MNI ASIA OPEN: Focus on Tariff Deadline, July Employ Report

EXECUTIVE SUMMARY

• MNI TARIFFS: Mexico Tariff Pause Injects Uncertainty Into Midnight Deadline
• MNI US OUTLOOK/OPINION: Nonfarm Payrolls Growth Seen Easing Whilst Private Firms
• MNI US: Tsy Bessent Talks On India & China Trade
• MNI US DATA: Chicago Business Barometer™ - Advances To 47.1 In July
• MNI US DATA: Core PCE Unrounded - Upward Revisions Earlier In The Quarter
• MNI US DATA: Another Set Of Better Jobless Claims Data

US

MNI TARIFFS: Mexico Tariff Pause Injects Uncertainty Into Midnight Deadline

Edward Lawrence at Fox News reports on X that "tariffs will snap back to April 2nd levels starting at [12:01 ET 05:01 BST] Aug 1st for countries without a framework agreement or for countries that have been assigned a tariff rate through a letter or announcement," per a White House source.

NEWS

MNI US-RUSSIA: US 'Prepared To Implement Additional Measures' If No Peace By 8 Aug

Reuters reports comments from the acting US Representative to the United Nations, Dorothy Shea, saying to the UN Security Council that President Donald Trump "has made clear a deal to end Russia's war in Ukraine must be done by August 8th". Adds that the US "is prepared to implement additional measures to secure peace in Ukraine."

MNI US: Trump Says US Would Be "Dead" w/o Tariffs As Court Case To Start

President Donald Trump posts on Truth Social: "To all of my great lawyers who have fought so hard to save our Country, good luck in America’s big case today. If our Country was not able to protect itself by using TARIFFS AGAINST TARIFFS, WE WOULD BE “DEAD,” WITH NO CHANCE OF SURVIVAL OR SUCCESS. Thank you for your attention to this matter!"

MNI US: Bessent Talks On India & China Trade

US Treasury Secretary Scott Bessent speaks to CNBC on a number of trade issues: 

• India: Bessent: "I don't know what's going to happen [on an India trade deal]...It will be up to India...[the US] trade team is frustrated with India...India has not been a great global actor."
• China: Bessent: "The Chinese are tough negotiators...We pushed back on them quite a bit...We have the makings of a deal...I will speak to President Trump [today] about 12 August deadline...Confident [a deal] will be done...This is three-dimensional chess...The Treasury market has not featured in negotiations."

MNI JAPAN: LDP Sets 8 Aug For Crucial Meeting To Decide PM's Fate

The governing Liberal Democratic Party (LDP) will hold a General Assembly meeting of lawmakers from both houses of the National Diet on 8 August. This event could prove crucial in determining whether PM Shigeru Ishiba remains in office or faces a formal move to call a snap party leadership election. 

MNI CANADA: Trump-Palestinian State Recognition Makes Trade Deal 'Very Hard' To Make

Earlier this morning, US President Donald Trump posted on Truth Social, "Wow! Canada has just announced that it is backing statehood for Palestine. That will make it very hard for us to make a Trade Deal with them. Oh’ Canada!!!". Trump's comments come after PM Mark Carney stated on 30 July that Canada plans to recognize a Palestinian state in September, provided the Palestinian Authority meets certain criteria on reforms.

• Carney's shift makes Canada the third G7 country in a week to announce the future recognition of a Palestinian state. It comes after French President Emmanuel Macron and UK PM Sir Keir Starmer both announced that their countries would formally recognise a Palestinian state at the UN General Assembly in September (again, subject to certain conditions regarding the actions of Israel in Gaza/the Palestinian Authority).

MNI US-EU: EU Off-Wine & Spirits Face 15% Tariff Until Sector-Specific Deal Reached

Reuters reports comments from an EU official stating that US tariffs on EU wine and spirits will be set at 15% from 1 August until a sector-specific deal is reached between the two sides. For a number of EU countries, reaching an agreement on wine and spirits has been a key aspect of trade talks with the US. 

US TSYS

MNI US TSYS: Rates & Stocks Reverse Early Support, Extend Late Lows Ahead NFP

• Treasuries had a moderately volatile session Thursday, retreating from midday highs to near late session lows after the bell.
• Tsy Sep'25 10Y futures currently trades +1 at 111-01 (110-31 low, 111-10 high). Treasury futures faced resistance yesterday and pulled back from a key short-term hurdle at 111-14+, the high on Jul 22 and 30. A clear break of this level would highlight a stronger reversal and open 111-28, the Jul 3 high.
• Treasury futures had pared gains/rebounded after flurry of morning data: lower than expected weekly & continuing jobless claims, personal income/spending (priors up-revised slightly) and employ cost index largely in-line.
• Initial jobless claims were lower than expected at 218k (sa, cons 224k) in the week to Jul 26 after an unrevised 217k. Continuing claims were also lower than expected at 1946k (sa, cons 1953k) in the week to Jul 19 after a downward revised 1946k (initial 1955k).
• Treasury futures extend gains ahead midday after Pres Trump's Mexico tariff 90 day extension tweet: "We have agreed to extend, for a 90 Day period, the exact same Deal as we had for the last short period of time, namely, that Mexico will continue to pay a 25% Fentanyl Tariff, 25% Tariff on Cars, and 50% Tariff on Steel, Aluminum, and Copper. Additionally, Mexico has agreed to immediately terminate its Non Tariff Trade Barriers, of which there were many."
• Late month-end rebalancing appeared to be in play a couple dealer desks said as Tsys and stocks looked to extend lows after the bell, US$ climbing higher (BBDXY +2.49 at 1221.74).
• Focus on Friday's employment report for July, is expected at 104k in July per the broad Bloomberg consensus. The Bloomberg Whisper currently stands at 115k with little movement after Wednesday’s better than expected ADP report. Fed speakers are out of blackout tomorrow as well.

OVERIGHT DATA

MNI US OUTLOOK/OPINION: Nonfarm Payrolls Growth Seen Easing Whilst Private Firms

• Released Friday at 0830ET, nonfarm payrolls growth is expected at 104k in July per the broad Bloomberg consensus. The Bloomberg Whisper currently stands at 115k with little movement after Wednesday’s better than expected ADP report.
• See the full MNI Payrolls Preview, here: https://media.marketnews.com/USNFP_Aug2025_Preview_3bfda52c8f.pdf

MNI US DATA: Another Set Of Better Jobless Claims Data

Initial jobless claims surprised lower again in data up to last week as they trend closer to average levels in 2019, a period when the unemployment rate was 40-50bps lower than current levels. Continuing claims meanwhile are very slowly edging lower after a quick climb through May-June. The combination continues to support the “low fire, low hire” categorization of the labor market, with greater emphasis on the former in the past couple weeks. 

• Initial jobless claims were lower than expected at 218k (sa, cons 224k) in the week to Jul 26 after an unrevised 217k. Continuing claims were also lower than expected at 1946k (sa, cons 1953k) in the week to Jul 19 after a downward revised 1946k (initial 1955k).

MNI US DATA: Core PCE Unrounded - Upward Revisions Earlier In The Quarter

A 2-3bp miss for June core PCE with yesterday's Q2 upward revisions instead concentrated in May (+3bps) and April (+4bps)

• M/M (SA): 0.256% in Jun (vs BBG cons 0.3 median, MNI unrounded 0.28 av)
• Follows 0.213% in May (initial 0.179%), 0.18% in Apr (initial 0.136%)
• Y/Y (SA): 2.793% in Jun (cons 2.7) from 2.758% in May

MNI US DATA: PCE Inflation Exceeds Fed Tracking, Extends Stabilization Above Target

Both headline and core PCE inflation were stronger than Fed tracking in June, at least going off Fed Chair Powell’s comments in yesterday’s FOMC press conference, although don’t look too surprising considering an upward surprise in yesterday’s Q2 advance release. It continues trend stabilization in core PCE inflation comfortably above the 2% inflation target, most recently at 2.8% Y/Y, whilst market-based services inflation (a component of interest for the more hawkish members) is still at 3.3% Y/Y.

• Core PCE inflation was softer than analyst unrounded estimates had been tracking in June, at 0.26% M/M (we had seen estimates averaging 0.28% after CPI, PPI and import price inputs) but with larger revisions earlier in Q2 more than offsetting (with April +4bp and May +3bp).

MNI US DATA: Chicago Business Barometer™ - Advances To 47.1 In July

The Chicago Business Barometer™ produced with MNI advanced 6.7 points to 47.1 in July. This was the largest increase in thirteen months, bringing the index to the highest since March 2025. However, the index has still been below 50 for twenty consecutive months. The increase was driven by a sharp rise in New Orders and Order Backlogs. Meanwhile, Production, Employment and Supplier Deliveries saw small decreases.

MNI US DATA: Consumption And Income Momentum Remained Limited At End-Q2

June's Personal Income and Outlays report confirmed a slowdown in spending and income growth in the second quarter, with May looking to have been the weakest month but the subsequent recovery in consumption looking fairly tame so far.

• Real spending rose by 0.1% M/M (0.06% M/M unrounded) in June, remaining below its end-2024 level albeit amid significant volatility along the way (0.7% rise in March ahead of tariffs, 0.1% in April, -0.2% in May). The 3M/3M annualized rate came in at 1.4% (after 0.5% in Q1). This merely confirms the quarterly PCE consumption reading in this week's Q2 GDP report but suggests that there was neither strong momentum coming into nor exiting the quarter.

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 330.3 points (-0.74%) at 44130.98
S&P E-Mini Future down 26.75 points (-0.42%) at 6369.5
Nasdaq down 7.2 points (0%) at 21122.45
US 10-Yr yield is unchanged 0 bps at 4.37%
US Sep 10-Yr futures are up 0.5/32 at 111-0.5
EURUSD up 0.0008 (0.07%) at 1.1413
USDJPY up 1.25 (0.84%) at 150.76
WTI Crude Oil (front-month) down $0.84 (-1.2%) at $69.17
Gold is up $16.3 (0.5%) at $3291.95

European bourses closing levels:
EuroStoxx 50 down 73.26 points (-1.36%) at 5319.92
FTSE 100 down 4.13 points (-0.05%) at 9132.81
German DAX down 196.75 points (-0.81%) at 24065.47
French CAC 40 down 89.99 points (-1.14%) at 7771.97

US TREASURY FUTURES CLOSE

3M10Y +0.313, 2.507 (L: -2.357 / H: 2.706)
2Y10Y -0.823, 41.705 (L: 39.758 / H: 42.784)
2Y30Y -1.131, 94.291 (L: 92.272 / H: 95.841)
5Y30Y -0.482, 92.874 (L: 91.845 / H: 93.875)
Current futures levels:
Sep 2-Yr futures down 1.125/32 at 103-15.75 (L: 103-15.5 / H: 103-18)
Sep 5-Yr futures down 1.25/32 at 108-4.75 (L: 108-04.5 / H: 108-11)
Sep 10-Yr futures up 0.5/32 at 111-0.5 (L: 110-31 / H: 111-10)
Sep 30-Yr futures up 6/32 at 114-2 (L: 113-29 / H: 114-20)
Sep Ultra futures up 8/32 at 117-2 (L: 116-29 / H: 117-27)

MNI US 10YR FUTURE TECHS: (U5) Resistance Remains Intact

• RES 4: 112-15   61.8% retracement of the Apr 7 - 11 sell-off
• RES 3: 112-12+ High Jul 1 and a bull trigger
• RES 2: 111-28   High Jul 3
• RES 1: 111-14+ High Jul 22 & Jul 30
• PRICE:‌‌ 111-03 @ 11:29 BST Jul 31
• 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 faced resistance yesterday and pulled back from a key short-term hurdle at 111-14+, the high on Jul 22 and 30. A clear break of this level would highlight a stronger reversal and open 111-28, the Jul 3 high. On the downside, key support is 110-08+, the Jul 14 and 16 low. Clearance of this level would reinstate a bearish theme. First support is at 110-19+, the Jul 24 low.

SOFR FUTURES CLOSE

Sep 25 -0.015 at 95.770
Dec 25 -0.045 at 95.975
Mar 26 -0.055 at 96.185
Jun 26 -0.035 at 96.435
Red Pack (Sep 26-Jun 27) -0.02 to steady
Green Pack (Sep 27-Jun 28) -0.005 to steady
Blue Pack (Sep 28-Jun 29) +0.005 to +0.015
Gold Pack (Sep 29-Jun 30) +0.015 to +0.025

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

• Secured Overnight Financing Rate (SOFR): 4.32% (-0.04), volume: $2.727T
• Broad General Collateral Rate (BGCR): 4.31% (-0.03), volume: $1.130T
• Tri-Party General Collateral Rate (TCR): 4.31% (-0.03), volume: $1.098T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $105B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $275B

FED Reverse Repo Operation

RRP usage rebounds to $214.445B this afternoon from $155.481B yesterday, total number of counterparties at 52. Usage had fallen to $54.772B on Wednesday, April 16 -- lowest level since April 2021 - compares to July 1: $460.731B highest usage since December 31.

MNI PIPELINE: Corporate Bond Update: $1B Welltower 2Pt Launched

$4.3B to Price Thursday

• Date $MM Issuer (Priced *, Launch #)
• 07/31 $2B #UBS $750M PerpNC5.5 6.6%, $1.25B PerpNC10 7%
• 07/31 $1.3B #Bunge Ltd Finance $650M 5Y +63, $650M 10Y +82
• 07/31 $1B #Welltower $400M 5Y +62, $600M 10Y +82
• 07/31 $Benchmark Allied Universal (US$/EUR) investor calls

MNI BONDS: EGBs-GILTS CASH CLOSE: Curve Flattening Continues

Curves flattened for a third consecutive session Thursday.

• Longer-end yields moved lower at the open, with 10Y Bund yields touching their lowest intraday level since July 24 and Gilts July 7.
• The rest of the session was largely range-bound in nature, with weakness in European equities keeping yields contained amid solid-leaning US data.
• The short-end lagged, following Wednesday's hawkishly-perceived Federal Reserve meeting outcome.
• Reaction to European data was limited, including slight upside in German state-level, French and Italian flash July inflation readings.
• The German curve twist flattened, with the UK's bull flattening. Periphery/semi-core EGB spreads were mixed but little changed on the whole.
• Friday's schedule includes final July manufacturing PMIs and Eurozone flash July HICP.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 1bps at 1.964%, 5-Yr is down 0.1bps at 2.295%, 10-Yr is down 1.1bps at 2.695%, and 30-Yr is down 2.8bps at 3.176%.
• UK: The 2-Yr yield is down 1.5bps at 3.861%, 5-Yr is down 3.4bps at 4.007%, 10-Yr is down 3.4bps at 4.569%, and 30-Yr is down 3.9bps at 5.376%.
• Italian BTP spread down 0.1bps at 81.3bps / French up 0.4bps at 65.7bps

MNI FOREX: BoJ Give Greenlight to Further USD/JPY Gains

• Markets were broadly in consolidation across Thursday trade: EUR/USD held inside the recent range, propped up just above yesterday's lows at 1.1401. With both the July ECB and Fed rate decisions now cleared - it's left to the US data to further curtail expectations of a rate cut from the Fed at the September meeting - particularly as the mid-week press conference with Powell pressured assumed policy rates through the end of the year and into the first half of 2026.
• While EUR trade was contained, GBP/USD edged to a new pullback low.  This marks a sixth consecutive session of lower lows for the pair, and a clean break of the 100-dma at 1.3338. This week's weakness exposes key support into the 1.3140 level, a break below which extends the sharp correction off the early July high.
• The standout Thursday was JPY. USD/JPY rallied sharply throughout the day despite the weakness in core equity futures. The recent rally in USD/JPY and EUR/JPY was given another tailwind following the BoJ decision and the board's decision to play down the risk of inflation through this year and into the next - pressuring BoJ hike expectations this year.
• AUDUSD has seen little in the way of a recovery rally after breaking lower this week. Rate has traded through both the 20- and 50-day EMAs. This undermines a recent bullish theme and signals the likely start of a corrective cycle. Note that support 0.6455 the Jul 17 low, has also been cleared.
• Focus Friday notably switches to the July NFP print. Street looks for job gains of 104k, while the household survey's unemployment rate will continue to be watched closely as a barometer of broad labor market tightness amidst significant immigration curbs. Powell stressed in Wednesday's FOMC press conference that the reduction in labor demand has been in tandem with reduced supply. 

FRIDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
01/08/2025	0715/0915	**	ES	S&P Global Manufacturing PMI (f)
01/08/2025	0745/0945	**	IT	S&P Global Manufacturing PMI (f)
01/08/2025	0750/0950	**	FR	S&P Global Manufacturing PMI (f)
01/08/2025	0755/0955	**	DE	S&P Global Manufacturing PMI (f)
01/08/2025	0800/1000	*	IT	Retail Sales
01/08/2025	0800/1000	**	EU	S&P Global Manufacturing PMI (f)
01/08/2025	0830/0930	**	GB	S&P Global Manufacturing PMI (Final)
01/08/2025	0900/1100	***	EU	HICP (p)
01/08/2025	-	***	US	Domestic-Made Vehicle Sales
01/08/2025	1230/0830	***	US	Employment Report
01/08/2025	1345/0945	***	US	S&P Global Manufacturing Index (final)
01/08/2025	1400/1000	***	US	ISM Manufacturing Index
01/08/2025	1400/1000	*	US	Construction Spending
01/08/2025	1400/1000	***	US	U. Mich. Survey of Consumers
01/08/2025	1400/1000	**	US	University of Michigan Surveys of Consumers Inflation Expectation
01/08/2025	1400/1000	*	US	Construction Spending
01/08/2025	1700/1300	**	US	Baker Hughes Rig Count Overview - Weekly
01/08/2025	1700/1300	**	US	Baker Hughes Rig Count Overview - Weekly