MNI ASIA OPEN: Curves Twist Steeper Ahead Likely Gov Shutdown
EXECUTIVE SUMMARY
- MNI US: CBO: 750k Set To Be Furloughed In Shutdown, Econ Impact Depends On Duration
- MNI FED: Boston's Collins: Limited Further Easing Possible By Year-End
- MNI FED: Vice Chair Jefferson: Softening Labor Market May Need Support
- MNI US DATA: JOLTS Reaffirms "Low Hiring, Low Firing" Labor Market Narrative
US
MNI FED: Boston's Collins: Limited Further Easing Possible By Year-End
Boston Fed President Collins (2025 FOMC Voter) says in a speech Tuesday (link) that "it may be appropriate to ease the policy rate a bit further this year – but the data will have to show that". This indicates that she may not be one of the 9 FOMC members at the median 3.6% dot seen in the latest SEP projections. Instead she may only see one further cut this year (there are two of 19 members in that camp).
MNI FED: Vice Chair Jefferson: Softening Labor Market May Need Support
Fed Vice Chair Jefferson gave a speech early Tuesday morning that suggested a monetary policy outlook in line with that of most of the rest of the Fed leadership, including Chair Powell. As such we would guess he is among the 9 FOMC participants who anticipate making a further 2 25bp rate cuts by year-end to a median 3.6%, the same outlook that we think is shared by the core of the FOMC.
NEWS
MNI US: CBO: 750k Set To Be Furloughed In Shutdown, Econ Impact Depends On Duration
The Congressional Budget Office releases a short report on the potential impact of a full government shutdown in response to a request by Senator Ernst, here. The analysis is based largely on the impact report published after the partial shutdown in Dec 2018-Jan 2019. The key findings are that around 750,000 federal employees could be furloughed (around the generally accepted consensus of 800,000), and that the economic impact - while dependent on the details - could see a short-term negative impact reverse when payments were restarted.
MNI SECURITY: Trump Gives Hamas 'Three Or Four Days' To Response To Gaza Peace Plan
US President Donald Trump has indicated to reporters ahead of his remarks to US military officials in Virginia that he will give Hamas "about three or four days" to respond to a US peace plan for Gaza that was endorsed by Israeli Prime Minister Benjamin Netanyahu at the White House yesterday. Trump said, when asked how long he is going to give Hamas to respond to his ceasefire proposal, "About three or four days. We'll see how it is. All of the Arab countries are signed up. The Muslim countries are all signed up. Israel is all signed up. We're just waiting for Hamas, and Hamas is either going to be doing it or not, and if it's not, it's going to be a very sad end."
US TSYS
US TSYS: Curves Twist Steeper Heading into Likely Gov Shutdown at Midnight
- US Govt likely to shutdown at midnight tonight - the first time since late Dec 2018 when the government shutterd for 35 consecutive days. Senate majority whip Barrasso: "SENATE TO VOTE THIS WEEKEND ON REOPENING GOVERNMENT", Bbg.
- The BLS plans to postpone key economic releases in the event of a shutdown: "BLS will suspend all operations. Economic data that are scheduled to be released during the lapse will not be released. All active data collection activities for BLS surveys will cease. The BLS website will not be updated with new content or restored in the event of a technical failure during a lapse." LINK
- That said, most of Wednesday's scheduled data should be released as most are generated by non-govt firms, Construction Spending the lone exception tomorrow as the U.S. Census Bureau the source. Updates to follow if/when an announcement of a closing is made.
- Treasuries trading mixed after the bell, curves twist steeper (2s10s +2.591 at 54.207) as Bonds led the decline in the second half, Tsy Dec'25 10Y contract (TYZ5) currently trades at 112-15.5 (-1) on decent cumulative volumes of 1.68M. 10Y yield at 4.1483% (+.0096).
- A short-term bear cycle in Treasury futures remains in play. Last Thursday’s sell-off resulted in a print below the 50-day EMA, currently 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. On the upside, initial firm resistance to watch is 113-00, the Sep 24 high.
- Projected rate cut pricing gaining vs. late Monday levels (*): Oct'25 at -24.2bp (-22.7bp), Dec'25 at -44.2bp (-41.3bp), Jan'26 at -53.7bp (-50.7bp), Mar'26 at -64.7bp (-60.9bp).
OVERNIGHT DATA
MNI US DATA: Conference Board Labor Differential Hits Fresh Cycle Low
Standing out in a broadly weak Conference Board consumer confidence survey for September, the "labor differential" (jobs "plentiful" minus "hard to get") fell to 7.8 from 11.1 in August (rev from 9.7). That's the weakest since 2017 when excluding the 2020-21 pandemic period. While the percentage of those seeing jobs as "hard to get" was steady at 19.1%, the proportion seeing jobs as "plentiful" (26.9%) was the lowest since February 2021, but excluding the April 2020-Feb 2021 pandemic period, it was the lowest since February 2017.
MNI US DATA: JOLTS Reaffirms "Low Hiring, Low Firing" Labor Market Narrative
Job openings were relatively steady in August in the latest JOLTS report, totaling 7,227k (SA, vs 7,200k consensus) with July's slightly upwardly revised to 7,208k (from 7,181k). But secondary metrics suggested further loosening in labor market conditions, and while there was no marked deterioration in the month, overall the report bolstered the prevailing "low hiring, low firing" narrative.
MNI US DATA: Chicago Business Barometer™ - Dipped to 40.6 in September
The Chicago Business Barometer™, produced with MNI, fell 0.9 points to 40.6 in September. The index now sits 0.2 points above the June reading, having now almost fully unwound July’s 6.7 point rise. The index has now been below 50 for twenty-two consecutive months. New Orders dropped 7.0 points, leaving the index just above the year-to-date low seen in May.
MNI US DATA: Redbook Report Continues To Point To Solid Retail Sales Into End-Sept
Same-store retail sales remained robust through late September, per the Johnson Redbook Retail Sales Index which rose 5.9% Y/Y in the week to Sept 27. This was up from the 5.7% rise the prior week and brings month-to-date sales growth to 6.1% Y/Y (only slightly below retailers' targeted 6.3% gain).
MARKET SNAPSHOT
Key market levels of markets in late NY trade:
DJIA up 83.91 points (0.18%) at 46399.72
S&P E-Mini Future up 27.75 points (0.41%) at 6740.75
Nasdaq up 73.2 points (0.3%) at 22663.61
US 10-Yr yield is up 0.8 bps at 4.1464%
US Dec 10-Yr futures are down 0.5/32 at 112-16
EURUSD up 0.0014 (0.12%) at 1.1741
USDJPY down 0.73 (-0.49%) at 147.87
WTI Crude Oil (front-month) down $0.93 (-1.47%) at $62.51
Gold is up $26.58 (0.69%) at $3859.73
European bourses closing levels:
EuroStoxx 50 up 23.11 points (0.42%) at 5529.96
FTSE 100 up 50.59 points (0.54%) at 9350.43
German DAX up 135.66 points (0.57%) at 23880.72
French CAC 40 up 15.07 points (0.19%) at 7895.94
US TREASURY FUTURES CLOSE
3M10Y +3.033, 20.307 (L: 13.722 / H: 21.147)
2Y10Y +2.591, 54.207 (L: 50.67 / H: 54.81)
2Y30Y +4.067, 112.179 (L: 107.741 / H: 113.176)
5Y30Y +2.438, 99.248 (L: 96.832 / H: 100.212)
Current futures levels:
Dec 2-Yr futures up 1.375/32 at 104-6 (L: 104-05 / H: 104-07.25)
Dec 5-Yr futures up 0.75/32 at 109-5.75 (L: 109-04.75 / H: 109-11)
Dec 10-Yr futures down 0.5/32 at 112-16 (L: 112-14 / H: 112-25.5)
Dec 30-Yr futures down 7/32 at 116-20 (L: 116-16 / H: 117-07)
Dec Ultra futures down 17/32 at 120-3 (L: 119-30 / H: 121-03)
MNI US 10YR FUTURE TECHS: (Z5) Corrective Cycle 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: 112-23/113-00 20-day EMA / High Sep 24
- PRICE: 112-18+ @ 1202ET Sep 30
- 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
A short-term bear cycle in Treasury futures remains in play. Last Thursday’s sell-off resulted in a print below the 50-day EMA, currently 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. On the upside, initial firm resistance to watch is 113-00, the Sep 24 high.
SOFR FUTURES CLOSE
Current White pack (Dec 25-Sep 26):
Dec 25 +0.025 at 96.310
Mar 26 +0.030 at 96.505
Jun 26 +0.025 at 96.710
Sep 26 +0.030 at 96.850
Red Pack (Dec 26-Sep 27) +0.025 to +0.030
Green Pack (Dec 27-Sep 28) +0.015 to +0.025
Blue Pack (Dec 28-Sep 29) steady to +0.010
Gold Pack (Dec 29-Sep 30) -0.01 to steady
REFERENCE RATES (PRIOR SESSION)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.13% (-0.03), volume: $2.893T
- Broad General Collateral Rate (BGCR): 4.12% (-0.02), volume: $1.146T
- Tri-Party General Collateral Rate (TCR): 4.12% (-0.02), volume: $1.110T
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.09% (+0.00), volume: $89B
- Daily Overnight Bank Funding Rate: 4.09% (+0.00), volume: $174B
FED Reverse Repo Operation
RRP usage slips to $49.071B into month end with 28 counterparties this afternoon from $56.220B Monday. 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 PIPELINE: Corporate Bond Roundup: $11.25B Kuwait 3Pt Launched
- Date $MM Issuer (Priced *, Launch #)
- 09/30 $11.25B #Kuwait $3.25B 3Y +40, $3B 5Y +40, $5B 10Y +50
- 09/30 $1.5B *Rentenbank 5Y SOFR+37
- 09/30 $1.5B #Egypt $700M 3Y 6.375%, $800M 7Y Sukuk 7.95%
- 09/30 $1.25B Carnival Corp 3.5NC
- 09/30 $1B ADT 8NC guidance TBA
- 09/30 $700M #Centerpoint Energy 30.5NC5.25 5.95%
- 09/30 $600M #Turk Telekom 7Y 6.95%
- 09/30 $Benchmark Kuwait 3Y, 5Y, 10Y
- 09/30 $Benchmark Guardian Life 5Y +60
- 09/30 $Benchmark Pacific Gas & Electric 3Y, 7Y & 30Y
- 09/30 $1.4B WBI Operating 5NC2 6.25%, 8NC3 6.5%
- 09/30 $Benchmark Thermo Fisher +5Y +70a, 7Y +80a, 10Y +90a, 12Y +100a
- 09/30 $Benchmark Bahrain +8Y Sukuk, 12Y investor calls
MNI BONDS: EGBs-GILTS CASH CLOSE: Modest Dip In Yields To Close The Month
European yields mostly fell Tuesday, to close September on a slightly positive note.
- Core FI saw an early bid with French flash September inflation softer-than-expected, and a US federal government shutdown on Oct 1 looming. German CPI was in line, but HICP was slightly above consensus (as was Italy's).
- On net ahead Wednesday's flash Eurozone HICP print, we track the Y/Y at 2.2-2.3%Y/Y, broadly in line with consensus coming into the week. In other data, there was little reaction to modest revisions to UK Q2 GDP.
- BOE's Breeden spoke toward the cash close, calling current policy restrictive and sounding supportive of easing policy but did not specify a timeline. UK STIR futures were little changed.
- The German curve twist steepened slightly, with UK yields modestly lower across the curve. Periphery/semi-core EGB spreads tightened a bit, helped by Spain lowering its net issuance target for the year by E5bln.
- The possible US government shutdown will bear attention after the cash close. Apart from the Eurozone inflation data, Wednesday's schedule includes final PMIs and appearances by ECB's Kazimir, Kocher, Simkus and Guindos, as well as BOE's Mann.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 0.4bps at 2.019%, 5-Yr is down 0.3bps at 2.309%, 10-Yr is up 0.4bps at 2.711%, and 30-Yr is up 0.8bps at 3.28%.
- UK: The 2-Yr yield is down 0.3bps at 3.985%, 5-Yr is down 0.9bps at 4.136%, 10-Yr is down 0.1bps at 4.699%, and 30-Yr is down 0.3bps at 5.506%.
- Italian BTP spread down 0.3bps at 82.3bps / French OAT down 0.5bps at 82.2bps
MNI FOREX: AUD and JPY Lead G10 Advance as Dollar Dips Further
- Bearish dollar momentum continues to be a function of concerns related to the potential US government shutdown, which President Trump has said will probably occur. Haven demand for the Japanese yen has prompted USDJPY to fall another 0.5%, while a moderate hawkish tilt to the September RBA meeting promotes AUD to the top of the G10 leaderboard.
- USDJPY traded to a low of 147.66, with spot narrowing the gap to initial support which lies at 147.59, the 50-day EMA. Stronger pivot support has been defined at 145.49, the Sep 17 and post-Fed low.
- The broad dollar weakness has boosted AUDUSD back above the 0.66 handle on Tuesday. RBA Governor Michele Bullock declined to say whether the central bank retains an easing bias after the Board held the cash rate at 3.6%, stressing that future moves will depend on incoming data, with the current level still viewed as slightly restrictive.
- Overall, the AUDUSD uptrend remains intact and recent weakness appears to have been a correction. Initial firm resistance to watch at 0.6628 has been met today and will be closely monitored ahead of the APAC crossover. A stronger reversal higher would refocus attention on 0.6707, the Sep 17 and post-Fed high.
- Price action prompted another impressive surge for AUDNZD, rising to a fresh cycle high above 1.14, continuing to narrow the gap with the 2022 highs located at 1.1491.
- US data did little to spur volatility in currency markets. Job openings were relatively steady in August in the latest JOLTS report, but secondary metrics suggested further loosening in labor market conditions. Consumer confidence was weaker-than-expected.
- On Wednesday, the first focus will be on Japan’s Q3 Tankan Survey. Eurozone inflation data, US ADP employment and the ISM manufacturing PMI release are all scheduled.
WEDNESDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 01/10/2025 | 0630/0830 | ** |  CH | Retail Sales |
| 01/10/2025 | 0715/0915 | ** |  ES | S&P Global Manufacturing PMI (f) |
| 01/10/2025 | 0730/0930 |  EU | ECB Elderson Keynote at ECB Climate Conference | |
| 01/10/2025 | 0745/0945 | ** |  IT | S&P Global Manufacturing PMI (f) |
| 01/10/2025 | 0750/0950 | ** |  FR | S&P Global Manufacturing PMI (f) |
| 01/10/2025 | 0755/0955 | ** |  DE | S&P Global Manufacturing PMI (f) |
| 01/10/2025 | 0755/0955 | EU | ECB de Guindos Interview & Panel at Politico Summit | |
| 01/10/2025 | 0800/1000 | ** | EU | S&P Global Manufacturing PMI (f) |
| 01/10/2025 | 0830/0930 | ** |  GB | S&P Global Manufacturing PMI (Final) |
| 01/10/2025 | 0900/1100 | *** | EU | EZ HICP Flash |
| 01/10/2025 | 0900/1000 | * | GB | Index Linked Gilt Outright Auction Result |
| 01/10/2025 | 0955/1055 | GB | BOE Mann In Bloomberg Interview | |
| 01/10/2025 | 1100/0700 | ** |  US | MBA Weekly Applications Index |
| 01/10/2025 | - | *** | US | Domestic-Made Vehicle Sales |
| 01/10/2025 | 1215/0815 | *** | US | ADP Employment Report |
| 01/10/2025 | 1345/0945 | *** | US | S&P Global Manufacturing Index (final) |
| 01/10/2025 | 1400/1000 | *** | US | ISM Manufacturing Index |
| 01/10/2025 | 1400/1000 | * | US | Construction Spending |
| 01/10/2025 | 1400/1000 | * | US | Construction Spending |
| 01/10/2025 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 01/10/2025 | 1430/1030 | ** | US | US DOE Petroleum Supply |
| 01/10/2025 | 1730/1330 |  CA | BOC Summary of Deliberations | |
| 01/10/2025 | 1805/1405 | CA | BOC Sr Deputy Rogers speaks at competition panel | |
| 02/10/2025 | 0130/1130 | ** |  AU | Trade Balance |
