MNI ASIA OPEN: Fed Hammack Cautions Cuts Prolong Inflation

EXECUTIVE SUMMARY

• MNI Fed's Hammack - Cuts Could Prolong Inflation Fight
• MNI US DATA: Higher U/E Rate vs Payrolls Beat
• MNI US DATA: Existing Home Sales Stabilizing At Low Levels
• MNI US DATA: Continuing Claims Pick Up As Federal Jobless Claims Jump
• MNI US DATA: Genuine Improvement On Payrolls Side Of September Jobs Report
• MNI US DATA: Unemployment Rise Puts FOMC Median Q4 Forecast In Sight

US

MNI Fed's Hammack - Cuts Could Prolong Inflation Fight

Federal Reserve Bank of Cleveland President Beth Hammack on Thursday said lowering interest rates risks prolonging elevated inflation, and could come at the cost of heightened financial stability risks down the road. "Inflation has been running above the Fed’s 2% objective for four and a half years. Lowering interest rates to support the labor market risks prolonging this period of elevated inflation, and it could also encourage risk-taking in financial markets," she said in prepared remarks for a financial stability conference. Financial conditions are quite accommodative today, reflecting recent gains in equity prices and easy credit conditions, she said.

NEWS

MNI SECURITY: Zelenskyy Receives 'Draft Peace Plan' From US

Reuters reports that Ukrainian President Volodymyr Zelenskyy’s office has received the “draft peace plan” for Ukraine from the United States. Reuters notes that the presidential office said Zelenskyy, “expects to discuss with [US President Donald] Trump diplomatic opportunities in the coming days.” Zelenskyy added that the US and Ukraine will “work on peace plan provisions after Ukraine outlined its fundamental principles,” suggesting that Ukraine will submit a series of counterproposals.  

US TSYS

MNI US TSYS: Near Highs/Wide Ranges on Heavy Volumes, Unemployment Driver

• Treasuries look to finish near midday highs after a volatile morning and rush of economic data, heavy volumes (TYZ5 over 3.6M) as quarterly futures rolls accelerated - 10s over 25% complete. Currently, TYZ5 +8.5 at 112-30.5 (112-11.5 low, 113-01.5 high), still inside technicals: resistance held at the 113-02 level in Treasuries, an area of congestion since Nov 5, remains intact. A clear breach of this hurdle would be a bullish signal and suggest scope for a climb towards 113-18+, the Oct 28 high. This would also cancel a short-term bearish theme.
• Fast two-way trade as Tsys alternately extended lows - then highs after weekly claims dipped/continuing claims gained, NFP rises/prior down revised. Risk-on tone gaining momentum/rate hike pricing bounced post data - only to gradually retreat into the close.
• September's Household Survey broadly added to evidence that the labor market is loosening. The 4.44% unemployment rate is the highest since October 2021 (4.32% prior) and was above the consensus expectation of 4.3%. With the number of unemployed rising 219k, it's now up 588k in the last 3 months.
• The 220k (SA) initial claims in the week of Nov 15 were the joint-lowest (seen also in the Oct 11 and Oct 25 weeks) since Sep 20, and a fall from 228k prior. This was also below the 227k consensus and suggests relative stability in this November payrolls reference week.
• Mixed initial response for the USD, but more settled reaction sees EURUSD rally well off a new intraday low, trimming the day's losses to trade broadly unchanged. USDJPY managed to briefly print a new cycle high at 157.86 before reversing hard. The dollar’s resilience remains most notable against the yen, with USDJPY looking to post its highest daily close since January, currently trading at 157.60.

OVERNIGHT DATA

MNI US DATA: Unemployment Rise Puts FOMC Median Q4 Forecast In Sight

September's Household Survey broadly added to evidence that the labor market is loosening. The 4.44% unemployment rate is the highest since October 2021 (4.32% prior) and was above the consensus expectation of 4.3%. With the number of unemployed rising 219k, it's now up 588k in the last 3 months. The unemployment rate has now risen by 0.32pp in since June, and suddenly the FOMC's median forecast made in September for a 4.5% unemployment rate in Q4 is in sight.

MNI US DATA: Genuine Improvement On Payrolls Side Of September Jobs Report

Separate to the weaker household survey with its push higher in the u/e rate, the payrolls data in the establishment survey were stronger than expected in September. Trend growth rates are at the lower end of the range of breakeven estimates rather than pushing more materially below. Further, September alone saw the first net job creation for private industries outside of health & social assistance since April, albeit after some heavy cumulative declines since then. 

• September’s report put nonfarm payrolls growth at a stronger than expected 119k in September (cons 51k), following a downward revised August to -4k (22k initially) after 72k in July (from 79k) and -13k in June. Private payrolls were weaker on net though, increasing 97k (cons 65k) in a surprise that was offset by a two-month revision of -41k (spread over both August and July).

MNI US DATA: Higher U/E Rate vs Payrolls Beat

A sizeable beat for NFP growth in September (119k vs cons 51k) with a smaller two-month revision of -33k, mostly in Aug. It was supported by the government but private still saw a beat with 97k vs 65k expected, albeit with a slightly larger 2-mth revision of -41k. However, as the above unrounded u/e rate shows, it was a high figure at 4.44% (cons 4.3).

MNI US DATA: Continuing Claims Pick Up As Federal Jobless Claims Jump

The latest weekly jobless claims data - and the first official Department of Labor release since the federal government shutdown started on Oct 1 - showed a continuation of the "low-firing" labor market trend in the initial column, though a slightly concerning "low-hiring" dynamic evident in continuing claims. 

• The 220k (SA) initial claims in the week of Nov 15 were the joint-lowest (seen also in the Oct 11 and Oct 25 weeks) since Sep 20, and a fall from 228k prior. This was also below the 227k consensus and suggests relative stability in this November payrolls reference week. The 224k 4-week average was the lowest in 5 weeks and this metric has been in a tight range (224-227k) since the end of September.

MNI US DATA: Existing Home Sales Stabilizing At Low Levels

Existing home sales remained relatively stable in October per NAR data, showing a modest improvement to 4.10M (on a seasonally-adjusted annualized basis - was 4.05M prior, 4.08M consensus). The bigger picture of course is of fairly subdued activity, with sales settling around 75-80% of pre-2020 levels and 1/3 lower than the pandemic peak. 

MNI US DATA: Much Higher Response Rate For September's ‘First’ NFP Reading

The response rate for this first release of payrolls data (establishment survey) jumped to 80.2% in September from 56.7% in August and a prior twelve-month average of 62%. This should give the Fed more confidence in the September uptick in jobs growth as it reduces scope for revisions come the next update, which we know won’t come until Dec 16 when the October establishment survey readings are bundled in with the regular November readings.

MNI CANADA DATA: CFIB Survey Points To Stabilizing Inflation, Activity In Q4

The Canadian Federation of Independent Business (CFIB) 12-month Business Barometer jumped to 55.5 in November from 46.7 prior. This was an 11-month high, and marked the 3rd 50+ reading in the last 5 months, suggesting some solidity in what is a very volatile indicator gauging small businesses' business outlooks. Overall the gains are roughly consistent with Q/Q real GDP expansion. The short-term optimism index (based on a 3-month outlook) rose by 1.2 points but is still only at 46.0.

MNI CANADA DATA: Oct Industrial Prices +6% YOY; Precious Metals Up On Global Tension

StatsCan's industrial price index +6% YOY, 13th straight increase. Gain driven by gold, silver, and platinum group metals, and their alloys, +54%. IPPI +1.5% MOM, fifth straight increase; ex-energy & petroleum +1.9% MOM.

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 386.33 points (-0.84%) at 45752.44
S&P E-Mini Future down 104.5 points (-1.57%) at 6555.5
Nasdaq down 486.2 points (-2.2%) at 22078.05
US 10-Yr yield is down 4.1 bps at 4.0961%
US Dec 10-Yr futures are up 8.5/32 at 112-30.5
EURUSD down 0.0012 (-0.1%) at 1.1526
USDJPY up 0.41 (0.26%) at 157.57
WTI Crude Oil (front-month) down $0.3 (-0.5%) at $59.14
Gold is down $2.71 (-0.07%) at $4075.08

European bourses closing levels:
EuroStoxx 50 up 27.87 points (0.5%) at 5569.92
FTSE 100 up 20.24 points (0.21%) at 9527.65
German DAX up 115.93 points (0.5%) at 23278.85
French CAC 40 up 27.3 points (0.34%) at 7981.07

US TREASURY FUTURES CLOSE

Curve update: 3M10Y -2.988, 22.44 (L: 21.282 / H: 27.344) 
2Y10Y +0.131, 54.441 (L: 52.62 / H: 56.372)
2Y30Y +1.605, 117.821 (L: 113.073 / H: 119.799)
5Y30Y +2.124, 106.689 (L: 101.188 / H: 107.486)
Current futures levels:
Dec 2-Yr futures up 2.75/32 at 104-6.25 (L: 104-00.75 / H: 104-07.5)
Dec 5-Yr futures up 6.5/32 at 109-13.75 (L: 109-00.25 / H: 109-15.75)
Dec 10-Yr futures up 8.5/32 at 112-30.5 (L: 112-11.5 / H: 113-01.5)
Dec 30-Yr futures up 13/32 at 117-0 (L: 116-06 / H: 117-05)
Dec Ultra futures up 13/32 at 120-6 (L: 119-10 / H: 120-16)

MNI US 10YR FUTURE TECHS: (Z5) Resistance Intact For Now

• RES 4: 114-02   High Oct 17 and the bull trigger
• RES 3: 113-29   High Oct 22
• RES 2: 113-18+ High Oct 28
• RES 1: 113-04+ High Nov 14
• PRICE:‌‌ 112-19+ @ 11:11 GMT Nov 20
• SUP 1: 112-11/07+ 100-dma / Trendline drawn from the May 22 low
• SUP 2: 112-06   Low Sep 25 and a key support
• SUP 3: 111-31   Low Sep 2
• SUP 4: 111-23   50.0% retracement of the May 22 - Oct 17 bull leg 

Resistance at the 113-02 level in Treasuries, an area of congestion since Nov 5, remains intact. A clear breach of this hurdle would be a bullish signal and suggest scope for a climb towards 113-18+, the Oct 28 high. This would also cancel a short-term bearish theme. For bears, attention is on 112-06, the Sep 25 low. Trendline support, drawn from the May 22 low, lies at 112-07+. A breach of 112-07+/06, would highlight a stronger reversal.

SOFR FUTURES CLOSE

Current White pack (Dec 25-Sep 26):
Dec 25 +0.013 at 96.178
Mar 26 +0.040 at 96.425
Jun 26 +0.055 at 96.690
Sep 26 +0.055 at 96.865
Red Pack (Dec 26-Sep 27) +0.055 to +0.055
Green Pack (Dec 27-Sep 28) +0.045 to +0.050
Blue Pack (Dec 28-Sep 29) +0.035 to +0.040
Gold Pack (Dec 29-Sep 30) +0.035 to +0.040

REFERENCE RATES
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US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 3.91% (-0.03), volume: $3.179T
• Broad General Collateral Rate (BGCR): 3.87% (-0.03), volume: $1.272T
• Tri-Party General Collateral Rate (TCR): 3.87% (-0.03), volume: $1.244T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 3.88% (+0.00), volume: $76B
• Daily Overnight Bank Funding Rate: 3.88% (+0.00), volume: $166B

FED Reverse Repo Operation

RRP usage up to $6.520B with 7 counterparties this afternoon. Compares to Tuesday's $0.905B - lowest level since mid-March 2021; this years highest excess liquidity measure: $460.731B on June 30.

MNI PIPELINE: Corporate Bond Update: $1B CF Industries 10Y Launched

• Date $MM Issuer (Priced *, Launch #)
• 11/20 $1B #CF Industries 10Y +120
• Expected to launch tomorrow:
• 11/21 $1B Sabre Corp 3.5NC1.5

MNI BONDS: EGBs-GILTS CASH CLOSE: Gilts Regain Some Ground Amid EGB Weakness

European yields traded mixed Thursday, with Gilts outperforming Bunds for the first time in 3 sessions.

• EGBs and Gilts were on the back foot in early trade as risk appetite picked up alongside equities (thanks largely to Nvidia's solid earnings report overnight). 10Y Bund yields touched fresh multi-year highs in a broader steepening move.
• The session's worst levels were seen immediately after the release of the postponed US employment report for September, which showed stronger job gains than anticipated.
• However yields would descend from then on, in part because of a higher-than-expected US unemployment rate in the report, as well as a pullback in equities that extended through the European bond cash close.
• The German curve bear steepened modestly on the day, with the UK's bull flattening. Periphery spreads failed to solidify early narrowing and closed modestly wider.
• Friday's schedule is highlighted by flash November PMIs. The docket also includes a public sector finances update from the UK alongside retail sales data and an appearance by BOE's Pill; in the Eurozone we get French confidence and Q3 negotiated wages data, with multiple ECB speakers including Lagarde making appearances.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.1bps at 2.019%, 5-Yr is up 0.1bps at 2.295%, 10-Yr is up 0.5bps at 2.716%, and 30-Yr is up 1.7bps at 3.349%.
• UK: The 2-Yr yield is down 1.3bps at 3.793%, 5-Yr is down 1.1bps at 3.99%, 10-Yr is down 1.6bps at 4.586%, and 30-Yr is down 2.5bps at 5.423%.
• Italian BTP spread up 1.5bps at 75.7bps / French OAT up 0.7bps at 75.7bps 

MNI FOREX: Sharp Reversal for AUDJPY as Equities Reverse Initial Optimism

• The first half of the session for currencies was characterised by the buoyant risk sentiment in the aftermath of the Nvidia earning report late Wednesday. Dynamics provided a positive backdrop for Cross/JPY to substantially extend recent strengthening trends. Equity sentiment attempted to extend following the delayed September payrolls report, however, sharp reversals then ensued.
• The roughly 7% turnaround for Nvidia dragged the major US indices into negative territory, and in tandem, the likes of AUDJPY and NZDJPY have sharply reversed course. For AUDJPY specifically, spot briefly pierced the November 2024 high, placing the cross at its highest level since July 2024. Amid the turnaround for stocks, AUDJPY has reversed 1.15% to now trade 0.45% lower on the session.
• Moves for the broader dollar index have been extremely contained, with Fed pricing for the December rate decision holding marginally in favour of a policy hold, and several banks adjusting their calls for that meeting despite the latest US unemployment rate rising to 4.44%.
• DXY highs of 100.36 matched the recovery highs from earlier in the month, keeping short-term bullish conditions intact for the greenback.
• The dollar’s resilience remains most notable against the yen, with USDJPY looking to post its highest daily close since January, currently trading at 157.45. Highs for the session fell just short of the 158.00 handle, and it is worth noting that the pair has entered overbought territory. A pullback would be considered corrective. Given the consistent verbal jawboning in recent weeks, we would expect further rhetoric from MOF officials given the sharp extension lower for the JPY this week.
• Japan National CPI, UK retail sales and Eurozone flash PMIs headline Friday’s data calendar.

FRIDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
21/11/2025	0700/0700	***	GB	Public Sector Finances
21/11/2025	0700/0700	***	GB	Retail Sales
21/11/2025	0745/0845	**	FR	Manufacturing Sentiment
21/11/2025	0800/0900		EU	ECB de Guindos Remarks/Q&A at Foro Gran Via
21/11/2025	0815/0915	**	FR	S&P Global Services PMI (p)
21/11/2025	0815/0915	**	FR	S&P Global Manufacturing PMI (p)
21/11/2025	0830/0930	**	DE	S&P Global Services PMI (p)
21/11/2025	0830/0930	**	DE	S&P Global Manufacturing PMI (p)
21/11/2025	0830/0930		EU	ECB Lagarde Speech at European Banking Congress
21/11/2025	0900/1000	**	EU	S&P Global Services PMI (p)
21/11/2025	0900/1000	**	EU	S&P Global Manufacturing PMI (p)
21/11/2025	0900/1000	**	EU	S&P Global Composite PMI (p)
21/11/2025	0930/0930	***	GB	S&P Global Manufacturing PMI flash
21/11/2025	0930/0930	***	GB	S&P Global Services PMI flash
21/11/2025	0930/0930	***	GB	S&P Global Composite PMI flash
21/11/2025	1000/1100		EU	Negotiated Wage Growth
21/11/2025	1130/1230		EU	ECB de Guindos Remarks/Q&A at Deusto Business School
21/11/2025	1230/0730		US	New York Fed's John Williams
21/11/2025	1330/0830	**	CA	Retail Trade
21/11/2025	1330/0830		US	Fed Governor Michael Barr
21/11/2025	1345/0845		US	Fed Vice Chair Philip Jefferson
21/11/2025	1400/0900		US	Dallas Fed's Lorie Logan
21/11/2025	1400/0900		US	Boston Fed's Susan Collins
21/11/2025	1445/0945	***	US	S&P Global Manufacturing Index (Flash)
21/11/2025	1445/0945	***	US	S&P Global Services Index (flash)
21/11/2025	1500/1000	***	US	U. Mich. Survey of Consumers
21/11/2025	1500/1000	**	US	University of Michigan Surveys of Consumers Inflation Expectation
21/11/2025	1540/1540		GB	BOE Pill in Panel at Swiss National Bank
21/11/2025	1800/1300	**	US	Baker Hughes Rig Count Overview - Weekly
21/11/2025	1800/1300	**	US	Baker Hughes Rig Count Overview - Weekly
21/11/2025	1800/1300	**	US	Baker Hughes Rig Count Overview - Weekly