MNI ASIA OPEN: Fed Keeps Rate-Cut Door Ajar

EXECUTIVE SUMMARY

• MNI FED: Boston's Collins: Policy "Modestly Restrictive"
• MNI: Fed May Be In Holding Pattern Quite Some Time - Hammack
• MNI FED: Entirely Appropriate To Maintain Modestly Restrictive Stance - Williams
• MNI US: Freedom Caucus Chair Harris Says He Will Vote No On Senate's OBBB
• MNI US DATA: Philly Fed Non-Mfg Improves As Regional Weakness Dialed Back

US

MNI FED: Entirely Appropriate To Maintain Modestly Restrictive Stance - Williams

NY Fed's Williams (permanent voter), typically towards the more dovish end of the FOMC, says maintaining the modestly restrictive policy stance is entirely appropriate in a keynote address titled "The Totality of the Data" (link). It’s a view that most on the FOMC appear to have with two notable exceptions in Gov Waller and VC Supervision Barr. 

MNI FED: Boston's Collins: Policy "Modestly Restrictive"

Not much from Boston Fed's Collins (2025 voter, leans dovish) on her current monetary policy views in a speech called “Observations on Housing and the Economy”. She calls the current policy stance "modestly restrictive" (previously she's called it "somewhat restrictive" so not much difference here) and notes higher rates have slowed new residential investment, contributing "the more moderate overall demand we are currently experiencing".

MNI: Fed May Be In Holding Pattern Quite Some Time - Hammack

U.S. interest rates may be kept steady at 4.25%-4.5% "for some time" if uncertainty over President Donald Trump's tariffs weakens the health of the labor market and keeps inflation above the Fed's 2% target, Federal Reserve Bank of Cleveland President Beth Hammack said Tuesday. 

NEWS

MNI US: Trump Piles Pressure On Senate To Pass OBBB This Week

President Donald Trump has issued a statement on Truth Social urging the Senate to stay in session as long as necessary to pass the 'One Big Beautiful' reconciliation bill. Trump said to Senators, "lock yourself in a room if you must, don’t go home, and GET THE DEAL DONE THIS WEEK. Work with the House so they can pick it up, and pass it, IMMEDIATELY. NO ONE GOES ON VACATION UNTIL IT’S DONE."

MNI US: Freedom Caucus Chair Harris Says He Will Vote No On Senate's OBBB

Rep Andy Harris (R-MD), the chair of the conservative House Freedom Caucus, has written in a post on X that he will vote down the Senate's version of the 'One Big Beautiful Bill' in its current state. As Rep Thomas Massie (R-KY) is expected to vote no on the package, a second 'no' from Harris would likely give House Speaker Mike Johnson (R-LA) only a one-vote cushion when the House receives the Senate bill.  

MNI MIDEAST: China FM-Supports Iran Efforts To "Achieve A Real Ceasefire"

(MNI) London - The Chinese Ministry of Foreign Affairs has released a statement following a call between Foreign Minsiter Wang Yi and his Iranian counterpart Abbas Araghchi. The Iranian minister "thanked China for its understanding and support for Iran's legitimate position, and was willing to maintain close communication with China, and expected China to play a greater role in easing the situation." Wang says that "China supports Iran's efforts to safeguard its sovereignty and security, and on this basis, achieve a real ceasefire, let the people resume normal life, and promote the cooling of the situation in the Middle East as soon as possible."

US TSYS

MNI US TSYS: Iran/Israel Ceasefire Holding, Fed Keeps Rate Cut Door Ajar

• US Treasuries look to finish at/near late Tuesday session highs - support twofold: risk sentiment improved as Israel/Iran hostilities appeared to de-escalate (ceasefire pledges watched closely after some morning confusion over timing).
• Secondary: Fed Chairman Powell's policy testimony to the House this morning - while maintaining patient stance regarding rate cuts, Chair Powell conceded he could see inflation not coming in "as strong as expected", however, "inflation is projected to have moved higher due to tariffs". Meanwhile, a "majority" feel it's appropriate to cut interest rates later this year.
• Projected rate cut pricing largely gaining vs. morning levels (*): Jul'25 at -4.7bp (-5.7bp), Sep'25 at -25.3bp (-24.2bp), Oct'25 at -41.2bp (-39.7bp), Dec'25 at -59.6bp (-56.6bp).
• On data, The Philly Fed non-manufacturing survey saw firms dial back particularly negative views on the regional economy to one closer to their own experiences. The Johnson Redbook retail sales index rose by 4.5% Y/Y in the week ending Jun 21, a slowdown from 5.2% the prior week and bringing month-to-date June sales gains to 4.8% Y/Y (vs a 5.7% gain targeted by retailers).
• Greenback weakness will likely have been bolstered by cleaner short-term positioning, weaker-than-expected US consumer confidence and Fed Chair Powell not ruling out the chance of an FOMC rate cut as soon as July.

OVERNIGHT DATA

MNI US DATA: Philly Fed Non-Mfg Improves As Regional Weakness Dialed Back

The Philly Fed non-manufacturing survey saw firms dial back particularly negative views on the regional economy to one closer to their own experiences. Some details were weak however, such as new recent lows for new orders along with the prices received index almost in balance. 

• The Philly Fed non-manufacturing index improved to -25.0 in June after two particularly weak readings of -41.9 in May and -42.7 in April (both the weakest since the series started in 2011 aside from two months at the depths of the pandemic). For context though, this is the highest since February and compares poorly with an average -8.0 in 2024, -10.4 in 2023 and +3.7 in 2022.  

MNI US DATA: Johnson Redbook Sales Continue To Point To Slowing Retail

The Johnson Redbook retail sales index rose by 4.5% Y/Y in the week ending Jun 21, a slowdown from 5.2% the prior week and bringing month-to-date June sales gains to 4.8% Y/Y (vs a 5.7% gain targeted by retailers).

• As it stands, June would be the slowest month for Redbook gains since January and well down from 6.7% in April, in line with the broad slowdown - but not sharp drop - in retail sales activity more broadly. That said, activity looks fairly consistent with where it has been for most of the last year prior to the (arguably tariff-front-running-related) jump in March/April which is now being reversed.

MNI CANADA DATA: Canada May CPI Steady +1.7%, Core Measures Slows To +3% From 3.1%

• Canada May CPI held steady +1.7% YOY in line with expectations as shelter prices slowed down led by rent in Ontario and gasoline prices posted a smaller decline, adding upward pressure to inflation.
• Core trim and median both eased but remains elevated at top end of BOC's target range, +3.0% in May vs prior +3.1%. StatsCan revised April core trim to +3.1% from +3.2%.

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA up 577.21 points (1.36%) at 43160.21
S&P E-Mini Future up 75.5 points (1.24%) at 6152.75
Nasdaq up 293.1 points (1.5%) at 19923.98
US 10-Yr yield is down 6.3 bps at 4.2847%
US Sep 10-Yr futures are up 7/32 at 111-21.5
EURUSD up 0.0042 (0.36%) at 1.162
USDJPY down 1.47 (-1.01%) at 144.68
WTI Crude Oil (front-month) down $3.75 (-5.47%) at $64.76
Gold is down $43.68 (-1.3%) at $3324.70

European bourses closing levels:
EuroStoxx 50 up 75.17 points (1.44%) at 5297.07
FTSE 100 up 0.95 points (0.01%) at 8758.99
German DAX up 372.57 points (1.6%) at 23641.58
French CAC 40 up 78.42 points (1.04%) at 7615.99

US TREASURY FUTURES CLOSE

3M10Y -7.94, -0.429 (L: -0.884 / H: 9.578)
2Y10Y -0.58, 47.437 (L: 47.163 / H: 51.322)
2Y30Y +0.771, 101.78 (L: 100.944 / H: 106.282)
5Y30Y +1.748, 97.777 (L: 96.096 / H: 100.091)
Current futures levels:
Sep 2-Yr futures up 1.25/32 at 103-29 (L: 103-24.875 / H: 103-29.25)
Sep 5-Yr futures up 4.25/32 at 108-23.5 (L: 108-13 / H: 108-24)
Sep 10-Yr futures up 7.5/32 at 111-22 (L: 111-05 / H: 111-22)
Sep 30-Yr futures up 13/32 at 114-24 (L: 113-18 / H: 114-26)
Sep Ultra futures up 17/32 at 118-2 (L: 116-12 / H: 118-07)

MNI US 10YR FUTURE TECHS: (U5) Breaches Resistance

• RES 4: 112-23   High May 1 and key resistance
• RES 3: 111-30   76.4% retracement of the May 1 - 22 downleg
• RES 2: 111-26+ 1.0% 10-dma envelope
• RES 1: 111-14+ Intraday high 
• PRICE:‌‌ 111-10 @ 11:29 BST Jun 24
• SUP 1: 110-21+ 50-day EMA        
• SUP 2: 110-10+/109-28 Low Jun 16 / Low Jun 6 / 11
• SUP 3: 109-12+ Low May 22 and the bear trigger
• SUP 4: 109-09+ Low Apr 11 and key support

Treasury futures traded higher Monday resulting in a print above resistance at 111-14+, the Jun 5 high and 61.8% of the May 1 - 22 downleg. The clear break of this hurdle highlights a stronger reversal and has opened 111-30, a Fibonacci retracement. Clearance of 111-30 would strengthen a bullish condition. Initial pivot support to watch lies at 110-21+, the 50-day EMA. A clear breach of this EMA would signal a reversal.

SOFR FUTURES CLOSE

Sep 25 steady00 at 95.950
Dec 25 +0.020 at 96.250
Mar 26 +0.030 at 96.495
Jun 26 +0.030 at 96.710
Red Pack (Sep 26-Jun 27) +0.035 to +0.035
Green Pack (Sep 27-Jun 28) +0.040 to +0.040
Blue Pack (Sep 28-Jun 29) +0.040 to +0.045
Gold Pack (Sep 29-Jun 30) +0.040 to +0.045

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

• Secured Overnight Financing Rate (SOFR): 4.29% (+0.00), volume: $2.740T
• Broad General Collateral Rate (BGCR): 4.27% (+0.00), volume: $1.081T
• Tri-Party General Collateral Rate (TCR): 4.27% (+0.00), volume: $1.055T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $115B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $293B

FED Reverse Repo Operation

RRP usage rises to $187.367B this afternoon from $165.319B yesterday, total number of counterparties at 34. Usage had fallen to $54.772B on Wednesday, April 16 -- lowest level since April 2021. Conversely, usage had surged to the highest level since December 31, 2024 on Monday, March 31: $399.167B.

MNI PIPELINE: Corporate Bond Update: Waiting for IFC, American National Group

At least $16.45B to price Tuesday

• Date $MM Issuer (Priced *, Launch #)
• 06/24 $2.5B #Kazakhstan $1.35B 7Y 5%, $1.15B 12Y 5.5%
• 06/24 $2.25B #Nomura $1B PerpNC5.5 7%, $750M 5Y +105, $500M 10Y +120
• 06/24 $2.2B #Imperial Brands $850M 3Y +85, $850M 10Y +140, $500M 30Y +158
• 06/24 $2B International Finance Corp (IFC) 5Y SOFR+41
• 06/24 $1.5B #Toyota $500M 2Y +38, $500M 5Y +60, $500M 10Y +77
• 06/24 $1.5B #Westpac $750M 5Y +50, $750M 5Y SOFR+82
• 06/24 $1.5B *Denmark 2Y +4
• 06/24 $1B *JBIC 3Y SOFR+44
• 06/24 $1B *CAF 3Y SOFR+69
• 06/24 $500M #China Development Bank 5Y SOFR+30
• 06/24 $500M #Ladder Capital 5Y +167
• 06/24 $Benchmark American National Group 10Y +175
  • Expected Wednesday:
  • 06/25 $Benchmark Swedish Export Cr 2Y SOFR+36a

MNI BONDS: EGBs-GILTS CASH CLOSE: German Long End Underperforms On Issuance Concerns

European FI traded mixed Tuesday, with Gilts gaining and easily outperforming Bunds, and periphery EGB spreads tightening.

• Germany's Q3 issuance plan was in line with expectations though the curve steepened on indications of possible 50Y issuance, helping pressure the broader FI space. But lower oil prices on the overnight US/Iran/Israel de-escalation helped subdue any short-end yield rise.
• Global core FI regained ground by middle of the European afternoon however, led by Treasuries as Fed Chair Powell was seen to be open to earlier rate cuts if data warranted, while US consumer confidence and labor market indications were weaker than expected.
• In European data, German IFO Business Climate/Expectations beat expectations. There were several central bank speakers, with BOE's Ramsden perceived dovishly, while ECB's Lane drawing headlines for seeing some caution on services disinflation (though nothing really new).
• The German curve bear steepened on the day, with the UK's leaning bull flatter (out to the 10-year segment).
• Periphery/semi-core EGB spreads tightened in a risk-on session, with BTPs outperforming.
• Wednesday sees a quieter central bank communications schedule, with BOE's Lombardelli the lone scheduled speaker, while in data we get French consumer confidence and Spanish GDP/PPI readings.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 1.3bps at 1.851%, 5-Yr is up 2.1bps at 2.131%, 10-Yr is up 3.6bps at 2.543%, and 30-Yr is up 6.5bps at 3.026%.
• UK: The 2-Yr yield is down 1.7bps at 3.872%, 5-Yr is down 1.7bps at 3.991%, 10-Yr is down 1.9bps at 4.473%, and 30-Yr is down 0.4bps at 5.208%.
• Italian BTP spread down 5.5bps at 91.9bps / Greek bond spread down 3.5bps at 73.9bps

MNI FOREX: Greenback Extends Weekly Reversal Lower, USD Index Eyes Cycle Lows

• The dollar remained under renewed pressure Tuesday, as firmer risk sentiment permeated through global markets following the announcement of a truce between Israel and Iran. This allowed the greenback to extend its reversal south that begun late Monday, with the dollar index within close proximity of cycle lows.
• Greenback weakness will likely have been bolstered by cleaner short-term positioning, weaker-than-expected US consumer confidence and Fed Chair Powell not ruling out the chance of an FOMC rate cut as soon as July. In remarks to Congress on Tuesday, Powell said “many paths are possible” when asked about the possibility of a July rate cut, explaining that lower inflation and weaker labour data could portend an earlier cut to interest rates.
• USDJPY (-0.86%) briefly extended the reversal from yesterday’s peak to over 350 pips and the swift move back below its 20-day EMA is a bearish development. With positioning a lot cleaner now following yesterday’s spike higher to 148.03, the risks may be tilted to a more protracted move south, targeting 144.34 (Jun 18 low) initially, before 142.80 Low Jun 13.
• In similar vein, the Swiss Franc continued to perform resiliently, prompting USDCHF (-0.94%) to match the April lows at 0.8040. A break of this bear trigger would confirm a resumption of the medium-term technical downtrend and open the 0.8000 handle, and 0.7927, the 1.50 projection of the May 1 - Sep 6 2024 - Jan 13 price swing.
• AUD and NZD are also performing well, but remain shy of their most recent highs against the greenback, which are located at 0.6552 and 0.6088. Dollar dynamics have allowed the likes of EURUSD and GBPUSD to rise through the overnight highs to their best levels of the cycle, and the next immediate targets for the move are 1.1696 and 1.3681 respectively.
• Australian CPI highlights the Wednesday data calendar, before US new home sales figures. Fed Chair Powell will testify in front of the Senate.

WEDNESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
25/06/2025	0600/1400	**	CN	MNI China Money Market Index (MMI)
25/06/2025	0645/0845	**	FR	Consumer Sentiment
25/06/2025	0700/0900	**	ES	PPI
25/06/2025	0700/0900	***	ES	GDP (f)
25/06/2025	0845/0945		GB	BOE Lombardelli At BOE MonPol Conference
25/06/2025	0900/1000	**	GB	Gilt Outright Auction Result
25/06/2025	0900/1000	**	GB	Gilt Outright Auction Result
25/06/2025	0900/1000		GB	BOE Pill On Panel At BOE MonPol Conference
25/06/2025	1100/0700	**	US	MBA Weekly Applications Index
25/06/2025	1230/1330		GB	BOE Lombardelli Chairs Riksbank's Breman Speech At BOE MonPol Conf
25/06/2025	1400/1000	***	US	New Home Sales
25/06/2025	1400/1000	***	US	New Home Sales
25/06/2025	1400/1000		US	Fed Chair Jay Powell
25/06/2025	1430/1030	**	US	DOE Weekly Crude Oil Stocks
25/06/2025	1530/1130	**	US	US Treasury Auction Result for 2 Year Floating Rate Note
25/06/2025	1700/1300	*	US	US Treasury Auction Result for 5 Year Note
25/06/2025	1800/1400		US	Federal Reserve Board Meeting