MNI ASIA OPEN: Fed Widely Expected to Cut Rates Wednesday
EXECUTIVE SUMMARY
- MNI FED: Macro Since Last FOMC - Prices: Data Quality Concerns Increase
- MNI US TSYS/OVERNIGHT REPO: QT Set To End As Reserve Fall Elevates Pressures
- MNI BOC: MNI BoC Preview-Oct 2025: Mixed Data Unlikely To Derail Cut
- MNI CHINA-EU: Talks On Rare Earths & Trade This Week, But No Sefcovic-Wang Meeting
- MNI US LABOR MARKET: Chicago Fed Suggests Small Unemployment Uptick In October
- MNI US OUTLOOK/OPINION: Core PCE Estimates Soften After CPI, Fed In The Dark On PPI
US
MNI FED: Macro Since Last FOMC - Prices: Data Quality Concerns Increase
When thinking about how the Fed will view this report, it’s important to note that translating it to core PCE with no publication of a PPI report would have been hard enough this month (CPI provides ~65% of inputs), but uncertainty is greater still with a deterioration in the quality of the CPI report itself.
- September saw 40% of sources using “different cell” imputation, a new high after 36% in August as budget and staff cuts have an increasingly large impact. It has historically averaged closer to 10% and peaked at 15% in the pandemic when in-person surveys weren’t possible, but it jumped to ~30% April and has continued to increase since.
MNI BOC: MNI BoC Preview-Oct 2025: Mixed Data Unlikely To Derail Cut
The Bank of Canada is set to cut its policy rate by 25bp for a second consecutive meeting on October 29 - MNI's preview is Here
- The new 2.25% overnight rate would represent the bottom of the BOC's "neutral" estimate range (2.25%-3.25%), reflecting an environment in which economic slack has built amid the fallout from the US-Canada trade conflict but with trim/median inflation continuing to run at the high end of the BOC's target band.
NEWS
AMAZON PLANS TO CUT UP TO 30,000 CORPORATE JOBS: REUTERS
MNI CHINA-EU: Talks On Rare Earths & Trade This Week, But No Sefcovic-Wang Meeting
(MNI) London - A senior Chinese delegation will arrive in Brussels for talks on Thursday, 30 October, according to Commission Deputy Chief spox Olof Gill. This follows a video call last week between European Trade Commissioner Maros Sefcovic and China's Commerce Minister Wang Wentao last week. After the call last week, Sefcovic said,
MNI US: AFGE Letter Does Little To Move Dial On Govt Shutdown Expectations
An open letter from American Federation of Government Employees (AFGE) president, Everett Kelly, calling for an immediate end to the US government shutdown, has done little to influence prediction market assessments that the US government shutdown is likely to extend until at least mid-November.
MNI FRANCE: Lawmakers Resume Budget Debate With Socialists Still Threatening Censure
The National Assembly continues to debate the provisions of the revenue side of the 2026 social security budget (PLFSS), but the debate could prove moot given the centre-left Socialist Party (PS) continues to threaten a censure vote against the gov't if its demands on a wealth tax are not met.
US TSYS
MNI US TSYS: Bonds Reverse Early Weakness, Curves Twist Flatter Ahead Wed's FOMC
- Treasuries are mixed after the bell, curves flatter (5s30s -3.996 at 94.579) with bonds outperforming - leading a bounce off midmorning lows; 27th day of the US Govt shutdown.
- Currently, Dec'25 TY contract trades -1 at 113-13 vs. 113-14.5 high, 10Y yield -.0097 at 3.9910%. A bullish structure in Treasuries remains intact and recent weakness appears to be a correction. The breach of a key resistance at 113-29, the Sep 11 high, confirmed a resumption of the medium-term uptrend.
- Spot Gold is now down 10% from last week’s all-time highs of $4,381.5, with an easing of US/China trade tensions being cited as the driver of today’s pullback. While the USD index came under some pressure, the sharp unwind for spot gold has offset the greenback pessimism somewhat
- Focus on Wednesday's FOMC - overwhelmingly expected to cut the funds rate by 25bp for a 2nd consecutive meeting on October 29, bringing the target range to 3.75-4.00%.
- Projected rate cut pricing vs. late Friday levels (*): Oct'25 at -24.5bp (-24.2bp), Dec'25 at -48.1bp (-50.2bp), Jan'26 at -61bp (-63.7bp), Mar'26 at -72.7bp (-75.8bp).
- Stocks continue to drift at/near record highs late Monday, sentiment buoyed amid trade optimism between the US & China. Officials from the two countries have reached basic consensus on arrangements to address their respective trade concerns following two days of talks in Kuala Lumpur, the People’s Daily reported.
- Earnings expected after the close include Whirlpool Corp, Alexandria Real Estate, Olin Corp, Waste Management, Nucor Corp, Brown & Brown, Welltower, Avis, Cadence, F5 and Amkor Technology.
OVERNIGHT DATA
MNI US LABOR MARKET: Chicago Fed Suggests Small Unemployment Uptick In October
The Chicago Fed's preliminary Real-Time Unemployment Rate Forecast for October estimates a 4.35% rate for the month, up from an actual 4.32% in August (the last nonfarm payrolls report that was released before the government shutdown) and their September estimate of 4.34%. The 0.03pp (rounded) uptick is due to a rise in both higher layoffs/separations and a weaker hiring rate for unemployed workers.
MNI US LABOR MARKET: Chicago Fed Suggests Small Unemployment Uptick In October
The Chicago Fed's preliminary Real-Time Unemployment Rate Forecast for October estimates a 4.35% rate for the month, up from an actual 4.32% in August (the last nonfarm payrolls report that was released before the government shutdown) and their September estimate of 4.34%. The 0.03pp (rounded) uptick is due to a rise in both higher layoffs/separations and a weaker hiring rate for unemployed workers.
MNI US TSYS/OVERNIGHT REPO: QT Set To End As Reserve Fall Elevates Pressures
Outside of repo rates/spreads there are various measures of reserve elasticity that increasingly point to less-than-abundant reserves (note reserves + overnight reverse repo takeup fell last week to a fresh post-November 2020 low $2.93T vs over $3.6T as recently as June, the drop reflecting the buildup in the Treasury’s cash accounts at the Fed after the lifting of the debt limit).
MNI US OUTLOOK/OPINION: Core PCE Estimates Soften After CPI, Fed In The Dark On PPI
The data quality concerns of the CPI report (40% "different cell" imputation in the September release before data collection under the government shutdown) will further complicate the Fed’s underlying of latest inflation trends, with a lack of PPI report this month leaving approximately 65% of inputs for PCE inflation in September ahead of this week's FOMC meeting. We have seen median core PCE estimates for September trimmed from ~0.30% M/M prior to CPI to closer to an average ~0.25% M/M since then, albeit from a modest sample.
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA up 337.47 points (0.71%) at 47544.59
S&P E-Mini Future up 84.25 points (1.23%) at 6911
Nasdaq up 432.6 points (1.9%) at 23637.46
US 10-Yr yield is down 1.2 bps at 3.9891%
US Dec 10-Yr futures are up 0.5/32 at 113-14.5
EURUSD up 0.0018 (0.15%) at 1.1645
USDJPY up 0.03 (0.02%) at 152.89
WTI Crude Oil (front-month) down $0.13 (-0.21%) at $61.34
Gold is down $121.63 (-2.96%) at $3990.82
European bourses closing levels:
EuroStoxx 50 up 36.56 points (0.64%) at 5711.06
FTSE 100 up 8.2 points (0.09%) at 9653.82
German DAX up 68.89 points (0.28%) at 24308.78
US TREASURY FUTURES CLOSE
3M10Y +3.013, 17.074 (L: 14.758 / H: 18.402)
2Y10Y -2.634, 48.808 (L: 48.385 / H: 53.172)
2Y30Y -4.414, 106.242 (L: 105.536 / H: 112.265)
5Y30Y -3.458, 95.117 (L: 94.272 / H: 99.233)
Current futures levels:
Dec 2-Yr futures down 1.25/32 at 104-11 (L: 104-10 / H: 104-11.5)
Dec 5-Yr futures down 1.25/32 at 109-21.75 (L: 109-17 / H: 109-22)
Dec 10-Yr futures up 0.5/32 at 113-14.5 (L: 113-04 / H: 113-14.5)
Dec 30-Yr futures up 9/32 at 118-28 (L: 117-27 / H: 118-29)
Dec Ultra futures up 14/32 at 123-13 (L: 122-02 / H: 123-14)
US 10YR FUTURE TECHS: (Z5) Corrective Cycle
- RES 4: 115-00+ High Oct 1 ‘24 (cont)
- RES 3: 114-21+ 1.00 proi of the Aug 18 - Sep 11 - 25 price swing
- RES 2: 114-10 High Apr 7 (cont) and a key resistance
- RES 1: 113-24/114-02 High Oct 17
- PRICE: 113-12 @ 1415 ET Oct 27
- SUP 1: 113-04 Intraday low
- SUP 2: 112-25+ 50-day EMA
- SUP 3: 112-16+ Low Oct 10
- SUP 4: 112-06 Low Sep 25 and a reversal trigger
A bullish structure in Treasuries remains intact and recent weakness appears to be a correction. The breach of a key resistance at 113-29, the Sep 11 high, confirmed a resumption of the medium-term uptrend. Moving average studies are in a bull-mode position and this set-up highlights a dominant uptrend. Sights are on 114-10, the Apr 7 high (cont) and the next key resistance. Support to watch lies at 112-25+, the 50-day EMA.
SOFR FUTURES CLOSE
Current White pack (Dec 25-Sep 26):
Dec 25 -0.020 at 96.360
Mar 26 -0.030 at 96.580
Jun 26 -0.025 at 96.795
Sep 26 -0.030 at 96.935
Red Pack (Dec 26-Sep 27) -0.025 to -0.015
Green Pack (Dec 27-Sep 28) -0.015 to -0.005
Blue Pack (Dec 28-Sep 29) -0.005 to +0.005
Gold Pack (Dec 29-Sep 30) steady to +0.005
REFERENCE RATES
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.24% (+0.00), volume: $3.000T
- Broad General Collateral Rate (BGCR): 4.21% (+0.00), volume: $1.136T
- Tri-Party General Collateral Rate (TCR): 4.21% (+0.00), volume: $1.111T
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.11% (+0.00), volume: $90B
- Daily Overnight Bank Funding Rate: 4.11% (+0.00), volume: $180B
FED Reverse Repo Operation
RRP usage climbs to $10.642B d-March 2021) with 13 counterparties this afternoon from $2.435B Friday (lowest level since mid-March 2021). Compares to this year's high usage of $460.731B on June 30.
MNI PIPELINE: Corporate Bond Update: $7.5B Amphenol 7Pt Launch
Surge of issuance ($27B to price Monday) ahead of the FOMC and month end, many still sidelined ahead earnings.
- Date $MM Issuer (Priced *, Launch #)
- 10/27 $7.5B #Amphenol $750M 2Y +33, $500M 2Y SOFR+53, $750M 3Y +43, $1B 5Y +53, $1.25B 7Y +63, $1.6B +10Y +65, $1.6B 30Y +75
- 10/27 $3.5B #HCA Inc $500M 5Y +72, $1B 7Y +85, $1B 10Y +95, $750M 30Y +115
- 10/27 $3.5B #Philip Morris $750M 3Y +43, $300M 3Y SOFR+66, $750M 5Y +58, $850M 7Y +68, $850M 10Y +78
- 10/27 $3B #Sanofi $400M 2Y +25, $500M 2Y SOFR+46, $400M 3Y +30, $500M 3Y SOFR+54, $1.2B 7Y +45
- 10/27 $2.25B #Turkiye 11Y 6.8%
- 10/27 $1.5B #Southwest Airline $750M 3Y +88, $10Y +128
- 10/27 $1.25B #Procter Gamble $750M 7Y +32, $750M 10Y +37
- 10/27 $1B #Prologis Targeted Fund $400M +5Y +70, $600M +10Y +90
- 10/27 $1B #Lloyds PerpNC10 6.625%
- 10/27 $1B #DNB Bank 6NC5 +77
- 10/27 $1B #Aker BP 10Y +132
- 10/27 $500M Kaiser Aluminum 8.3NC3.3 6%a
MNI BONDS: EGBs-GILTS CASH CLOSE: Gilt Yields Resume Descent
European bonds broadly gained ground on Monday.
- Core EGBs and Gilts were pressured early by news of a potential China-US trade breakthrough over the weekend, spurring a broad risk-on move.
- But the sell-off petered out by late morning, with yields descending in orderly fashion throughout the rest of the session with no clear driver, ahead of month-end and the ECB decision/Eurozone data later this week.
- In a session with limited data, German IFO came in mixed (current assessment missed, expectations beat).
- On the day, the German curve twist flattened with the UK's bull flattening. Gilts performed overall, carrying through from last week's outperformance.
- OAT spreads moved largely in line with other semi-core EGBs despite a modicum of relief from Friday's lowering of France's outlook by Moody's, as opposed to a fall in the credit rating itself.
- Tuesday's schedule includes the ECB Bank Lending Survey and CPI expectations, though that's not expected to have any impact on the ECB's expected rate hold Thursday. Otherwise the week's highlight is the Eurozone October flash inflation round, with the ECB in its pre-meeting media blackout period. is on the quiet side in the UK (our weekly outlook is here).
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 0.4bps at 1.972%, 5-Yr is down 0.3bps at 2.228%, 10-Yr is down 1bps at 2.616%, and 30-Yr is down 1.7bps at 3.189%.
- UK: The 2-Yr yield is down 1.8bps at 3.781%, 5-Yr is down 1.9bps at 3.883%, 10-Yr is down 3bps at 4.402%, and 30-Yr is down 3.8bps at 5.181%.
- Italian BTP spread down 1.3bps at 77.7bps / French OAT down 0.7bps at 80.1bps
MNI FOREX: AUD Remains Top of G10 Leaderboard amid China Optimism
- Risk sentiment has been buoyed Monday, amid optimism surrounding US-China trade negotiations which comes ahead of Thursday's Trump-Xi meeting. While the USD index came under some pressure, a further sharp unwind for spot gold has offset the greenback pessimism. AUD outperforms all others in G10, most notably impacted owing to its high beta status and sensitivity to the Chinese economy.
- Furthermore, RBA Bullock's comments playing down recent job weakness and mentioning they are in a "pretty good" position on both jobs and CPI added to topside momentum for AUDUSD, which remains 0.65% higher on the session above 0.6550. Today’s boost has strengthened a bullish underlying theme, and spot has narrowed the gap to initial resistance at 0.6574, the 50.0% retracement of the Sep 17 - Oct 14 bear leg.
- Higher core yields and the sharp gains for major equity benchmarks initially weighed on the Japanese Yen, with USDJPY extending its most recent rally ahead of the European open to trade within one pip of the key 153.27. Price action did reverse amid a broader dollar offer ahead of the NY crossover, however, USDJPY’s dip to 152.57 was very short-lived. Spot has returned back above 153.00, and the pair looks set to extend a winning streak to seven consecutive sessions. Clearance of the bull trigger at 153.27 would confirm a resumption of the medium-term uptrend.
- Despite the generally flat USD Index, USDCNH has broken lower today, building on a strong session for China FX overnight. The rate has tested below 7.1050 for the lowest print since September, narrowing the gap with key support into 7.0851, the cycle low. Moves follow the stronger-than-expected CNY fix (7.0881, the lowest in over 12 months), consistent with the bank's long-held push for further internationalization and expanded use - which the bank reiterated on Friday last week after the conclusion of the government's 4th plenum.
- Central banks highlight this week's calendar, with the Bank of Canada and the Fed holding policy meetings on Wednesday, before the Bank of Japan and the ECB follow Thursday.
TUESDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 28/10/2025 | 0700/0800 | * |  DE | GFK Consumer Climate |
| 28/10/2025 | 0900/1000 | ** |  IT | ISTAT Consumer Confidence |
| 28/10/2025 | 0900/1000 | ** | IT | ISTAT Business Confidence |
| 28/10/2025 | 0900/1000 | ** |  EU | ECB Bank Lending Survey |
| 28/10/2025 | 0900/1000 | ** | EU | ECB Consumer Expectations Survey |
| 28/10/2025 | 1000/1000 | * |  GB | Index Linked Gilt Outright Auction Result |
| 28/10/2025 | - |  US | FOMC Meeting | |
| 28/10/2025 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 28/10/2025 | 1300/0900 | ** | US | S&P Case-Shiller Home Price Index |
| 28/10/2025 | 1300/0900 | ** | US | FHFA Home Price Index |
| 28/10/2025 | 1300/0900 | ** | US | FHFA Home Price Index |
| 28/10/2025 | 1400/1000 | *** | US | Conference Board Consumer Confidence |
| 28/10/2025 | 1400/1000 | ** | US | Richmond Fed Survey |
| 28/10/2025 | 1400/1000 | ** | US | housing vacancies |
| 28/10/2025 | 1430/1030 | ** | US | Dallas Fed Services Survey |
| 28/10/2025 | 1530/1130 | ** | US | US Treasury Auction Result for 52 Week Bill |
| 28/10/2025 | 1700/1300 | ** | US | US Treasury Auction Result for 7 Year Note |
| 29/10/2025 | - |  JP | Bank of Japan Meeting | |
| 29/10/2025 | 0001/0001 | * | GB | Brightmine pay deals for whole economy |
| 29/10/2025 | 0030/1130 | *** |  AU | CPI Inflation Monthly |
| 29/10/2025 | 0030/1130 | *** | AU | CPI inflation |
