MNI ASIA OPEN: Fed Speakers Express Caution on More Cuts

EXECUTIVE SUMMARY

• MNI BRIEF: Fed's Musalem Urges Caution On Further Rate Cuts
• MNI BRIEF: Fed's Williams-Making Meeting By Meeting Decisions
• MNI US DATA: BLS's Shutdown Plan Confirms Key Data Wouldn't Be Published
• MNI US DATA: Pending Home Sales Point To Modest Pickup In Existing Activity

US

MNI BRIEF: Fed's Musalem Urges Caution On Further Rate Cuts

The Federal Reserve must be cautious cutting interest rates further because inflation remains too high, St. Louis Fed President Alberto Musalem said Monday. "I'm open-minded to future potential reductions in interest rates. I do believe we need to tread cautiously because the room between now and the point where policy can become overly accommodative is limited," he said at a Washington University in St. Louis event.

MNI BRIEF: Fed's Williams-Making Meeting By Meeting Decisions

New York Fed President John Williams said Monday he is making monetary policy decisions on a meeting-by-meeting basis, adding that this month's rate cut made sense given rising risks to employment, and leaves monetary policy at still-restrictive levels. The Fed needs to "basically make the best judgment, meeting by meeting, as we get more data," Williams said during a Q&A in Rochester, NY. 

NEWS

MNI US DATA: BLS's Shutdown Plan Confirms Key Data Wouldn't Be Published

The Bureau of Labor Statistics' key economic releases would be postponed in the event of a government shutdown, per the Department of Labor's plan for such an event - PDF link. "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."

MNI US: Jeffries And White House Dig In Ahead Of Trump Govt Shutdown Meeting

House Minority Leader Hakeem Jeffries (D-NY) implied to reporters, ahead of a crucial (15:00ET) White House meeting with Senate Minority Leader Chuck Schumer (D-NY), President Donald Trump and Republican leaders, that Democrats will not support the House-passed 'clean' Continuing Resolution, even if Trump and Republicans offer concessions on Affordable Care Act (Obamacare) subsidies.

MNI US: Speaker Johnson To Keep House Recessed During 'Shutdown Week'

Jake Sherman at Punchbowl News reporting on X that House Speaker Mike Johnson (R-LA) told Republican representatives in a conference call that he intends to bring the House of Representatives back from recess next week. Keeping the lower chamber shuttered this week suggests that the only route out of a government shutdown on October 1 is a capitulation from Senate Minority Leader Chuck Schumer (D-NY) or an unlikely 'handshake' deal with President Donald Trump and Republican leaders on an 'Obamacare' subsidy vote. 

Figure 1: Government Shutdown on October 1

Source: Polymarket

MNI SECURITY: Trump Admin Will Proceed w/AUKUS Following Pentagon Review - Nikkei

Nikkei Asia reporting, “The Trump administration will proceed with the AUKUS defense pact linking the U.S., U.K. and Australia, maintaining the original timeline that includes the sale of three Virginia-class submarines to Canberra beginning in 2032...” The report comes after a Pentagon review in June, ordered by US Undersecretary of Defence Elbridge Colby, threw doubt over US participation in the nuclear submarine alliance.  

MNI TARIFFS: Switzerland Offers Gold Industry Investments As US Sweetener

Switzerland has "has offered to invest in the US gold-refining industry, as part of its efforts to persuade the Trump administration to lower the 39% import tariff imposed last month", Bloomberg reports. Note that is already the second headline crossing today on Swiss - US relations following this morning's re-commitment for non-manipulation of FX rates.

US TSYS

MNI US TSYS: Yields Lower, Awaiting Word From Trump Ahead Potential Shutdown

• US Government shutdown concerns buoy Tsys into the close. No word as yet as Pres Trump meets with congressional leaders (1500ET) in an attempt to avert a shutdown as Federal agencies to run out of money at midnight Tuesday.
• The Bureau of Labor Statistics' key economic releases would be postponed in the event of a government shutdown, per the Department of Labor's plan for such an event - PDF link.
• The Dec'25 10Y contract (TYZ5) currently trades at 112-16.5 (+8) on light cumulative volumes of 972k. 10Y yield at 4.1387% (-.0368). Curves flatter: 2s10s -2.250 at 50.798, 5s30s -1.728 at 96.464.
• Treasury futures traded lower last 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 firm resistance to watch is 113-00, the Sep 24 high.
• Pending home sales rose 4.0% M/M in August, handily above the 0.4% expected and the -0.3% reported in July. This was the highest index reading in 5 months, suggesting a potential pickup at the end of a weak period. Pending sales rose solidly in three of four regions, with Northeast sales falling.
• Fed speakers: StL Fed Pres Musalem said the Fed must be cautious cutting interest rates further because inflation remains too high, NY Fed Williams:  policy decisions on a meeting-by-meeting basis, adding that this month's rate cut made sense given rising risks to employment, and leaves monetary policy at still-restrictive levels.
• Look ahead: Tuesday sees MNI Chicago PM, JOLTS, Conf. Board Consumer Confidence and more Fed speak.

OVERNIGHT DATA

MNI US DATA: Pending Home Sales Point To Modest Pickup In Existing Activity

Pending home sales rose 4.0% M/M in August, handily above the 0.4% expected and the -0.3% reported in July. This was the highest index reading in 5 months, suggesting a potential pickup at the end of a weak period. Pending sales rose solidly in three of four regions, with Northeast sales falling.

MNI US DATA: Dallas Fed Survey Unexpectedly Weakens As Respondents Cite Weak Demand

The Dallas Fed's Texas Manufacturing Outlook Survey printed on the weak side in September, with the headline general business activity index of -8.7 below the expected -1.0. That meant that the index unexpectedly deteriorated from the prior -1.8, the 2nd consecutive retracement after briefly hitting a 6-month high in July. The activity index suffered along with a combination of weak subindices: a decline in employment (lowest since April) and new orders suggesting contraction in demand with shipments also retreating, overall with "most pointing to notably slower growth than in August" per the report.

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA up 53.62 points (0.12%) at 46299.9
S&P E-Mini Future up 12 points (0.18%) at 6708
Nasdaq up 79.9 points (0.4%) at 22562.87
US 10-Yr yield is down 3.3 bps at 4.1426%
US Dec 10-Yr futures are up 7.5/32 at 112-16
EURUSD up 0.0026 (0.22%) at 1.1729
USDJPY down 0.89 (-0.6%) at 148.6
WTI Crude Oil (front-month) down $2.56 (-3.9%) at $63.16
Gold is up $67.27 (1.79%) at $3826.79

European bourses closing levels:
EuroStoxx 50 up 7.15 points (0.13%) at 5506.85
FTSE 100 up 15.01 points (0.16%) at 9299.84
German DAX up 5.59 points (0.02%) at 23745.06
French CAC 40 up 10.19 points (0.13%) at 7880.87

US TREASURY FUTURES CLOSE

3M10Y -3.511, 17.919 (L: 16.953 / H: 21.018)
2Y10Y -2.272, 50.776 (L: 50.389 / H: 53.101)
2Y30Y -3.091, 107.274 (L: 106.69 / H: 110.798)
5Y30Y -1.685, 96.507 (L: 95.998 / H: 98.892)
Current futures levels:
Dec 2-Yr futures up 1/32 at 104-4.625 (L: 104-03.625 / H: 104-05.375)
Dec 5-Yr futures up 3/32 at 109-4.5 (L: 109-01.25 / H: 109-06.5)
Dec 10-Yr futures up 7.5/32 at 112-16 (L: 112-08.5 / H: 112-18.5)
Dec 30-Yr futures up 24/32 at 116-25 (L: 116-03 / H: 116-30)
Dec Ultra futures up 1-04/32 at 120-18 (L: 119-19 / H: 120-23)

MNI US 10YR FUTURE TECHS: (Z5) Corrective Cycle

• 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: 112-24/113-00 20-day EMA / High Sep 24
• PRICE:‌‌ 112-16+ @ 1235 ET Sep 29
• 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 traded lower last 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 firm resistance to watch is 113-00, the Sep 24 high.

SOFR FUTURES CLOSE

Current White pack (Dec 25-Sep 26):
Dec 25 +0.010 at 96.285
Mar 26 +0.020 at 96.475
Jun 26 +0.015 at 96.680
Sep 26 +0.010 at 96.815
Red Pack (Dec 26-Sep 27) steady to +0.005
Green Pack (Dec 27-Sep 28) +0.015 to +0.020
Blue Pack (Dec 28-Sep 29) +0.025 to +0.035
Gold Pack (Dec 29-Sep 30) +0.035 to +0.045

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

• Secured Overnight Financing Rate (SOFR): 4.16% (-0.02), volume: $2.917T
• Broad General Collateral Rate (BGCR): 4.14% (-0.03), volume: $1.154T
• Tri-Party General Collateral Rate (TCR): 4.14% (-0.03), volume: $1.113T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.09% (+0.00), volume: $95B
• Daily Overnight Bank Funding Rate: 4.09% (+0.00), volume: $178B

FED Reverse Repo Operation

RRP usage climbs to $56.220B ahead month end with 26 counterparties this afternoon from $48.073B Friday. 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: Late Corporate Bond Roundup: $8.3B To Price Monday

• Date $MM Issuer (Priced *, Launch #)
• 09/29 $1.4B #Codelco WNG $700M 2035 Tap +130, $700M 2055Tap +155
• 09/29 $1.25B #Dominion Energy $625M each 2056 Taps 6 & 6.2
• 09/29 $1B *Scotiabank 60NC10 6.875%
• 09/29 $500M #Fortitude Global Funding WNG 3Y +100
• 09/29 $500M *Vakifbank WNG PerpNC5.25 8.5%
• 09/29 $500M #Corebridge Funding 5Y +73
• 09/29 $500M Starwood Property Trust 5.25NC 5.75%
• 09/29 $1.25B #Societe Generale 11NC10 +130
• 09/29 $1.4B Waterbridge Starts $400M each 4Y, 8Y investor calls
• 09/29 $Benchmark Kuwait 3Y, 5Y, 10Y investor calls
• 09/29 $Benchmark Egypt 3Y, 7Y Sukuk investor calls
• Expected Tuesday:
• 09/30 $Benchmark Rentenbank 5Y SOFR+41a

MNI BONDS: EGBs-GILTS CASH CLOSE: Bull Flattening As Euro Inflation Week Unfolds

European curves bull flattened Monday.

• Bull flattening started early, with a looming federal government shutdown in the US setting a cautious undertone.
• BOE's Ramsden sounded to be on the dovish side in an appearance and does not appear to be guiding away from a vote for a November cut so far.
• Data didn't have a major market impact. Spanish flash September core HICP was slightly softer than expected, while Eurozone economic confidence slightly above-consensus. BOE credit data was largely in-line.
• UK instruments slightly outperformed German counterparts across most of their respective curves, with the most notable divergence being at the short end.
• Periphery/semi-core EGB spreads closed mixed, with France underperforming amid continued fiscal uncertainty (Friday saw Spain upgraded by Fitch/Moody's and France's outlook lowered by Scope).
• The Eurozone flash September inflation round continues Tuesday with French, German and Italian data, with the bloc-wide figure out Wednesday. MNI's preview is here. We also get UK GDP data Tuesday, as well as several central bank speakers including BOE's Breeden and Mann, and ECB's Lagarde.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.7bps at 2.023%, 5-Yr is down 2.3bps at 2.312%, 10-Yr is down 3.9bps at 2.707%, and 30-Yr is down 5.6bps at 3.272%.
• UK: The 2-Yr yield is down 2.7bps at 3.988%, 5-Yr is down 3bps at 4.145%, 10-Yr is down 4.6bps at 4.7%, and 30-Yr is down 5.2bps at 5.509%.
• Italian BTP spread down 0.9bps at 82.6bps / French OAT up 0.5bps at 82.7bps

MNI FOREX: US Dollar on Back Foot Amid US Shutdown Concerns

• The USD index has started the week on the back foot, consolidating a modest 0.25% move lower on the session amid US government shutdown concerns. Associated gains in G10 have been centered around the Japanese yen and notably, the Australian dollar ahead of tomorrow’s RBA decision.
• With USDJPY moving average studies highlighting a dominant uptrend, today’s 0.6% pullback appears technically corrective. Sights are on 150.92, the Aug 1 high and key resistance, while pivot support remains much further out at 145.49, Sep 17 low. Some market participants have sighted BOJ board member Asahi Noguchi’s comments as potentially assisting the yen bid on Monday.
• AUDUSD (+0.52%) edged back towards the 0.66 handle ahead of Tuesday’s central bank decision. With the RBA widely expected to be on hold in September, the focus will be on the tone of the statement and Governor Bullock’s press conference for guidance on the Board’s current thinking. Given the bullish underlying theme for AUDUSD, attention is on 0.6707, the Sep 17 high. Initial firm resistance to watch is 0.6628, the Sep 24 high.
• it’s worth noting that AUDJPY remains in a strong uptrend, with the 20-day EMA acting as very strong support in recent weeks. Additionally, an area between 97.25-45 continues to hold, while the uptrend from the April lows remains intact.
• GBPUSD’s move lower last week resulted in a break of 1.3491, a trendline support drawn from the Aug 1 low. Both 20- and 50-day EMAs also now intersect close to 1.3490, emphasising the short-term significance of this level.
• Ahead of the RBA, the BOJ summary of opinions and China PMIs are scheduled. German and French inflation releases are then due, before the US JOLTS jobs data.

TUESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
30/09/2025	0600/0800	**	SE	Retail Sales
30/09/2025	0600/0800	**	DE	Import/Export Prices
30/09/2025	0600/0800	**	DE	Retail Sales
30/09/2025	0600/0700	*	GB	Quarterly current account balance
30/09/2025	0600/0700	***	GB	GDP Second Estimate
30/09/2025	0645/0845	***	FR	HICP (p)
30/09/2025	0645/0845	**	FR	PPI
30/09/2025	0645/0845	**	FR	Consumer Spending
30/09/2025	0700/0900	**	CH	KOF Economic Barometer
30/09/2025	0755/0955	**	DE	Unemployment
30/09/2025	0800/1000	**	IT	PPI
30/09/2025	0800/1000	***	DE	Bavaria CPI
30/09/2025	0800/1000	***	DE	North Rhine Westphalia CPI
30/09/2025	0800/1000	***	DE	Baden Wuerttemberg CPI
30/09/2025	0900/1100	***	IT	HICP (p)
30/09/2025	1000/0600		US	Fed Vice Chair Philip Jefferson
30/09/2025	1100/1300		EU	ECB Cipollone In Panel At Sibos
30/09/2025	1150/1250		GB	BOE Lombardelli Panel On MonPol, Bank of Finland
30/09/2025	1200/1400	***	DE	Germany CPI (p)
30/09/2025	1200/1400	***	DE	Germany CPI (p)
30/09/2025	1250/1450		EU	ECB Lagarde Keynote at MonPol Conference, Bank of Finland
30/09/2025	1255/0855	**	US	Redbook Retail Sales Index
30/09/2025	1300/0900	**	US	S&P Case-Shiller Home Price Index
30/09/2025	1300/0900	**	US	FHFA Home Price Index
30/09/2025	1300/0900	**	US	FHFA Home Price Index
30/09/2025	1300/1500		EU	ECB Elderson In Panel On Climate Action
30/09/2025	1300/0900		US	Boston Fed's Susan Collins
30/09/2025	1325/1425		GB	BOE Mann Fireside Chat At FT
30/09/2025	1342/0942	***	US	MNI Chicago PMI
30/09/2025	1400/1000	***	US	Conference Board Consumer Confidence
30/09/2025	1400/1000	***	US	JOLTS jobs opening level
30/09/2025	1400/1000	***	US	JOLTS quits Rate
30/09/2025	1430/1030	**	US	Dallas Fed Services Survey
30/09/2025	1530/1630		GB	BOE Breeden Speech At Cardiff University
30/09/2025	1530/1130	**	US	US Treasury Auction Result for 52 Week Bill
30/09/2025	1600/1200	**	US	USDA GrainStock - NASS
01/10/2025	2300/0900	**	AU	S&P Global Manufacturing PMI (f)
30/09/2025	2310/1910		US	Dallas Fed's Lorie Logan
01/10/2025	2350/0850	***	JP	Tankan
01/10/2025	0030/0930	**	JP	S&P Global Final Japan Manufacturing PMI