MNI ASIA OPEN: Core CPI Inflation Moderation Expected
EXECUTIVE SUMMARY
- MNI JAPAN: LDP & Ishin Sign Coalition Agreement Forming New Gov't
- MNI TARIFFS: Trump Talks On China Tariffs, Critical Minerals, AUKUS & Ukraine
- MNI US OUTLOOK/OPINION: Core CPI and Early PCE Estimates Eye 0.30% M/M For Sept
US
MNI US OUTLOOK/OPINION: Core CPI and Early PCE Estimates Eye 0.30% M/M For Sept
- An early look at analyst unrounded core CPI estimates for Friday’s delayed September release sees a median estimate of 0.30% M/M, with a reasonably wide range of 0.25-0.36% M/M. As such, core CPI inflation is mostly expected to moderate from the 0.35% in August although it would be a third consecutive strong month after the 0.32% in July as well.
NEWS
MNI TARIFFS: Trump Talks On China Tariffs, Critical Minerals, AUKUS & Ukraine
Speaking at a bilateral meeting with Australian PM Anthony Albanese, US President Donald Trump confirms that he intends to meet Chinese President Xi Jinping in South Korea during the Asia Pacific Economic Cooperation annual summit at the end of the month. Trump claims that "China has been respectful of [the] US", but the potential 155% tariffs come in on 1 November unless a deal is agreed. Trump: "We'll see what we can do..We expect to get a fair deal". Says "I think we'll end up with a strong trade deal with China ...."
MNI US: AUSTRALIA-Albanese Arrives At White House For Trump Summit
Australian Prime Minister Anthony Albanese has arrived at the White House for his first one-on-one meeting with US President Donald Trump since the latter won a second term in office. The two leaders will hold a meeting in the Cabinet Room (changed from the Oval Office at late notice) before a bilateral lunch. Amid China’s imposition of export controls on critical minerals, Australia’s abundant supply could forge strong links between the two leaders, despite hailing from opposite ends of the political spectrum.
MNI JAPAN: LDP & Ishin Sign Coalition Agreement Forming New Gov't
The governing Liberal Democratic Party (LDP) and libertarian-federalist Japan Innovation Party (Ishin) have signed a coalition agreement that sets the stage for a new gov't, and LDP President Sanae Takaichi's election as prime minister on 21 Oct. Takaichi is certain to succeed the outgoing Shigeru Ishiba and become Japan’s first-ever female prime minister after reaching an agreement Ishin.
US TSYS
MNI US TSYS: Treasuries Inch Higher As US Enters Shutdown Day 19
- Treasuries extended the top end of the range late Monday on relatively modest volumes (TYZ5 just over 1M) as the US Gov enters shutdown day 19, no data & the Federal Reserve in policy blackout through October 30.
- The Dec'25 10Y futures contract trades +4 at 113-19, 113-10.5 low / 113-20 high. MA studies are in a bull-mode position and this set-up continues to highlight a dominant uptrend. Sights are on 114-10, the Apr 7 high (cont) and the next key resistance.
- Speaking at a bilateral meeting with Australian PM Anthony Albanese, US President Donald Trump confirms that he intends to meet Chinese President Xi Jinping in South Korea during the Asia Pacific Economic Cooperation annual summit at the end of the month.
- Expected corporate earnings announcements after the close include: Cleveland-Cliffs, Crown Holdings, Steel Dynamics, AGNC Investment Corp and Zions Bancorp - the regional bank in the spotlight last week after it "disclosed a $50 million charge-off for a loan underwritten by its wholly-owned subsidiary, California Bank & Trust," Bbg reported.
- Looking ahead, UK fiscal data will be published ahead of Canada CPI on Tuesday, while markets will remain focused on Friday’s US inflation data. An early look at analyst unrounded core CPI estimates for Friday’s delayed September release sees a median estimate of 0.30% M/M, with a reasonably wide range of 0.25-0.36% M/M.
OVERNIGHT DATA
Monday's Leading Index suspended until Federal data is released
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA up 529.59 points (1.15%) at 46720.26
S&P E-Mini Future up 74.5 points (1.11%) at 6777.25
Nasdaq up 324.4 points (1.4%) at 23004.15
US 10-Yr yield is down 2.5 bps at 3.9838%
US Dec 10-Yr futures are up 4.5/32 at 113-19.5
EURUSD down 0.0011 (-0.09%) at 1.1645
USDJPY up 0.1 (0.07%) at 150.71
WTI Crude Oil (front-month) down $0.15 (-0.26%) at $57.39
Gold is up $115.2 (2.71%) at $4367.02
European bourses closing levels:
EuroStoxx 50 up 73.54 points (1.31%) at 5680.93
FTSE 100 up 49 points (0.52%) at 9403.57
German DAX up 427.81 points (1.8%) at 24258.8
French CAC 40 up 31.87 points (0.39%) at 8206.07
US TREASURY FUTURES CLOSE
3M10Y +1.159, 9.316 (L: 6.601 / H: 10.053)
2Y10Y -2.907, 52.029 (L: 51.819 / H: 55.11)
2Y30Y -3.449, 111.135 (L: 110.831 / H: 114.756)
5Y30Y -1.299, 99.892 (L: 98.866 / H: 101.572)
Current futures levels:
Dec 2-Yr futures down 0.125/32 at 104-13.875 (L: 104-12.75 / H: 104-14.5)
Dec 5-Yr futures up 1.75/32 at 109-27 (L: 109-22.25 / H: 109-27.5)
Dec 10-Yr futures up 4.5/32 at 113-19.5 (L: 113-10.5 / H: 113-20)
Dec 30-Yr futures up 11/32 at 118-26 (L: 118-06 / H: 118-28)
Dec Ultra futures up 16/32 at 123-5 (L: 122-10 / H: 123-08)
MNI US 10YR FUTURE TECHS: (Z5) Bullish Outlook
- RES 4: 115-00+ High Oct 1 ‘24 (cont)
- RES 3: 114-21+ 1.00 proi of the Aug 18 - Sep 11 - 25 price swing
- RES 2: 114-10 High Apr 7 (cont) and a key resistance
- RES 1: 114-02 High Oct 17
- PRICE: 113-17+ @ 1312 ET Oct 20
- SUP 1: 113-00 20-day EMA
- SUP 2: 112-30 Low Oct 13
- SUP 3: 112-19+ 50-day EMA
- SUP 4: 112-06 Low Sep 25
Treasuries remain in a clear bull cycle. Friday’s initial gains resulted in a breach of key resistance at 113-29, the Sep 11 high. This confirms a resumption of the M/T uptrend. Note that MA studies are in a bull-mode position and this set-up continues to highlight a dominant uptrend. Sights are on 114-10, the Apr 7 high (cont) and the next key resistance. Firm support lies at 112-30, the 20-day EMA. S/T weakness is considered corrective.
SOFR FUTURES CLOSE
Current White pack (Dec 25-Sep 26):
Dec 25 -0.005 at 96.385
Mar 26 steady00 at 96.645
Jun 26 -0.005 at 96.870
Sep 26 -0.005 at 97.015
Red Pack (Dec 26-Sep 27) -0.005 to +0.005
Green Pack (Dec 27-Sep 28) +0.015 to +0.020
Blue Pack (Dec 28-Sep 29) +0.020 to +0.025
Gold Pack (Dec 29-Sep 30) +0.020 to +0.030
REFERENCE RATES
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.18% (-0.12), volume: $3.022T
- Broad General Collateral Rate (BGCR): 4.16% (-0.09), volume: $1.180T
- Tri-Party General Collateral Rate (TCR): 4.16% (-0.09), volume: $1.145T
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.11% (+0.00), volume: $79B
- Daily Overnight Bank Funding Rate: 4.11% (+0.00), volume: $169B
FED Reverse Repo Operation
RRP usage rebounds to $5.931B with 9 counterparties this afternoon from $4.102B Friday. Compares to $3,516B on Tuesday, Oct 13 (lowest level since early April 2021) & this year's high usage of $460.731B on June 30.
MNI PIPELINE: Late Corporate Bond Roundup: $2.5B Truist Bank Launched
- Date $MM Issuer (Priced *, Launch #)
- 10/20 $2.5B #Truist Bank $1.25B 4NC3 +67, $1.25B 11NC10 +98 (no 4NC3 SOFR leg)
- 10/20 $2B #American Express 11NC10 +82
- 10/20 $1.5B #Cargill $750M 5Y +60, $750M 30Y +80
- 10/20 $1B #State St Corp 11NC10 +80
- 10/20 $1B Versant Media Group 5.25NC2 investor call
- 10/21 $Benchmark World Bank 5Y SOFR+41a expected Tuesday
- 10/21 $Benchmark Kingdom of Sweden 3Y SOFR+30a expected Tuesday
MNI EGBS: BTP/Bund Spread Near Session Lows, Growth Data Key To Further Narrowing
The 10-year BTP/Bund spread trades close to session lows of ~78.5bps, benefiting from the latest extension higher in global equity futures.
- We highlighted last week that having already tightened by ~35bps this year, the 10-year BTP/Bund spread has struggled to sustainably consolidated below 80bps in recent months.
- Signs of a more resilient domestic growth outlook may be a necessary condition for further narrowing. Although the 2026 draft budget projects the Italian deficit to fall to 2.8% next year, a weak growth trajectory may impede continued improvements in fiscal metrics. Q3 flash GDP is due on October 30.
- Note that EUR 3m10y swaption vol has also moved away from multi-year lows through October, which may be limiting near-term tightening impulses.
- BTP futures are +7 ticks at 121.53, off session lows of 121.58. Initial resistance is Friday’s opening high of 121.94.
- Italy is issuing the new retail-only 7-year Oct-32 BTP Valore this week. Day 1 books are currently E4.9bln. That’s above the E3.7bln raised on the first day of the last BTP Valore issue in May 2024, but currently below the E5.6bln raised on the first day of the BTP Piu issue in February 2025.
MNI FOREX: JPY Volatility on Show, NZD Outperforms on CPI Beat/Equity Rally
- The USD index trades a touch firmer to start the week, extending the bounce from Friday’s lows by around 0.1% to 98.60. China third quarter GDP slowed to 4.7% Y/y, however the print came in marginally above expectations, prompting minimal impact on broader risk sentiment and the greenback. President Trump expressed optimism around US-China trade talks (albeit with clear focus points), keeping major equity benchmarks in the green Monday.
- Despite the broadly contained price adjustments across G10 FX, the Japanese yen has had a volatile session, registering a 92 pip range. Developments regarding Japan's LDP and Ishin parties forming a coalition initially boosted USDJPY to 151.20, before hawkish remarks from BoJ board member Takata and headlines on the BOJ revising the economic growth forecast up assisted a solid reversal to 150.28 session lows. Price has subsequently consolidated close to unchanged levels around 150.75.
- Elsewhere, New Zealand Q3 CPI came in at 1.0% Q/q overnight, one tenth above market expectations. While the data overall was close to RBNZ expectations, NZD does stand 0.40% higher on the session, assisted by the constructive price action for major equity indices late Monday. Despite the bounce for NZDUSD, bearish conditions remain firmly intact, with the pair remaining just 1.15% above cycle lows at 0.5683, 6-month lows for the pair.
- It is also worth noting that EURCHF has fallen 0.25%, further narrowing the gap to a crucial cluster of support between 0.9206-22. Clearance of the lows would place EURCHF at its lowest since the peg removal in 2015.
- In emerging markets, the Colombian peso has significantly underperformed peers following the negative newsflow on US tariff threats against Colombia and weaker-than-expected economic activity data published on Monday. USDCOP has risen 1.5% on the session, extending the bounce from Friday’s cycle lows to around 3.2%.
- Looking ahead, UK fiscal data will be published ahead of Canada CPI on Tuesday, while markets will remain focused on Friday’s US inflation data.
MNI ARGENTINA: Milei Says Swap Line Provides Security, Remains Confident On Election
- Speaking after the signing of the $20bn currency swap line between the BCRA and US Treasury today, President Milei said that the agreement is to provide security and will only be executed when needed. According to a report in La Nacion, Milei said that if the government can’t access the international capital market because of elevated country risk, then it will make payments due next year using the swap line.
TUESDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 21/10/2025 | 0600/0700 | *** |  GB | Public Sector Finances |
| 21/10/2025 | 0700/0900 |  EU | ECB Lane at Macroeconomics and Finance Conference | |
| 21/10/2025 | 0900/1100 | * | EU | government debt |
| 21/10/2025 | 0900/1100 | * | EU | government deficit |
| 21/10/2025 | 0900/1000 | GB | BOE Saporta Fireside Chat at Islamic Development Bank | |
| 21/10/2025 | 1030/1130 | GB | BOE Bailey & Breeden on Private Markets at Financial Services Regulation Committee | |
| 21/10/2025 | 1100/1300 | EU | ECB Lagarde Keynote at Norges Bank Climate Conference | |
| 21/10/2025 | 1230/0830 | *** |  CA | CPI |
| 21/10/2025 | 1230/0830 | ** |  US | Philadelphia Fed Nonmanufacturing Index |
| 21/10/2025 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 21/10/2025 | 1915/2015 | GB | BOE Mann Fireside Chat at Lazard |
