision.

• While the BOE eased 25bp as fully expected, there was an unprecedented deadlock in a first vote, with the second ballot delivering what Gov Bailey called a "finely balanced" 5-4 decision in favour of a quarter-point cut.
• When combined with hawkishly-interpreted short-term inflation projections and language shifts, the UK short-end bore the brunt in a bear flattening move on the curve (2s10s have now erased the steepening seen since July 1).
• In data, German industrial production came in weak with lower revisions but this had limited market impact.
• For the day, the UK and German curves twist flattened, with periphery/semi-core EGB spreads closing mostly tighter to Bunds.
• Friday's regional calendar is light, with BOE's Pill scheduled to speak, and some second-tier Eurozone data (including French ILO unemployment).

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.1bps at 1.919%, 5-Yr is down 0.9bps at 2.226%, 10-Yr is down 2bps at 2.63%, and 30-Yr is down 3.5bps at 3.138%.
• UK: The 2-Yr yield is up 5.6bps at 3.877%, 5-Yr is up 4.5bps at 4.004%, 10-Yr is up 2.1bps at 4.547%, and 30-Yr is down 0.9bps at 5.351%.
• Italian BTP spread down 0.5bps at 79.3bps / Spanish bond spread down 0.8bps at 57.2bps

MNI FOREX: USD Index Still Driven by Speculation Over Make-Up of FOMC

• Price action in the USD Index remained dominated by speculation over Fed leadership. Reportedly, Trump advisers are pushing for current FOMC member Waller to lead the Fed after Powell's departure. The headline helped trigger some USD positive moves given Waller's relative credibility and insider knowledge of the Fed relative to Kevin Hassett - who argued for a Greenspan-like approach to rate-setting earlier this week.
• Later in the session, CEA Chair Stephen Miran was touted to take Kugler's place on the Fed Board of Governors. Miran, an Oval Office insider who has backed the President on trade deals, US economic dominance and the benign inflation backdrop - prompted a minor spell of USD weakness, aiding EUR/USD to head into the close either side of 1.1650.
• GBP shot higher against all others in G10 into the Thursday close on the back of the BOE rate decision. While the bank voted to cut rates by 25bps - as expected - there was more opposition among the committee for easing than expected and, for the first time, the vote on policy went to a second round after an initial failure to reach consensus. The unexpected opposition to cutting rates today proved a surprise for markets, and prompted UK rates to price out the odds of further easing through year-end.
• November BoE rate cut odds dropped below 50%, and another 25bps easing through year-end is now less than fully priced. As a result, GBP surged through 1.34 against the USD, narrowing the gap on the 50-dma in the process. This leaves prices still well below the late July highs of 1.3589, let alone 1.3789, the YTD high. With the September BoE unlikely to deliver any policy change, this leaves the Autumn budget as the next major UK macro event - particularly as estimates this week showed the UK Treasury with considerably less wiggle room on debt than previously expected.
• Focus Friday turns to unemployment rate data from France and the Canadian jobs report for July. Central bank speakers include Fed's Musalem and BoE's Pill. 

FRIDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
08/08/2025	0500/1400		JP	Economy Watchers Survey
08/08/2025	0600/0800	**	SE	Private Sector Production m/m
08/08/2025	1115/1215		GB	BOE Pill At National MPC Agency Briefing
08/08/2025	1230/0830	***	CA	Labour Force Survey
08/08/2025	1230/0830	***	CA	Labour Force Survey
08/08/2025	1420/1020		US	St. Louis Fed's Alberto Musalem
08/08/2025	1700/1300	**	US	Baker Hughes Rig Count Overview - Weekly
08/08/2025	1700/1300	**	US	Baker Hughes Rig Count Overview - Weekly
09/08/2025	0130/0930	***	CN	CPI
09/08/2025	0130/0930	***	CN	Producer Price Index