MNI ASIA OPEN: Core PCE Steady, Supercore Elevated, NFP Ahead
EXECUTIVE SUMMARY
- MNI POLITICAL RISK - No Clear Offramp To Avert Govt Shutdown
- MNI FED BRIEF: Fed's Barkin-Jobs Shakier, Inflation Less Troubling
- MNI FED: Bowman Advocates Fed Take More Forward-Looking Approach
- MNI US DATA: PCE Spending Looks More Robust After Revisions
- MNI US DATA: UMichigan Confidence Remains Subdued As Inflation, Job Concerns Persist
- MNI US DATA: Core PCE Inflation Steady In August, Supercore M/M Stays Elevated
US
MNI FED: Bowman Advocates Fed Take More Forward-Looking Approach
Federal Reserve Governor Miki Bowman on Friday said the Fed should place more emphasis on a proactive forward-looking approach and down-weight the latest data points, repeating that the Fed must act "decisively and proactively" to address increasingly fragile labor market conditions. Judging where the economy was headed was much more challenging in the past amid unusually high uncertainty and significant risks to employment and price stability goals, she said in prepared remarks. "It made sense in the past to consider and be informed by the incoming data and its implications for the outlook in assessing the appropriate path for monetary policy."
MNI FED BRIEF: Fed's Barkin-Jobs Shakier, Inflation Less Troubling
The U.S. employment outlook has deteriorated following recent weakening in payroll growth and large downward revisions to past numbers, while inflation has not risen as much as had been feared due to tariffs, Richmond Fed President Thomas Barkin said Friday. "We've been hearing this low firing, low firing thing for some time, but the jobs data wasn't giving much cause for concern. What has happened over the last two months, and you can't run away from that, is that a bunch of revisions have come in that have shown that job growth has been much more modest," he said during a Q&A at the Peterson Institute for International Economics.
NEWS
MNI POLITICAL RISK - No Clear Offramp To Avert Govt Shutdown
President Donald Trump will depart the White House just before 10:00 ET 15:00 BST to attend the Ryder Cup. He will return at 16:55 ET 21:55 BST. Trump signed an order approving a deal to keep TikTok operational in the US. A government shutdown on October 1 now appears inevitable, with Senate Minority Leader Chuck Schumer (D-NY) giving no indication he will fold in a standoff with his Republican counterpart.
MNI US-EU: Sefcovic-Will Send 'Detailed Letter' To US On Steel & Aluminium Proposals
Speaking at a press conference in Hanoi, European Trade Commissioner Maros Sefcovic says that he intends to send a "detailed letter" to the US over the weekend with "suggestions on how to resolve issues on steel and aluminium". Sefcovic met with US Trade Representative Jamieson Greer on 25 Sep on the sidelines of the Association of Southeast Asian Nations (ASEAN) economic ministers' summit in Kuala Lumpur, Malaysia.
MNI TURKEY: Erdogan Talks Up Outcomes Of White House Meeting
Reuters reporting comments from Turkish President Recep Tayyip Erdogan following his talks with his US counterpart Donald Trump at the White House on 25 Sep. Says that the two "discussed steps to improve defence cooperation with a constructive approach" as well as ways "to facilitate trade, including revising tariffs, to reach a USD100bln trade goal".
US TSYS
MNI US TSYS: TSY Roundup: Curves Twist Steeper as Rate Cut Pricing Gains Slightly
- Treasuries look to finish mostly lower - off this morning's post data highs, curves twisting steeper (2s10s +2.558 at 53.803) with short end rates outperforming. As such - projected rate cut pricing gained momentum vs. early morning levels (*): Oct'25 at -22.4bp (-21.5bp), Dec'25 at -40.5bp (-39.0bp), Jan'26 at -49.9bp (-47.7bp), Mar'26 at -59.9bp (-57.5bp).
- Treasury futures whipsawed lower but quickly reversed to session highs after personal income/spending came out slightly higher than expected, PCE/Core PCE in-line with expected rises. August's core PCE reading of 0.227% M/M was basically exactly in line with expectations (0.22% MNI median), and came with a downward revision to July's figure (now 0.235%, was (0.273%). That marks the slowest monthly M/M print in 4 months.
- Tsys followed Bund's lower at midmorning only to rebound after UofM sentiment and inflation expectations come out slightly lower than expected. The headline sentiment index came in at 55.1 (55.4 prelim, 58.2 August), with economic conditions at 60.4 (61.2 prelim, 61.7 prior) and expectations 51.7 (51.8 prelim 55.9 prior). The inflation expectations were revised down: 1Y to 4.7% from 4.8%, and 5-10Y to 3.7% from 3.9%.
- Currently, the Dec'25 10Y trades -2.5 at 112-08 (yld 4.18172 +.0174) - initial support at 112-01 (50.0% retracement of the Jul 15 - Sep 11 bull phase); resistance above at 113-00 (High Sep 24).
- Overall, renewed optimism for the dollar has been the theme of the week, although market participants will be wary of next week’s busy calendar, culminating in the September US jobs report.
OVERNIGHT DATA
MNI US DATA: Core PCE Inflation Steady In August, Supercore M/M Stays Elevated
August's core PCE reading of 0.227% M/M was basically exactly in line with expectations (0.22% MNI median), and came with a downward revision to July's figure (now 0.235%, was (0.273%). That marks the slowest monthly M/M print in 4 months.
- As flagged in our preview from the Q2 national accounts revisions, the profile of PCE looked a little stronger at the start of Q2 (April rev up 0.02pp to 0.19% and May 0.03pp to 0.23%) but the June reading was unchanged at 0.263%.
- Core goods prices contracted by 0.11% M/M, the weakest since March, versus services which hit a 6-month high 0.325% M/M after 0.296%. The core services non-housing reading ("supercore") printed 0.33% M/M, a slight tickup from 0.32% prior for a 6-month high, as market-based services ticked up to 0.26% (0.20% prior).
- For its part, housing PCE also gained, to 0.36% from 0.27% prior for a 5-month high.
MNI US DATA: PCE Spending Looks More Robust After Revisions
August's PCE spending and income data showed robust spending dynamics, especially when strong upward revisions to Q2 are considered. However, the income data didn't cast quite as solid a light on the underlying dynamics.
- Real spending growth came in at 0.35% M/M, above the 0.2% expected; the upside surprise was enhanced by the upward revision to July, to 0.38% (was 0.33%). And even moreso with each of the prior 4 months revised up, as flagged by the latest GDP revisions. On a 3M/3M annualized basis, consumption growth is running at 2.4%, a pickup from 2.1% in July (revised up from 1.0%) and steady with June's 2.5% (which as noted in the GDP data was revised up to 2.5% from 1.4%).
MNI US DATA: UMichigan Confidence Remains Subdued As Inflation, Job Concerns Persist
The University of Michigan's final September report showed downwardly revised sentiment as well as inflation expectations. The headline sentiment index came in at 55.1 (55.4 prelim, 58.2 August), with economic conditions at 60.4 (61.2 prelim, 61.7 prior) and expectations 51.7 (51.8 prelim 55.9 prior).
- The inflation expectations were revised down: 1Y to 4.7% from 4.8%, and 5-10Y to 3.7% from 3.9%. That leaves the longer-run inflation reading, especially, very elevated by historic standards (3.0% for most of 2022-24), and up from 3.5% in August
MNI CANADA DATA: July GDP Beats Expectations, But Q3 Recovery Still Looks Tepid
Industry-level GDP came in at 0.2% M/M in July in real terms, exceeding the 0.1% expected by both consensus and StatCan's advance report, with growth looking to have flatlined in August. The unrounded growth of 0.24% M/M, thus nearly rounding up to 0.3%, made July's outturn even more impressive vs expectations.
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA up 298.22 points (0.65%) at 46245.7
S&P E-Mini Future up 33.75 points (0.51%) at 6693.75
Nasdaq up 80.9 points (0.4%) at 22466.16
US 10-Yr yield is up 1.4 bps at 4.1833%
US Dec 10-Yr futures are down 2/32 at 112-8.5
EURUSD up 0.0035 (0.3%) at 1.1701
USDJPY down 0.31 (-0.21%) at 149.49
#VALUE!
Gold is up $20.6 (0.55%) at $3769.58
European bourses closing levels:
EuroStoxx 50 up 54.81 points (1.01%) at 5499.7
FTSE 100 up 70.85 points (0.77%) at 9284.83
German DAX up 204.64 points (0.87%) at 23739.47
French CAC 40 up 75.26 points (0.97%) at 7870.68
US TREASURY FUTURES CLOSE
3M10Y +3.547, 22.206 (L: 17.36 / H: 23.63)
2Y10Y +2.374, 53.619 (L: 49.904 / H: 54.222)
2Y30Y +2.501, 111.54 (L: 107.13 / H: 112.443)
5Y30Y +0.609, 99.225 (L: 96.456 / H: 100.362)
Current futures levels:
Dec 2-Yr futures up 1/32 at 104-3.75 (L: 104-02.375 / H: 104-04.25)
Dec 5-Yr futures up 0.25/32 at 109-1.5 (L: 108-31.25 / H: 109-04.75)
Dec 10-Yr futures down 2.5/32 at 112-8 (L: 112-06 / H: 112-15.5)
Dec 30-Yr futures down 5/32 at 116-2 (L: 115-28 / H: 116-21)
Dec Ultra futures down 8/32 at 119-14 (L: 119-09 / H: 120-12)
MNI US 10YR FUTURE TECHS: (Z5) Corrective Pullback Still In Play
- RES 4: 114-10 High Apr 7 (cont.)
- RES 3: 114-00 Round number resistance
- RES 2: 113-12/29 High Sep 18 / High Sep 11 and the bull trigger
- RES 1: 113-00 High Sep 24
- PRICE: 112-09+ @ 11:18 BST Sep 26
- SUP 1: 112-01 50.0% retracement of the Jul 15 - Sep 11 bull phase
- SUP 2: 111-26 Low Aug 26
- SUP 3: 111-13+ Low Aug 18 and a key support
- SUP 4: 111-01+ 76.4% retracement of the Jul 15 - Sep 11 bull phase
Treasury futures have traded lower this week and remain in retracement mode. Thursday’s sell-off has resulted in a print below the 50-day EMA, at 112-10. A clear break of this average would undermine a bull theme and signal scope for a deeper retracement. This would open 111-13+, the Aug 18 low and the next key support. Initial resistance to watch is 113-00, the Sep 24 high.
SOFR FUTURES CLOSE
Current White pack (Dec 25-Sep 26):
Dec 25 +0.020 at 96.280
Mar 26 +0.030 at 96.460
Jun 26 +0.025 at 96.665
Sep 26 +0.025 at 96.810
Red Pack (Dec 26-Sep 27) -0.01 to +0.015
Green Pack (Dec 27-Sep 28) -0.025 to -0.01
Blue Pack (Dec 28-Sep 29) -0.03 to -0.025
Gold Pack (Dec 29-Sep 30) -0.035 to -0.03
REFERENCE RATES (PRIOR SESSION)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.18% (+0.05), volume: $2.965T
- Broad General Collateral Rate (BGCR): 4.17% (+0.05), volume: $1.141T
- Tri-Party General Collateral Rate (TCR): 4.17% (+0.05), volume: $1.112T
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.09% (+0.00), volume: $92B
- Daily Overnight Bank Funding Rate: 4.09% (+0.00), volume: $194B
FED Reverse Repo Operation
RRP usage surges to $48.073B ahead month end with 23 counterparties this afternoon from $25.369B Thursday. Compares to $11.363B on Friday, September 16 - lowest level since early April 2021. The year's high usage stands at $460.731B on June 30.
MNI BONDS: EGBs-GILTS CASH CLOSE: Light EGB Gains Ahead Of Euro Inflation Round
European yields fell modestly to close the week.
- Yields largely reversed Thursday's rise, with a pullback seen through most of the session after an indifferent start (particularly for Gilts which looked to continue their yield rise in early trade).
- Bunds and Gilts largely shrugged off further solid US macro data in the form of personal consumption, as well as a notable uptick in crude oil prices.
- A sizeable core FI rally in late afternoon - with no discernable trigger - saw yields hit the low of the days, but they since ticked back up to close nearly flat for the session.
- European data wasn't a market mover: ECB 3Y consumer inflation expectations were steady at 2.5% (but 0.1pp above expected), while Spanish GDP was revised up going back to 2023.
- On the day, both the German and UK curves leaned bull flatter. For the week, the German curve twist flattened (2Y +0.7bp, 10Y -0.2bp), with the UK's bear flattening (2Y +3.3bp, 10Y +3.1bp).
- Periphery/semi-core EGB spreads closed mixed. OATs outperformed, with French PM Lecornu saying he would restart the contentious 2026 budget from scratch.
- The highlight early next week is the release of Eurozone flash September inflation data, while BOE speakers (including Ramsden Monday) bear watching.
Closing Yields / 10-Yr EGB Spreads To Germany:
- Germany: The 2-Yr yield is down 0.9bps at 2.03%, 5-Yr is down 2.5bps at 2.335%, 10-Yr is down 2.7bps at 2.746%, and 30-Yr is down 1.4bps at 3.328%.
- UK: The 2-Yr yield is down 0.4bps at 4.015%, 5-Yr is down 0.2bps at 4.175%, 10-Yr is down 1.1bps at 4.746%, and 30-Yr is down 0.5bps at 5.561%.
- Italian BTP spread up 0.1bps at 83.5bps / French OAT down 0.7bps at 82.2bps
MNI FOREX: USD Index Off Recovery Highs into Close, GBP Recovers Well
- Following two days of strong gains for the greenback, the USD index has eased off recovery highs on Friday, declining around 0.32% to finish the week. Overall, renewed optimism for the dollar has been the theme of the week, although market participants will be wary of next week’s busy calendar, culminating in the September US jobs report.
- Intra-day gains have been led by GBP in G10, with cable rising back to above the 1.34 handle. It is worth putting this into perspective following the steep declines on Thursday, and the technical breaks below two significant trendlines, bolstering the short-term bearish theme for the pair. For now, spot has bounced well from the early September lows, however, given the lingering fiscal and political uncertainty in the UK, a deeper selloff towards 1.3140 should not be ruled out.
- In similar vein, NZDUSD is a touch firmer today but looks likely to close the week below the pivotal 0.5800 mark. This week’s price action has made headway towards the next technical targets of 0.5728 and 0.5636. The well documented impressive rally for AUDNZD extended overnight to reach 1.1351, before momentum has stalled. Market participants continue to eye a move towards 1.1491, the September 2022 high.
- USDJPY rose to within 4 pips of the 150 mark overnight, and it’s notable that the recovery has outpaced that of the DXY, rallying 3.07% to its peak. A bullish candle pattern on Sep 17 - a hammer - provided an early reversal signal which remains valid. Sights are on 150.92, the Aug 1 high and key resistance.
- There was little to impact momentum in either direction for EURUSD, with large option expiries between 1.1685-1.1710 on Friday capping the US session range. The trend theme in EURUSD is unchanged, it remains bullish and the recent pullback appears corrective. However, support at 1.1680. the 50-day EMA, has been pierced and will be monitored in coming sessions.
- Spanish CPI, US pending home sales and Fed Speak highlights Monday’s calendar.
MONDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 29/09/2025 | 0650/0850 |  EU | ECB Cipollone Keynote At Baltic Digital Euro Conference | |
| 29/09/2025 | 0700/0900 | *** |  ES | HICP (p) |
| 29/09/2025 | 0830/0930 | ** |  GB | BOE Lending to Individuals |
| 29/09/2025 | 0830/0930 | ** | GB | BOE M4 |
| 29/09/2025 | 0900/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 29/09/2025 | 0900/1100 | EU | ECB Schnabel On Current Aspects of Monetary Policy | |
| 29/09/2025 | 1200/1400 | EU | ECB Lane In Policy Panel At Inflation Conference | |
| 29/09/2025 | 1200/0800 |  US | Cleveland Fed's Beth Hammack | |
| 29/09/2025 | 1330/0930 | US | NY Fed's Roberto Perli | |
| 29/09/2025 | 1400/1000 | ** | US | NAR Pending Home Sales |
| 29/09/2025 | 1430/1030 | ** | US | Dallas Fed manufacturing survey |
| 29/09/2025 | 1530/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 29/09/2025 | 1530/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 29/09/2025 | 1730/1330 | US | St. Louis Fed's Alberto Musalem | |
| 29/09/2025 | 1730/1330 | US | Ex-St. Louis Fed's James Bullard | |
| 29/09/2025 | 1730/1330 | US | New York Fed's John Williams | |
| 29/09/2025 | 2200/1800 | US | Atlanta Fed's Raphael Bostic | |
| 30/09/2025 | 2301/0001 | * | GB | BRC Monthly Shop Price Index |
| 30/09/2025 | 2350/0850 | ** |  JP | Industrial Production |
| 30/09/2025 | 2350/0850 | * | JP | Retail Sales (p) |
| 30/09/2025 | 0130/0930 | *** |  CN | CFLP Manufacturing PMI |
| 30/09/2025 | 0130/0930 | ** | CN | CFLP Non-Manufacturing PMI |
| 30/09/2025 | 0130/1130 | * |  AU | Building Approvals |
| 30/09/2025 | 0145/0945 | ** | CN | S&P Global Final China Manufacturing PMI |
| 30/09/2025 | 0430/1430 | *** | AU | RBA Rate Decision |
