MNI ASIA OPEN: Focus Turns to PMIs, ISM Services

EXECUTIVE SUMMARY

• MNI US Employment Insight: Sept FOMC In Focus As Jobs Stall
• MNI TARIFFS: Trump To "Substantially" Raise Tariffs On India For Buying Russian Oil
• MNI US DATA: Factory Orders Report Doesn’t Materially Alter Core Orders Q2 Softness

US

MNI US Employment Insight: Sept FOMC In Focus As Jobs Stall

The weak payrolls report dominated what had been a decent-sized hawkish reaction from a patient Fed Chair Powell not giving a nod to a September rate cut at Wednesday’s FOMC press conference.  

• Nonfarm payrolls growth underwhelmed at 73k in July (cons 104k) but the major headline was the -258k two-month downward revision, of which -139k came from the private sector and -119k from the public sector. Outside of April 2020, that’s the largest two-month downward revision in at least forty-five years.
• We caution however that whilst jobs growth has soured sharply, it’s doing so along with a significant slowing in labor supply under immigration curbs.
• As such, the unemployment rate may have technically ticked up to a new cycle high of 4.248% (exceeding the 4.244% in May) but it continues to roughly plateau in the 4.0-4.25% range seen since last July.

NEWS

MNI TARIFFS: Trump To "Substantially" Raise Tariffs On India For Buying Russian Oil

US President Donald Trump posts on Truth Social: "India is not only buying massive amounts of Russian Oil, they are then... selling it on the Open Market for big profits... Because of this, I will be substantially raising the Tariff paid by India to the USA."

MNI US-RUSSIA: Kremlin Downplays US Nuclear Sub Deployment; Putin May Meet Witkoff

Reuters reports comments from Kremlin spox Dmitry Peskov. Says that Russia "has no desire to get into a polemic with [US President Donald] Trump over nuclear submarines", adding "Its obvious that US submarines are already on combat duty anyway." This comes after Trump told media over the weekend that he had instructed the US Navy to move two nuclear submarines "in the appropriate region" [i.e.closer to Russia] following inflammatory comments from former president and current Deputy Chair of the National Security Council Dmitry Medvedev. 

MNI ISRAEL: US/Israel Eye Compr. Gaza Deal, Backed By Threat Of New IDF Offensive

Israel and the US appear to be pivoting strategy away from an incremental Gaza ceasefire to a comprehensive deal, after the latest round of mediated talks with Hamas stalled. The FT reports that Israel is “threatening to expand its military offensive into additional areas of Gaza in a bid to increase pressure on Hamas...”.

MNI SECURITY: Netherlands To Be First Contributor To New Ukraine Financing Mechanism

The Netherlands will be the first country to contribute (500 million euros) to NATO’s new "Priority Ukraine Requirements List" (PURL) financing mechanism for Ukraine, per Reuters. Comes after President Donald Trump said last month that the US and NATO would develop a mechanism for the United States to maintain military support for Ukraine via NATO partners in Europe. The financing initiative is part of a two-pronged approach to push Russia to the negotiating table with Ukraine.

US TSYS

MNI US TSYS: Holding Firm, Focus on Tuesday PMIs, ISM Services Data

• Treasuries remain firmer after the bell, Sep'25 10Y futures drifting near session highs for much of the second half. Curves reversed early steepening as bonds rebounded, focus on dovish rate cut pricing instead of Friday's slowing labor market data.
• Tsy Sep'25 10Y futures currently trades +4.5 at 112-11 vs. 112-14 high, curves flatter: 2s10s -2.157 at 50.855, 5s30s -1.554 at 104.770.
• The weak payrolls report dominated what had been a decent-sized hawkish reaction from a patient Fed Chair Powell not giving a nod to a September rate cut at Wednesday’s FOMC press conference. Nonfarm payrolls growth underwhelmed at 73k in July (cons 104k) but the major headline was the -258k two-month downward revision, of which -139k came from the private sector and -119k from the public sector.
• Projected rate cut pricing holds +/- .5bp vs pre-open highs (*) levels: Sep'25 at -23.2bp (-22.6bp), Oct'25 at -40.6bp (-41.1bp), Dec'25 at -61.4bp (-61.6bp).
• Factory orders fell -4.8% M/M (sa, cons -4.8) in June after 8.3% (initial 8.2) in May as they confirmed gyrations driven by nondefense aircraft in the previously released durable goods data (-52% M/M in June after 232% in May).
• Look ahead to Tuesday: China composite and manufacturing PMI data, final PMI prints across Europe and the US as well as the US ISM services index for July.

OVERNIGHT DATA

MNI US DATA: Factory Orders Report Doesn’t Materially Alter Core Orders Q2 Softness

The factory orders report for June didn’t contain any major surprises, with core orders continuing to point to pullback in the value of orders in Q2 after surging in Q1 on tariff front-running. It chimes with recent weakness in the ISM manufacturing survey, where July’s soft report suggests more of the same ahead in the near-term albeit with a questionable fit between the two now.   

• Factory orders fell -4.8% M/M (sa, cons -4.8) in June after 8.3% (initial 8.2) in May as they confirmed gyrations driven by nondefense aircraft in the previously released durable goods data (-52% M/M in June after 232% in May).
• Far less volatile core durable goods data meanwhile saw marginal downward revisions for June that don’t alter a trend of recent positive momentum in shipments but with orders slipping.
• Specifically, core shipments rose 0.3% M/M in June (initial -0.4) after an unrevised 0.4% M/M in May, whilst core orders fell -0.8% M/M (initial -0.7) after a downward revised 1.9% (initial 2.0).
• It leaves core shipments rising a nominal 2.9% (initial 3.1) annualized in Q2 after 4.7% in Q1, whereas core orders have slipped -2.1% (initial -1.7%) after 9.2% in Q1.
• This weakness in orders is more in keeping with the ISM manufacturing survey even if there has been a disconnect between the two. July’s surprisingly weak ISM mfg saw its headline index fall to 48.0 for its lowest since October whilst its new orders component at 47.1 notched a six consecutive monthly reading in contractionary territory. 

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA up 562.32 points (1.29%) at 44151.75
S&P E-Mini Future up 86 points (1.37%) at 6351.5
Nasdaq up 375.4 points (1.8%) at 21026.06
US 10-Yr yield is down 1.8 bps at 4.1982%
US Sep 10-Yr futures are up 5/32 at 112-11.5
EURUSD down 0.002 (-0.17%) at 1.1568
USDJPY down 0.39 (-0.26%) at 147.01
WTI Crude Oil (front-month) down $1.2 (-1.78%) at $66.14
Gold is up $12.21 (0.36%) at $3375.58

European bourses closing levels:
EuroStoxx 50 up 76.72 points (1.49%) at 5242.32
FTSE 100 up 59.72 points (0.66%) at 9128.3
German DAX up 331.72 points (1.42%) at 23757.69
French CAC 40 up 85.85 points (1.14%) at 7632.01

US TREASURY FUTURES CLOSE

3M10Y +1.646, -6.189 (L: -10.047 / H: -4.308)
2Y10Y -2.147, 50.865 (L: 49.623 / H: 54.704)
2Y30Y -2.978, 110.656 (L: 108.323 / H: 116.298)
5Y30Y -1.381, 104.943 (L: 102.812 / H: 108.295)
Current futures levels:
Sep 2-Yr futures up 0.75/32 at 103-31.5 (L: 103-29.125 / H: 104-01.875)
Sep 5-Yr futures up 3.25/32 at 109-4 (L: 108-29.25 / H: 109-06.25)
Sep 10-Yr futures up 5/32 at 112-11.5 (L: 111-31.5 / H: 112-14)
Sep 30-Yr futures up 6/32 at 115-28 (L: 115-00 / H: 115-31)
Sep Ultra futures up 6/32 at 119-1 (L: 117-24 / H: 119-08)

MNI US 10YR FUTURE TECHS: (U5) Testing Bull Trigger

• RES 4: 112-23 High May 1
• RES 3: 112-15   61.8% retracement of the Apr 7 - 11 sell-off
• RES 2: 112-14 High Aug 4
• RES 1: 112-12+ High Jul 1 and a bull trigger
• PRICE:‌‌ 112-11 @ 1530 ET Aug 4
• 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 rallied sharply on the back of the soft NFP print and remain firm headed into the Monday open. Friday’s rally resulted in a break of key short-term resistance at 111-14+, the high on Jul 22 and 30 low, as well as 111-28. The clear break here highlights a stronger reversal to open the bull trigger at 112-12+, the Jul 1 high and the next key resistance. 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 +0.015 at 95.950
Dec 25 +0.025 at 96.285
Mar 26 +0.025 at 96.520
Jun 26 +0.015 at 96.745
Red Pack (Sep 26-Jun 27) +0.005 to +0.015
Green Pack (Sep 27-Jun 28) +0.015 to +0.030
Blue Pack (Sep 28-Jun 29) +0.025 to +0.030
Gold Pack (Sep 29-Jun 30) +0.025 to +0.030

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

• Secured Overnight Financing Rate (SOFR): 4.34% (-0.05), volume: $2.885T
• Broad General Collateral Rate (BGCR): 4.32% (-0.04), volume: $1.143T
• Tri-Party General Collateral Rate (TCR): 4.32% (-0.04), volume: $1.109T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $129B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $287B

FED Reverse Repo Operation

RRP usage rebounds to $125.730B this afternoon from $97.426B Friday (lowest levels since April 25), total number of counterparties at 26. 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 Update: Over $14.5B To Price Monday

• Date $MM Issuer (Priced *, Launch #)
• 08/04 $3.25B #Barclays $1.5B 4.25NC3.25 +83, $500M 4.25NC3.25 SOFR+108, $1.25B 21NC10 +110
• 08/04 $2B #FISERV $1B +5Y +87, $1B 10Y +107
• 08/04 $2B Level 3 Financing 8.5NC3 7%, upsized from $1.25B
• 08/04 $1.525B #Dominion Energy $825M 30.5NC5.25 6%, $700M 30.5NC10.25 6.2%
• 08/04 $1.5B #Quanta Services $500M Each: 3Y +65, +5Y +80, 10Y +93
• 08/04 $1.25B Level 3 Financing 8.5NC3
• 08/04 $1B #Altria $500M 5Y +85, $500M 10Y +112
• 08/04 $700M #Kentucky Utilities 30Y +105
• 08/04 $700M #Louisville Gas & Electric 30Y +105
• 08/04 $600M #CenterPoint Houston 10Y +80
• 08/04 $Benchmark KKR & Co. 10Y +93
• 08/04 $Benchmark Chub Holdings 10Y +70
• 08/04 $Benchmark Public Service of Colorado 10Y +97, 2055 Tap +102

MNI FOREX: USD Stabilizes, But Little Sign of a S/T Bounce

• Following Friday's sharp downdraft in the USD, FX markets were more stable Monday, with the USD pulling back only a small part of the post NFP weakness. The ICE USD Index saw some support into the 50-dma at 98.303 - however Monday's price action took the form of stabilization rather than any bounce in prices.
• The more stable market Monday aided a recovery in GBP. GBP/USD traded either side of the 1.33 handle - topping Friday's high in the process. Moves come ahead of this Thursday's BoE decision at which markets fully discount a 25bps rate cut. The vote split among the MPC will be carefully watched as a clue for future easing plans across the second half of the year. The bearish theme in GBPUSD remains intact for now - despite Friday’s rally. Last week’s sell-off resulted in a breach of the bear trigger at 1.3365, the Jul 16 low. The break confirms a resumption of the downleg that started Jul 1 and highlights a clear breach of the trendline drawn from the Jan 13 low.
• JPY was the firmest in G10 - prompting a second session of losses for USD/JPY. The rate is now through Friday's low and going further to erase the rally off the mid-July low. Layered support comes in between 145.71 - 145.86 - marking the confluence of the 100-dma, 50-dma and the mid-July lows.
• Meanwhile, CHF was the weakest in G10 - seeing very little reprieve from Trump's decision to install some of the most sizeable tariffs against Switzerland. Reports that the Swiss government are to make a more attractive offers as part of negotiations did little to reverse the CHF weakness, which sees USD/CHF continue to trade either side of the 0.8074 50-dma.
• Focus Tuesday rests on China composite and manufacturing PMI data, final PMI prints across Europe and the US as well as the US ISM services index for July. BoJ minutes are the sole central bank release in G10 - however any further commentary from Fed officials will be carefully watched considering the focus on who could replace Fed's Kugler after her resignation over the weekend. 

TUESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
05/08/2025	0645/0845	*	FR	Industrial Production
05/08/2025	0700/0900	**	ES	Industrial Production
05/08/2025	0715/0915	**	ES	S&P Global Services PMI (f)
05/08/2025	0715/0915	**	ES	S&P Global Composite PMI (final)
05/08/2025	0745/0945	**	IT	S&P Global Services PMI (f)
05/08/2025	0745/0945	**	IT	S&P Global Composite PMI (final)
05/08/2025	0750/0950	**	FR	S&P Global Services PMI (f)
05/08/2025	0750/0950	**	FR	S&P Global Composite PMI (final)
05/08/2025	0755/0955	**	DE	S&P Global Services PMI (f)
05/08/2025	0755/0955	**	DE	S&P Global Composite PMI (final)
05/08/2025	0800/1000	**	EU	S&P Global Services PMI (f)
05/08/2025	0800/1000	**	EU	S&P Global Composite PMI (final)
05/08/2025	0830/0930	**	GB	S&P Global Services PMI (Final)
05/08/2025	0830/0930	***	GB	S&P Global/ CIPS UK Final Composite PMI
05/08/2025	0900/1100	**	EU	PPI
05/08/2025	0900/1000	**	GB	Gilt Outright Auction Result
05/08/2025	1230/0830	**	US	Trade Balance
05/08/2025	1230/0830	**	CA	International Merchandise Trade (Trade Balance)
05/08/2025	1230/0830	**	US	Trade Balance
05/08/2025	1255/0855	**	US	Redbook Retail Sales Index
05/08/2025	1345/0945	***	US	S&P Global Services Index (final)
05/08/2025	1345/0945	***	US	S&P Global US Final Composite PMI
05/08/2025	1400/1000	***	US	ISM Non-Manufacturing Index
05/08/2025	1530/1130	**	US	US Treasury Auction Result for 52 Week Bill
05/08/2025	1700/1300	***	US	US Note 03 Year Treasury Auction Result
06/08/2025	2330/0830	**	JP	average wages (p)