MNI ASIA OPEN: Philly Fed Non-Mfg Improved, Costs Elevated

EXECUTIVE SUMMARY

• MNI US: Trump Downplays Removing Powell, To Decide On Xi Meeting "Pretty Soon"
• MNI EU: Trade Commissioner Meets w/UAE Counterpart As EU Looks To Bolster GCC Links
• MNI RUSSIA: Kremlin-"No Reason To Expect Miraculous Breakthroughs" In 23 July Talks
• MNI US DATA: Redbook Retail Sales Maintain Steady Growth In Early Q3
• MNI US DATA: Philly Fed Services Sentiment Greatly Improved, Amid Stubborn Inflation

US

MNI US: Trump Downplays Removing Powell, To Decide On Xi Meeting "Pretty Soon"

President Donald Trump, speaking alongside Philippine President Ferdinand Marcos Jr. at the White House, has again downplayed the prospect of removing Fed Chair Jerome Powell before the end of his term in 2026. Asked if he believes Powell should resign: “I think he’s doing a bad job, but he’s going to be out pretty soon anyway. In eight months, he’ll be out. I call him ‘too late’, he’s too late all the time. He should have lowered interest rates many times.”

• Asked about a potential meeting with Chinese President Xi Jinping and Russian President Vladimir Putin in Beijing in September: "We have a lot of meetings possible. President Xi has invited me to China and we'll probably be doing that in the not too distant future. A little bit out, but not too distant We'll make those decisions pretty soon."

NEWS

MNI EU: Trade Commissioner Meets w/UAE Counterpart As EU Looks To Bolster GCC Links

European Trade Commissioner Maros Sefcovic meets with the UAE's Trade Minister Thani bin Ahmed Al Zeyoudi today, the latest in a series of talks as both sides seek to reach a Comprehensive Economic Partnership Agreement (CEPA). Discussions on a CEPA were launched earlier in 2025, with the Commission stating in April that talks will "focus on liberalising trade in goods, services, and investment, while deepening cooperation in strategic sectors such as renewable energy, green hydrogen and critical raw materials."

MNI RUSSIA: Kremlin-"No Reason To Expect Miraculous Breakthroughs" In 23 July Talks

Speaking to reporters regarding a third round of direct ceasefire talks with Ukraine, Kremlin spox Dmitry Peskov says there is "no reason to expect miraculous breakthroughs", saying such a development is "unlikely in the current situation". Peskov says the agenda is "complicated", and that memorandums exchanged in the second round of talks need to be discussed, adding "a lot of work needs to be done before talking about the possibility of top-level meetings." Peskov says "I would not assess the potential timeframes [for reaching a settlement agreement] at all. It depends on many factors, and any forecasts now would be wrong." 

MNI US-CHINA: Swedish PM Confirms Stockholm Trade Talks 28-29 July

Swedish PM Ulf Kristersson has formally confirmed that US and Chinese delegations will meet in Stockholm on Monday 28 and Tuesday 29 July for talks aimed at reaching an agreement on trade and tariffs. Kristersson says that "The talks primarily concern the relationship between the US and China, but are also of great importance for global trade and the economy". These will be the third set of US-China talks held on foreign soil after the first and second rounds took place in Geneva, Switzerland, and London, UK in May and June, respectively.

MNI CHINA-EU: Trade Commissioner-"Must Work Towards Balanced Partnership" w/China

(MNI) London - Reuters reports comments from European Trade Commissioner Maros Sefcovic regarding the upcoming EU-China summit on 24 July. Says that the meeting "is an opportunity to discuss critical trade and investment issues," adding "We must work towards a more balanced partnership."

US TSYS

MNI US TSYS: Tsys Back at July 10 Lvls, Philly Fed Non-Mfg Improves, Costs Elevated

• Treasuries bounced off early Tuesday lows, initially tracking a similar move in German Bunds - before settling into a narrow range near session highs since midmorning.
• The US$ resumed its weakening trend on Tuesday, extending the pullback from last week’s highs to ~1.6% in recent trade, further eroding the cautious recovery that had been seen across the first half of July.
• Tsy Sep'25 10Y futures are +7 at 111-13 after the bell vs. -14.5 high, briefly through resistance at 111-13+, the Jul 10 high. A clear break of this hurdle would highlight a stronger reversal. Key support lies at 110-08+, the low on Jul 14 and 16. A move through this support would reinstate the recent bearish theme.
• The Philadelphia Fed's Nonmanufacturing Business Outlook Survey continued to show improvement in July, though cost pressures remained elevated. The regional current general activity index rose to a 6-month high -10.3 from -25.0 prior. This was the 3rd consecutive improvement since bottoming at -42.7 in April amid tariff policy concerns.
• The Johnson Redbook Retail Sales Index continues to post solid gains, rising 5.1% Y/Y in the week ending Jul 19, fairly steady compared with 5.2% the prior week.
• Look ahead: Wednesday's data limited to MBA Mortgage Applications at 0700ET, Existing Home Sales follow at 1000ET.

OVERNIGHT DATA

MNI US DATA: Redbook Retail Sales Maintain Steady Growth In Early Q3

The Johnson Redbook Retail Sales Index continues to post solid gains, rising 5.1% Y/Y in the week ending Jul 19, fairly steady compared with 5.2% the prior week. The month-to-date rise is 5.2% Y/Y (albeit below retailers' targeted 5.7%). Census Bureau retail sales rose 3.9% Y/Y in June, with Control Group sales up 4.0% - mirroring above-typical Redbook sales in their Y/Y peak in Feb-April but slowing slightly since then.

• The Redbook report (which captures 80% of Census Bureau retail sales) suggests fairly steady retail sales growth in the early part of Q3.

MNI US DATA: Philly Fed Services Sentiment Greatly Improved, Amid Stubborn Inflation

The Philadelphia Fed's Nonmanufacturing Business Outlook Survey continued to show improvement in July, though cost pressures remained elevated. The regional current general activity index rose to a 6-month high -10.3 from -25.0 prior. This was the 3rd consecutive improvement since bottoming at -42.7 in April amid tariff policy concerns.

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA up 179.37 points (0.4%) at 44502.44
S&P E-Mini Future up 1.5 points (0.02%) at 6345.75
Nasdaq down 81.5 points (-0.4%) at 20892.69
US 10-Yr yield is down 3.6 bps at 4.342%
US Sep 10-Yr futures are up 5/32 at 111-11
EURUSD up 0.0053 (0.45%) at 1.1747
USDJPY down 0.77 (-0.52%) at 146.61
WTI Crude Oil (front-month) down $0.99 (-1.47%) at $66.21
Gold is up $35.11 (1.03%) at $3432.15

European bourses closing levels:
EuroStoxx 50 down 52.5 points (-0.98%) at 5290.48
FTSE 100 up 10.82 points (0.12%) at 9023.81
German DAX down 265.9 points (-1.09%) at 24041.9
French CAC 40 down 53.81 points (-0.69%) at 7744.41

US TREASURY FUTURES CLOSE

3M10Y -1.607, 2.714 (L: 1.008 / H: 7.877)
2Y10Y -0.634, 50.653 (L: 49.887 / H: 52.67)
2Y30Y -0.655, 107.564 (L: 106.252 / H: 109.751)
5Y30Y +0.155, 102.608 (L: 101.677 / H: 103.866) 
Current futures levels:
Sep 2-Yr futures up 1/32 at 103-24 (L: 103-21.62 / H: 103-24.75)
Sep 5-Yr futures up 3/32 at 108-17.25 (L: 108-10.25 / H: 108-19.25)
Sep 10-Yr futures up 5.5/32 at 111-11.5 (L: 111-00 / H: 111-14.5)
Sep 30-Yr futures up 12/32 at 113-26 (L: 113-00 / H: 114-02)
Sep Ultra futures up 14/32 at 116-21 (L: 115-21 / H: 117-02)

MNI US 10YR FUTURE TECHS: (U5) Monitoring Resistance

• 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: 111-13+   High Jul 21 & Jul 10
• PRICE:‌‌ 111-12+ @ 1550 ET Jul 22
• SUP 1: 110-08+ 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 traded higher again Tuesday, extending the firm start to the week. The move higher has resulted in a break of the 20-day EMA, strengthening the recovery, and markets have met resistance at 111-13+, the Jul 10 high. A clear break of this hurdle would highlight a stronger reversal. Key support lies at 110-08+, the low on Jul 14 and 16. A move through this support would reinstate the recent bearish theme.     

SOFR FUTURES CLOSE

Sep 25 +0.005 at 95.835
Dec 25 +0.010 at 96.115
Mar 26 +0.020 at 96.390
Jun 26 +0.025 at 96.645
Red Pack (Sep 26-Jun 27) +0.025 to +0.035
Green Pack (Sep 27-Jun 28) +0.025 to +0.035
Blue Pack (Sep 28-Jun 29) +0.025 to +0.025
Gold Pack (Sep 29-Jun 30) +0.020 to +0.025

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

• Secured Overnight Financing Rate (SOFR): 4.28% (-0.02), volume: $2.688T
• Broad General Collateral Rate (BGCR): 4.27% (-0.02), volume: $1.104T
• Tri-Party General Collateral Rate (TCR): 4.27% (-0.02), volume: $1.077T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $108B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $280B

FED Reverse Repo Operation

RRP usage retreats to $196.374B this afternoon from $213.666B yesterday, total number of counterparties at 34. 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: $2B General Electric 2Pt Launched

• Date $MM Issuer (Priced *, Launch #)
• 07/22 $2B #General Electric $1B 5Y +47, $1B +10Y +62
  07/22 $1.5B *Wells Fargo 2031-tap +72
• 07/22 $1B #NY Life $600M 3Y +40, $400M 3Y SOFR+66
• Expected Wednesday:
• 07/23 $Benchmark JFM (Japan Finance Org for Munis) 5Y SOFR+68a

MNI BONDS: EGBs-GILTS CASH CLOSE: Bull Flattening Move Continues

The bull flattening move in EGBs and Gilts continued for a second session Tuesday.

• Once again, there was no single trigger for the bullish move in global core FI which overall looked like a continuation move from Monday's constructive session.
• Some pointed to the rally in Treasuries as spilling over into the European space. The biggest move of the day coincided with US Treasury Secretary Bessent's suggestion that there was no reason for Fed Chair Powell to leave office before the end of his term in 2026, helping US long-end yields lower.
• In data, UK public sector net borrowing was higher than expected, while the ECB's Q2 Bank Lending Survey saw credit demand from firms pick up but overall momentum remaining weak.
• As noted, both the UK and German curves bull flattened on the day, with Gilts slightly outperforming.
• Periphery / semi-core EGB spreads were mixed, with BTPs underperforming and OATs outperforming.
• Wednesday's calendar includes Eurozone consumer confidence data but the week's focus remains the ECB decision Thursday.
• MNI's ECB preview has been published (PDF here) - alongside the expected hold, this week’s communication is expected to be as non-committal as possible, maintaining flexibility and buying time for a fresh forecast round in time for the Sep 11 meeting. The balance of risks will be important in determining any market reaction.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.2bps at 1.812%, 5-Yr is down 1.6bps at 2.152%, 10-Yr is down 2.3bps at 2.59%, and 30-Yr is down 2.2bps at 3.117%.
• UK: The 2-Yr yield is down 2.7bps at 3.842%, 5-Yr is down 3.8bps at 3.997%, 10-Yr is down 3.4bps at 4.569%, and 30-Yr is down 2.8bps at 5.4%.
• Italian BTP spread up 0.7bps at 84.4bps  / French OAT down 0.3bps at 67.6bps

MNI FOREX: Broad USD Weakness Extending, USDJPY Approaches 146.00

• After consolidating the Monday selloff overnight, the USD index (-0.52%) has resumed its weakening trend on Tuesday, extending the pullback from last week’s highs to ~1.6% in recent trade, further eroding the cautious recovery that had been seen across the first half of July. An extension lower for US yields appears to be assisting the move, helped by Treasury Secretary Bessent providing a more optimistic tone regarding Powell’s short-term future as the Fed Chair.
• Outside of the scandies, gains have been led by the Japanese Yen and Swiss Franc in G10, helping USDJPY extend its post upper house election pullback. USDJPY downside momentum built through initial support of 146.92 (Jul 16 low), printing down to a session low of 146.31. Short-term pivot support to monitor next is 145.85, the 50-day EMA.
• Bessent’s mention of Japan talks going “very well” and that the election may be the impetus to getting a deal done will have also provided tailwinds for the yen. His comments follow Japan’s chief trade negotiator meeting with the US Commerce Secretary on Monday ahead of the looming August 01 deadline.
• Elsewhere, advances for the likes of GBP, AUD, NZD and CAD have all mirrored the adjustment for the DXY. For EURUSD, spot has traded back above 1.1750, narrowing the gap back to cycle highs at 1.1829, the Jul 1 high and the bull trigger.
• The swift reversal and subsequent resumption of weakness keeps a bearish trend intact for USDCAD. Downside momentum appears to have picked up below some daily lows around 1.3650 today and further declines would refocus attention on key support at 1.3540, the Jun 16 low.
• GBP has relatively underperformed, however, cable has still risen back above the 1.35 handle which further negates the prior bearish technical breaks last week. This dynamic keeps EURGBP trading towards its most recent highs and attention firmly on the April 11 high at 0.8738.

WEDNESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
23/07/2025	0900/1000	**	GB	Gilt Outright Auction Result
23/07/2025	1100/0700	**	US	MBA Weekly Applications Index
23/07/2025	1400/1000	***	US	NAR existing home sales
23/07/2025	1400/1600	**	EU	Consumer Confidence Indicator (p)
23/07/2025	1430/1030	**	US	DOE Weekly Crude Oil Stocks
23/07/2025	1430/1030	**	US	US DOE Petroleum Supply
23/07/2025	1700/1300	**	US	US Treasury Auction Result for 20 Year Bond
24/07/2025	-		EU	European Central Bank Meeting
24/07/2025	2300/0900	***	AU	Judo Bank Flash Australia PMI
24/07/2025	0030/0930	**	JP	Jibun Bank Flash Japan PMI