MNI ASIA OPEN: Fed on Labor Market, Focus Turns to July CPI

EXECUTIVE SUMMARY

• MNI FED: St Louis's Musalem Says Labor Market "Looks Good"
• MNI: Fed Gov Bowman Sees 3 Cuts In '25, Greater Labor Risks
• MNI US DATA: Atlanta Fed Wage Tracker At Recent Lows But Still At 4% Y/Y
• MNI CANADA DATA: Labour Report Highlights Weakening Trends In Youth Employment
• MNI US OUTLOOK/OPINION: Early Core CPI Estimates See 0.32% M/M For July

US

MNI FED: St Louis's Musalem Says Labor Market "Looks Good"

St Louis Fed Pres Musalem (2025 FOMC voter, hawk) says in a Q&A that he supported the July decision to hold rates as the FOMC is missing on its inflation target but not its employment target. He says that looking forward, they may miss on both sides of the mandate - but doesn't sound too concerned about the labor market (noteworthy given the weak July payrolls report) albeit he sees risks to the downside. And he eyes potential upside tariff-related risks to inflation.

MNI: Fed Gov Bowman Sees 3 Cuts In '25, Greater Labor Risks

Federal Reserve Governor Miki Bowman on Saturday urged the FOMC to begin easing monetary policy to head off further weakening in the labor market, saying she's penciled in three cuts for the rest of the year. "As I recognize that economic conditions are shifting, I believe that beginning to move our policy rate at a gradual pace toward its neutral level will help maintain the labor market near full employment and ensure smooth progress toward achieving our dual mandate," she said in remarks prepared for a Kansas Bankers Association meeting in Colorado Springs, Colo.

NEWS

MNI US: WSJ: Trump Admin Preparing To Sell Stock In Fannie/Freddie Later This Year

(Wall Street Journal) -- "The Trump administration is preparing to sell stock in mortgage giants Fannie Mae and Freddie Mac in an offering it believes could raise around $30 billion and kick off later this year, according to people familiar with the matter."

MNI TARIFFS: Mexico's Sheinbaum Downplays Trump's Military Directive Against Cartels

Mexican President Claudia Sheinbaum downplayed reports that President Donald Trump authorised military action against Latin American cartels, stating the order has "nothing to do with US military participating on Mexican territory.” Sheinbaum said, “There is no risk of US invading our territory,” per Reuters. NYT reported earlier Trump “secretly signed a directive to the Pentagon to begin using military force against certain Latin American drug cartels that his administration has deemed terrorist organizations,”

MNI SECURITY: Zelenskyy Supports US In "Constuctive Steps" Towards Ceasefire

Ukrainian President Volodymr Zelenskyy writes on X, following a call with Czech Prime Minister Petr Fiala: “The United States is determined to achieve a ceasefire, and we must jointly support all constructive steps. A dignified, reliable, and lasting peace can only be the result of our joint efforts.”

MNI JAPAN: Ishiba Maintains Intention To Remain PM As LDP Critics Threaten Recall

The governing Liberal Democratic Party (LDP) has concluded a two-hour meeting of lawmakers from both houses of the National Diet. The formal reason for the assembly was to assess the fallout from the 20 July House of Councillors election, in which the LDP-Komeito governing coalition lost its majority in the upper chamber. However, the meeting was also a chance for LDP lawmakers to voice their displeasure with PM Shigeru Ishiba, whose critics blame for the party's poor performance.

US TSYS

MNI US TSYS: Extending Late Lows, Yields Surpass Midweek Kneejerk High

• Treasuries look to finish weaker Friday - near late week lows while yields climb past Wednesday's knee jerk high of 4.2789% to 4.2868%. Futures appeared to follow German Bunds lead lower in the first half.
• Tsy Sep'25 10Y futures trade -9.5 at 111-25.5 after the bell - first technical support lies at 110-19+, the Jul 24 low, key support is 110-08+, the Jul 14 and 16 low.
• Curves mixed, short end steeper (2s10s +1.046 at 52.652 while projected rate cuts consolidated slightly from morning levels(*): Dec'25 at -58.3bp (-59.4bp).
• No data, but St Louis Fed Pres Musalem (2025 FOMC voter, hawk) said in a Q&A that he supported the July decision to hold rates as the FOMC is missing on its inflation target but not its employment target.
• The greenback rose against all others on Friday - gaining late (BBDXY +1.16 at 1204.82) after The Wall Street Journal reported that ex-St Louis Fed President James Bullard and ex-George W Bush adviser Marc Sumerlin have been added to the list of possible Fed Chair nominees (previously named Waller, Hassett, and Warsh also on the list).
• Slow start to next week's calendar, focus on Tuesday's CPI inflation data for July. Core CPI meanwhile is seen at 0.32% M/M (cons 0.3).

OVERNIGHT DATA

MNI US OUTLOOK/OPINION: Early Core CPI Estimates See 0.32% M/M For July

Next week sees the CPI report for July released on Tuesday at the usual 0830ET. For an early look at unrounded analyst estimates, we see a median of the below nine analysts looking for headline CPI at 0.24% M/M in what could test Bloomberg consensus of 0.2.

• Core CPI meanwhile is seen at 0.32% M/M (cons 0.3) with a current range of 0.27-0.35% M/M after the 0.23% M/M seen in June. It would be the strongest M/M since January.
• Particularly early core PCE tracking is currently between 0.29-0.33% from these analysts, an acceleration from 0.26% M/M in June. It would be the strongest M/M since February. 

MNI US DATA: Atlanta Fed Wage Tracker At Recent Lows But Still At 4% Y/Y

• Released yesterday, the Atlanta Fed wage tracker ticked down a tenth for a second month running to 4.1% Y/Y in July for its lowest since Jan 2025 and before that late 2021. For comparison, this series averaged 3.7% in 2019 when the unemployment rate averaged 3.7% vs the 4.25% u/e rate most recently in July.

MNI CANADA DATA: Labour Report Highlights Weakening Trends In Youth Employment

The 6.91% (unrounded) unemployment rate in July marked only a slight uptick from 6.87% in June, and equal to the prior 3-months' average (6.91%), defying widespread expectations for a rise to 7.0%.

• Unpacking this surprising result: the participation rate fell to a 9-month low 65.23% (unrounded) from 65.40% prior - this had been expected to remain steady. That helps explain why despite the much-weaker-than-expected net employment change, the unemployment rate remained steady.

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA up 156.32 points (0.36%) at 44123.76
S&P E-Mini Future up 37.5 points (0.59%) at 6403.5
Nasdaq up 173.4 points (0.8%) at 21416.85
US 10-Yr yield is up 3.3 bps at 4.2829%
US Sep 10-Yr futures are down 8.5/32 at 111-26.5
EURUSD down 0.0024 (-0.21%) at 1.1642
USDJPY up 0.58 (0.39%) at 147.73
WTI Crude Oil (front-month) down $0.16 (-0.25%) at $63.73
Gold is up $1.76 (0.05%) at $3397.78

European bourses closing levels:
EuroStoxx 50 up 15.67 points (0.29%) at 5347.74
FTSE 100 down 5.04 points (-0.06%) at 9095.73
German DAX down 29.64 points (-0.12%) at 24162.86
French CAC 40 up 33.68 points (0.44%) at 7743

US TREASURY FUTURES CLOSE

3M10Y +3.376, 3.784 (L: -1.32 / H: 4.431)
2Y10Y +0.658, 52.264 (L: 50.188 / H: 52.691)
2Y30Y -0.304, 109.109 (L: 107.301 / H: 110.441)
5Y30Y -1.279, 102.015 (L: 101.914 / H: 103.992)
Current futures levels:
Sep 2-Yr futures down 1.75/32 at 103-26.75 (L: 103-26.375 / H: 103-29.125)
Sep 5-Yr futures down 6.25/32 at 108-23.25 (L: 108-22.75 / H: 108-30)
Sep 10-Yr futures down 8.5/32 at 111-26.5 (L: 111-25 / H: 112-04) 
Sep 30-Yr futures down 17/32 at 115-0 (L: 114-27 / H: 115-18)
Sep Ultra futures down 25/32 at 118-0 (L: 117-27 / H: 118-26)

MNI US 10YR FUTURE TECHS: (U5) Holds Ground

• RES 4: 113-23   76.4% retracement of the Sep’24 - Jan’25 sell-off
• RES 3: 113-07   76.4% retracement of the Apr 7 - 11 sell-off
• RES 2: 112-23   High May 1
• RES 1: 112-15+ High Aug 5
• PRICE:‌‌ 112-00+ @ 13:40 BST Aug 8
• SUP 1: 110-19+/08+ Low Jul 24 / Low Jul 14 & 16     
• SUP 2: 110-03   76.4% retracement of the May 22 - Jul 1 bull leg
• SUP 3: 109-28   Low Jun 6 and 11
• SUP 4: 109.25   Low May 27

Treasury futures remain strong on the back of the post-NFP rally - barring an erratic and quickly reversed intraday slip on Wednesday. Having cleared resistance into the bull trigger at 112-12+, the Jul 1 high, Treasuries have opened the May 1 high for direction at 112-23, a multi-month high. Clearance here opens retracement levels layered between 113-07 and 113-23. On the downside, key support is 110-08+, the Jul 14 and 16 low. First support lies at 110-19+, the Jul 24 low.   

SOFR FUTURES CLOSE

Sep 25 -0.010 at 95.920
Dec 25 -0.010 at 96.245
Mar 26 -0.030 at 96.450
Jun 26 -0.040 at 96.660
Red Pack (Sep 26-Jun 27) -0.045 to -0.04
Green Pack (Sep 27-Jun 28) -0.05 to -0.05
Blue Pack (Sep 28-Jun 29) -0.05 to -0.045
Gold Pack (Sep 29-Jun 30) -0.045 to -0.04

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

• Secured Overnight Financing Rate (SOFR): 4.35% (+0.01), volume: $2.855T
• Broad General Collateral Rate (BGCR): 4.33% (+0.01), volume: $1.154T
• Tri-Party General Collateral Rate (TCR): 4.33% (+0.01), volume: $1.130T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $108B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $254B

FED Reverse Repo Operation

RRP usage inches up to $80.303B this afternoon from $77.961B yesterday (lowest level since mid-April when usage fell to the mid-50s), total number of counterparties at 21. Lowest usage of the year at $54.772B on Wednesday, April 16 -- in turn the lowest level since April 2021 - compares to July 1: $460.731B highest usage since December 31.

MNI PIPELINE: Corporate Bond Roundup: $2.7 PetSmart 2Pt Launched

• Date $MM Issuer (Priced *, Launch #)
• 08/08 $2.7B #PetSmart Inc $1.95B 7NC3 7.5%, $750M 8NC3 10%
• 08/08 $750M WR Grace Holdings 7NC3 6.625% (upsized from $500M)
• $11.45B Priced Thursday, $47.675B/wk

MNI BONDS: EGBs-GILTS CASH CLOSE: Afternoon Weakness Cements Weekly Bear Steepening

European curves bear steepened to close the week.

• Bonds leaned a little weaker in early trade, in part due to spill-over from a weak long-end US Treasury auction after the European cash close Thursday.
• Then EGBs/Gilts turned lower in early afternoon trade with no clear catalyst, though the move was amid fairly thin volumes and weekly lows were not pierced.
• Comments from BoE chief economist Pill were hawkish, but had little reaction as it's known he dissented against Thursday's rate cut.
• There was a modest bounce in Bunds alongside a Bloomberg headline reporting that the US and Russia are "planning Ukraine deal cementing Russian gains", but this did little to mitigate the earlier sell-off.
• Bunds underperformed Gilts across most of the curve. Periphery/semi-core EGB spreads tightened modestly as equities rallied going into the weekend.
• Curves bear flattened for the week: Germany (2Y +2.7bp, 10Y +1.1bp) outperformed the UK (2Y +10.6bp, 10Y +7.3bp) largely on account of the hawkish-leaning BOE decision.
• The early highlight next week is the UK labour market data for June/July.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 3.7bps at 1.956%, 5-Yr is up 5.7bps at 2.283%, 10-Yr is up 6bps at 2.69%, and 30-Yr is up 6.8bps at 3.206%.
• UK: The 2-Yr yield is up 2.2bps at 3.899%, 5-Yr is up 3.3bps at 4.037%, 10-Yr is up 5.4bps at 4.601%, and 30-Yr is up 7.7bps at 5.428%.
• Italian BTP spread down 0.4bps at 78.9bps / Spanish down 0.4bps at 56.7bps

MNI FOREX: USD/JPY Rallies, But Consolidation Phase Still in Play

• The greenback rose against all others on Friday - however the bounce was shallow relative to the phase of post-NFP weakness. JPY traded poorly on a phase of selling pressure through the European morning. Speculation continues to mount over the future of the LDP leadership. Speaking today, Ishiba noted he is not intending to change the cabinet lineup for now, but has vowed to stay on in his role despite party pressure to accelerate succession. Conviction in the weaker is low, however, with volumes holding below the average.
• While JPY traded weaker, USD/JPY has held inside a consolidation pattern for much of the week, holding the bulk of the NFP losses. This has allowed a previously overbought condition to unwind, and keeps the downside argument in focus. The recent break and close below 147.57, the 20-day EMA, is a concern. A clear break of this support zone would undermine the recent bull theme. A break of last week’s 150.92 high would resume the uptrend. 
• Canadian jobs data came in noticeably weaker than forecast, with the country shedding over 40k jobs in July and over 50k full-time positions. The unemployment rate also ticked higher on a non-rounded basis, helping USD/CAD keep well off the mid-week lows. The 100-dma comes in as first resistance here, crossing at 1.3829.
• Headlines just ahead of the UK close showed US and Russian negotiators reportedly working on mutually-agreeable ceasefire conditions. The terms included a freezing of current battlelines and a withdrawal of troops from regions occupied by opposition forces -  if realised, such an agreement would be a major boon to Putin, whose forces have proved unable to wrest control of the regions by force over the course of the past three and a half years of war.
• Risk rallied, with European equities putting in a firm bounce on the report. Rallies were limited however, as there remain significant impediments to such a deal. It is unclear whether Ukraine will be invited to participate in direct talks with Putin, and the Zelenskyy administration could immediately reject such an offer (albeit risking a backlash from a White House impatient for any form of peace to be agreed).
• The coming week's highlights include UK jobs data (seen confirming the slowdown in the UK labour market over the past few quarters), the RBA rate decision (expected to undergo a 25bps cut to 3.60%) and a potential face-to-face meeting held between the US and Russian Presidents. 

MONDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
11/08/2025	0600/0800	***	NO	CPI Norway
11/08/2025	0800/1000	***	IT	HICP (f)
11/08/2025	-	***	CN	Money Supply
11/08/2025	-	***	CN	New Loans
11/08/2025	-	***	CN	Social Financing
11/08/2025	1530/1130	*	US	US Treasury Auction Result for 13 Week Bill
11/08/2025	1530/1130	*	US	US Treasury Auction Result for 26 Week Bill
12/08/2025	2301/0001	*	GB	BRC-KPMG Shop Sales Monitor
12/08/2025	0430/1430	***	AU	RBA Rate Decision