MNI ASIA OPEN: Late Risk-Off as US Marines Deployed to LA

EXECUTIVE SUMMARY

• MNI US TSYS: US Marines Deployed to Los Angeles
• MNI US-CHINA: Talks Done For The Day, To Resume Tuesday
• MNI US-CHINA: Hassett-Chip Controls Could Be Relaxed If Rare Earth Deal Reached
• MNI JAPAN: Govt Reportedly Considering Fresh Drive for Cash Handouts
• MNI US DATA: NY Fed Consumer Less Pessimistic On Jobs, Finances 
• MNI US DATA: NY Fed Consumer Inflation Concerns Ease In May

US

MNI US TSYS: US Marines Deployed to Los Angeles

Muted reaction so far, stocks pared gains after wires reported a battalion of Marines (appr 500) to be deployed to Los Angeles. 

MNI US-CHINA: Talks Done For The Day, To Resume Tuesday

Bloomberg reports: "US-China trade talks in London will continue tomorrow, according to a person familiar with the talks. Talks to resume at 10a in London" [0500ET]. Today's meeting began just after 1pm local time (0800ET), though there were basically no headlines emerging from the talks themselves. Little market reaction to the news that talks would continue - an extension into Tuesday was seen as a distinct possibility.

NEWS

MNI US-CHINA: Hassett-Chip Controls Could Be Relaxed If Rare Earth Deal Reached

Talks between US and Chinese delegations have been underway in London for around two hours, with expectations that the discussions could run well into the evening and even into 10 June. Possibly countering headlines about talks running into tomorrow, Kevin Hassett, director of the National Economic Council, told CNBC that "I expect this to be a short meeting with a big strong handshake," indicating his anticipation of a deal on rare earth exports from China, recently restricted but crucial for US high-tech manufacturing. 

US-CHINA: WSJ-Trump Gives US Team Power To Lift Export Controls In Talks

WSJ reports that according to people familiar with the matter, "Ahead of U.S.-China talks in London, President Trump authorized Treasury Secretary Scott Bessent's team to negotiate away recent restrictions on the sale of a wide variety of technology and other products to China." 

CANADA: PM Brings Forward 2% GDP On Defence Spending Target By Several Years

Prime Minister Mark Carney is announcing a major increase in military spending, committing to hitting NATO's (current) 2% of GDP spending on defence target in the 2025-26 fiscal year ending March 2026, bringing up the schedule significantly. Previous PM Justin Trudeau said that the 2% target would be hit by 2032, while on the campaign trail in May, Carney said he would advance this target to 2030 if elected. 

MNI JAPAN: Govt Reportedly Considering Fresh Drive for Cash Handouts

The Japanese government are reportedly mulling cash handouts as a relief measure, according to Mainichi. Not the first time we've seen this policy topic recently - this seems to be reviving an old policy idea that was dropped as recently as mid-April, at which the government dropped plans for tariff-tied cash handouts before the election in the upper house. Highlights from the article, "a proposal has emerged to provide tens of thousands of yen to every citizen with no income restrictions.

US TSYS

US TSYS: Late Risk-Off Tone as Marine Battalion Deployed to LA

• Muted reaction after the bell, stocks pared gains after wires reported a battalion of Marines (appr 500) to be deployed to Los Angeles to quell immigration protest unrest.
• Treasuries blipped higher after NY Fed 1Y inflation expectations come out lower than expected. Tsys remain inside session range, curves steeper with Bonds lagging.
• 1-Year median inflation expectations fell to 3.2% from 3.6% prior, the biggest drop since February 2023 to the lowest level since February of this year. 3Y median ticked 0.2pp lower to 3.00% (fully reversing what now appears to be a temporary tariff-led increase in April).
• Tsy Sep'25 10Y futures currently trades 6 at 110-03  vs. 110-07.5 session high, technical resistance above at 110-20.5 (50-day EMA).
• Curves steeper: 2s10s +0.903 at 47.391, 5s30s +1.498 at 86.007
• Cross asset: Stocks mildly higher, paring gains (SPX eminis +2.25 at 6009.0), Gold higher at 3327.5.
• Bbg US$ index little weaker, inside range at 1209.21 (-2.53).

OVERNIGHT DATA

MNI US DATA: NY Fed: Consumers Less Pessimistic On Jobs, Finances 

The vast majority of Labor Market and Household Finance categories in the NY Fed's Survey of Consumer Expectations (SCE) improved in May, though many remain weaker compared with late 2024/early 2025 as tariff uncertainty appears to continue in respondents' minds.

• One-year ahead earnings growth expectations rose 0.2pp to 2.7%, not far from the 12-month average of 2.8%, while mean unemployment expectations (re the mean probability the US national unemployment rate will be higher in 1 year's time) fell 3.3pp to 40.8%, though that's still above the 37.7% 12-month average. It should be noted that this hasn't been a particularly effective series in predicting future unemployment rates, but is still useful as a gauge of current consumer sentiment.
• Respondents' mean probability of losing their job in the next 12 months also improved, falling 0.5pp to 14.8%, with the expected 12-month quits rate  up 0.1pp to 18.3% - and the perceived probability of finding another job in 3 months (if respondents left the current job) rose 1.5pp to 50.7% (12m avg 52.2%).

MNI US DATA: NY Fed Consumer Inflation Concerns Ease In May

The New York Fed's Survey of Consumer Expectations (SCE) showed an improvement across the board in May, with respondents both less pessimistic on economic prospects and less concerned about future inflation compared with April. The prior months will of course have been impacted by the anticipation and announcement of April's "Liberation Day" tariffs, while May's respondents will have taken into account the US-China trade conflict climbdown on May 12 (NY Fed: "The survey is structured so that a roughly equal amount of data are collected every week of the month.")

• 1-Year median inflation expectations fell to 3.2% from 3.6% prior, the biggest drop since February 2023 to the lowest level since February of this year. 3Y median ticked 0.2pp lower to 3.00% (fully reversing what now appears to be a temporary tariff-led increase in April).
• The 5Y median fell to the lowest unrounded (2.61% from 2.74%) since January 2024, and is now nearly 0.4pp below the early-2024 peak. These levels are much closer to the longer-term averages, having not come close to pandemic reopening highs (at least in the cases of the 1Y and 3Y figures, the 5Y started in 2022).

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 1.11 points (0%) at 42761.76
S&P E-Mini Future up 3.5 points (0.06%) at 6010.5
Nasdaq up 61.3 points (0.3%) at 19591.24
US 10-Yr yield is down 2.8 bps at 4.4778%
US Sep 10-Yr futures are up 8/32 at 110-5
EURUSD up 0.0029 (0.25%) at 1.1427
USDJPY down 0.28 (-0.19%) at 144.56
WTI Crude Oil (front-month) up $0.74 (1.15%) at $65.32
Gold is up $18.75 (0.57%) at $3329.41

European bourses closing levels:
EuroStoxx 50 down 8.65 points (-0.16%) at 5421.52
FTSE 100 down 5.63 points (-0.06%) at 8832.28
German DAX down 130.14 points (-0.54%) at 24174.32
French CAC 40 down 13.4 points (-0.17%) at 7791.47

US TREASURY FUTURES CLOSE

3M10Y -3.248, 12.454 (L: 10.643 / H: 16.496)
2Y10Y +0.742, 47.23 (L: 46.179 / H: 48.803)
2Y30Y +1.151, 94.046 (L: 92.385 / H: 96.727)
5Y30Y +1.346, 85.855 (L: 84.595 / H: 87.795)
Current futures levels:
Sep 2-Yr futures up 2.375/32 at 103-16.375 (L: 103-14.375 / H: 103-17.375)
Sep 5-Yr futures up 6/32 at 107-22.25 (L: 107-16.75 / H: 107-24)
Sep 10-Yr futures up 8/32 at 110-5 (L: 109-29 / H: 110-07.5)
Sep 30-Yr futures up 9/32 at 112-13 (L: 111-25 / H: 112-16)
Sep Ultra futures up 7/32 at 115-21 (L: 114-28 / H: 115-26)

MNI US 10YR FUTURE TECHS: (U5) Bearish Threat

• RES 4: 111-30   76.4% retracement of the May 1 - 22 downleg
• RES 3: 111-19+ 1.0% 10-dma envelope
• RES 2: 111-14+ High Jun 5 & 61.8% of the May 1 - 22 downleg
• RES 1: 110-20+ 50-day EMA  
• PRICE:‌‌ 110-07 @ 1440 ET Jun 9
• SUP 1: 109-26   Low May 29         
• SUP 2: 109-12+ Low May 22 and the bear trigger
• SUP 3: 109-09+ Low Apr 11 and key support
• SUP 4: 108-25+ 0.764 proj of the Apr 7 - 11 - May 1 price swing

The reversal in Treasury futures from last Thursday’s high, undermines a recent bullish theme. An extension would expose support at 109-26, the May 29 low, where a break would open key support and the bear trigger, at 109-12+, the May 22 low. Key short-term resistance has been defined at 111-14+, a Fibonacci retracement and the Jun 5 high. A break of this hurdle would be bullish.  

SOFR FUTURES CLOSE

Jun 25 steady00 at 95.678
Sep 25 steady00 at 95.855
Dec 25 +0.010 at 96.10
Mar 26 +0.025 at 96.310
Red Pack (Jun 26-Mar 27) +0.040 to +0.055
Green Pack (Jun 27-Mar 28) +0.035 to +0.050
Blue Pack (Jun 28-Mar 29) +0.020 to +0.035
Gold Pack (Jun 29-Mar 30) +0.010 to +0.020

REFERENCE RATES (PRIOR SESSION)

US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 4.29% (+0.00), volume: $2.667T
• Broad General Collateral Rate (BGCR): 4.27% (+0.00), volume: $1.072T
• Tri-Party General Collateral Rate (TCR): 4.27% (+0.00), volume: $1.043T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $118B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $301B 

FED Reverse Repo Operation

RRP usage rises to $179.315B this afternoon from $149.284B Friday, total number of counterparties at 37. Usage had fallen to $54.772B on Wednesday, April 16 -- lowest level since April 2021. Conversely, usage had surged to the highest level since December 31, 2024 on Monday, March 31: $399.167B.

MNI PIPELINE: Corporate Bond Update: Air Products, Amphenol Debt Launched

• Date $MM Issuer (Priced *, Launch #)
• 06/09 $1.2B Whirlpool $600M 5NCL 6.375%, $600M 8NCL 6.625%
• 06/09 $1.1B #Air Products $600M 3Y +35, $500M +7Y +65
• 06/09 $750M #Amphenol 3Y +43
• For Tuesday's schedule:
• 06/10 $Benchmark Bahamas investor calls

MNI BONDS: EGBs-GILTS CASH CLOSE: Yields Dip Ahead Of UK Labour Market Data

European yields fell modestly Monday, with bellies outperforming on core curves.

• Bunds and Gilts were solid early, the former continuing a partial recovery from the post-ECB lows.
• The rally lost steam though. There was a modicum of risk appetite on reports suggesting the US and China could reach an agreement on key issues central to their trade dispute (including on export restrictions/rare earths), while higher oil prices weighed in early afternoon trade.
• Core FI would get a bit of a lift from a notable downtick in US consumer inflation expectations (NY Fed), helping cement modest gains.
• The German and UK curves leaned slightly steeper overall, with 5Ys slightly outperforming.
• Periphery/semi-core EGB spreads were little changed, with BTPs slightly outperforming.
• Tuesday's highlight is the UK labour market report - MNI's preview is here. The most important number remains the private AWE ex-bonus, which consensus expects to fall to 5.3% in the 3-months to April from 5.56%Y/Y in the 3-months to March. The UK spending review comes Weds.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.6bps at 1.864%, 5-Yr is down 1.9bps at 2.156%, 10-Yr is down 0.9bps at 2.567%, and 30-Yr is up 0.3bps at 3.012%.
• UK: The 2-Yr yield is down 1bps at 4.003%, 5-Yr is down 1.7bps at 4.138%, 10-Yr is down 1.2bps at 4.632%, and 30-Yr is down 1.1bps at 5.328%.
• Italian BTP spread down 0.6bps at 92bps / French OAT unchanged at 67.2bps 

MNI FOREX: Greenback Moderately Weaker, Antipodean FX Outperforms

• Although off its worst levels, the USD index remains lower on the session, hovering in close proximity to pre-NFP levels. Overall, this keeps the prevailing theme of a weaker greenback intact, and the DXY within range of the early June pullback low at 98.351 - a key level of support.
• Ahead of U.S.-China talks in London today, President Trump authorized Treasury Secretary Scott Bessent's team to negotiate away recent restrictions on the sale of a wide variety of technology and other products to China, according to people familiar with the matter. This is keeping risk sentiment buoyant to start the week.
• This cautious optimism is prompting AUD and NZD to outperform on Monday. NZDUSD has broken back above an important zone of resistance between 0.6025/40. Spot continues to threaten a daily close above the US election related highs, signalling scope for a more protracted recovery towards 0.6168, the 76.4% retracement of the Sep '24 - Apr '25 selloff. Initial resistance is seen at 0.6080, last week's high print.
• For AUDUSD, last Thursday’s close above 0.6500 was the highest in 6 months, and Monday’s resumption of strength keeps trend signals bullish. The pair’s recent climb signals scope for an initial climb to 0.6550, a Fibonacci retracement and the Nov 25 high.
• Elsewhere, the likes of JPY, EUR and GBP have all risen between 0.2-0.3% to start the week. USDJPY displayed its usual volatility in posting a near 100 pip range and has settled just below 144.50 as we approach the APAC crossover. EURUSD is consolidating back above 1.14 as markets continue to digest the latest ECB decision and await further US data, most notably – the May inflation release on Wednesday.
• Uk labour market data kicks off Tuesday’s calendar, while markets will remain sensitive to global trade developments.

MNI OPTIONS: Expiries for Jun10 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.1300-20(E1.5bln), $1.1370-75(E920mln), $1.1400-25(E2.1bln)
• USD/JPY: Y143.90-00($1.1bln), Y144.85-00($805mln)
• AUD/USD: $0.6420(A$771mln), $0.6460(A$529mln)
• USD/CAD: C$1.3695($869mln)

TUESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
10/06/2025	0600/0800	***	NO	CPI Norway
10/06/2025	0600/0700	***	GB	Labour Market Survey
10/06/2025	0600/0800	**	SE	Private Sector Production m/m
10/06/2025	0800/1000	*	IT	Industrial Production
10/06/2025	1000/0600	**	US	NFIB Small Business Optimism Index
10/06/2025	-	***	CN	Money Supply
10/06/2025	-	***	CN	New Loans
10/06/2025	-	***	CN	Social Financing
10/06/2025	1255/0855	**	US	Redbook Retail Sales Index
10/06/2025	1530/1130	**	US	US Treasury Auction Result for 52 Week Bill
10/06/2025	1700/1300	***	US	US Note 03 Year Treasury Auction Result