MNI ASIA OPEN: Powell Eyes Alt Jobs Data, Oct Cut on Track

EXECUTIVE SUMMARY

• MNI FED: Powell Keeps October Cut On Track, Notes Jobs Vs Activity Divergence
• MNI FED: Powell Eyeing Incoming Inflation Data, "Alternative" Jobs Numbers
• MNI FED Powell: May Be Near QT End "In Coming Months", In Line With MNI Expectation
• MNI US DATA: Redbook Retail Sales Start October Solidly, But Anecdotal Warning Signs
• MNI US DATA: Small Businesses See Stronger Price Pressures In Sept After A Soft Aug

US

MNI FED: Powell Keeps October Cut On Track, Notes Jobs Vs Activity Divergence

In what is among the very last major FOMC communications before the pre-meeting blackout period begins Friday night, Chair Powell's commentary Tuesday largely maintains the status quo in terms of signalling another 25bp rate cut at the end of October. In his written remarks, he says "based on the data that we do have, it is fair to say that the outlook for employment and inflation does not appear to have changed much since our September meeting four weeks ago" when of course they cut rates 25bp eyeing "Rising downside risks to employment". Though in a slightly less dovish note, "data available prior to the shutdown, however, show that growth in economic activity may be on a somewhat firmer trajectory than expected."

MNI FED: Powell Eyeing Incoming Inflation Data, "Alternative" Jobs Numbers

Powell in Q&A discusses what data the FOMC is looking at amid the federal gov't shutdown, pointing out that you can for example "add up" state jobless claims reports "and get a pretty decent estimate", and ADP payrolls. "I will say generally the alternative data that we look at is better used as a supplement for the underlying governmental data, which is the gold standard. And it won't be as effective as the main course as it would have been as a supplement.... in the employment space, there's some pretty good substitutes, less so in the inflation space and and in the economic activity space."

• On missing federal government data, Powell suggests that "we're going to make our decisions according to the FOMC schedule, but I think it will be a lot better once we start getting, for example, the September employment report is going to be very important report, and we're not on track to have that, there would still be time for us to get that. We will get, of course, the September inflation, the CPI and PPI reports. So that's a positive."

MNI FED Powell: May Be Near QT End "In Coming Months", In Line With MNI Expectation

Chair Powell's speech Tuesday, titled "Understanding the Fed’s Balance Sheet", is largely focused as the title suggests on the Fed's balance sheet policy. He gives the clearest sign yet that the balance sheet runoff which started in June 2022 and has reduced the SOMA portfolio by $2.2T is nearing an end. He says: "Our long-stated plan is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions. We may approach that point in coming months, and we are closely monitoring a wide range of indicators to inform this decision."

NEWS

MNI US-CHINA: Trump-Xi Meeting Likely, Tariffs Could Come Sooner Than Nov. 1 - Greer

Reuters reporting comments from United States Trade Representative Jamieson Greer speaking to CNBC on trade tensions with China. Greer notes that he expects US President Donald Trump and Chinese President Xi Jinping will meet at APEC at the end of the month as planned. Greer confirms that the US and China had “staff-level” talks in Washington on Monday. Likely refers to a meeting between Chinese Vice Finance Minister Liao Min and his US Treasury counterpart.

• The Chinese Ministry of Commerce said in a statement earlier, “Both sides have been in communications all along under the China-US economic and trade consultation mechanism and we had a working-level meeting just yesterday.”

MNI US POLITICAL RISK - White House Prepares For Extended Shutdown

Day 14 of the US government shutdown. Senate Majority Leader John Thune (R-SD) is expected to hold an eighth, likely doomed, vote on the House-passed government funding bill at around 17:30 ET 22:30 BST. The government shutdown could extend into next month, with the White House taking steps to ensure military personnel and law enforcement officers get paid and benefits programmes can maintain payouts.

MNI JAPAN: Jiji Press-LDP's Takaichi Seeks Meetings w/Opposition Leaders On 15 Oct

Jiji Press reports that governing Liberal Democratic Party (LDP) President Sanae Takaichi is seeking individual meetings with the leaders of the three main opposition parties on Wednesday, 15 October, as she seeks to gain support to ensure her election as prime minister. Meetings have/are taking place today between officials from the conservative LDP, as well as the liberal Constitutional Democratic Party (CDP), the libertarian-federalist Japan Innovation Party (Ishin), and the conservative populist Democratic Party for the People (DPFP). 

MNI BOE: Taylor reiterating the case for cuts (in line with his prior views)

Alan Taylor reiterating the case for cuts (in line with his recent votes and not a surprise). "I see the upside risks to inflation as low compared to the downward trajectory in output and inflation fundamentals, and this view has led me to dissent in five of the last seven votes on the MPC in favour of a lower path of Bank Rate."

MNI EGBS: Markets Optimistic Lecornu Will Survive, OAT/Bund Below 80bps

The 10-year OAT/Bund spread has tightened further since French PM Lecornu’s address concluded, now 4.5bps narrower on the session at ~78.5bps (the tightest since mid-September). Markets are cautiously optimistic that Lecornu’s Government will not fall to a censure vote after temporarily suspending pension reform until the end of 2027 (alongside abandoning the use of Article 49.3 to pass a budget).

US TSYS

MNI US TSYS: Rates Firmer, Fed Chair Powell Maintains Status Quo

• Treasuries look to finish modestly higher - off early highs after rates climbed to the highest levels since prior to FOMC rate cut on September 17. Currently, Tsy Dec'25 10Y contract trades 113-13.5 (+8.5), yld 4.0167% -.0154; curves steeper: 2s10s +1.166 at 54.023, 5s30s +2.680 at 101.900.
• Initial resistance at 113-17+ (intraday high), followed by 113-29 (High Sep 11 and the bull trigger). On the downside, support at the 50-day EMA at 112-15 remains intact for now. A clear break of the average would expose 111-13+, the Aug 18 low and a key support.
• Little reaction as Fed Chairman Powell delivers his keynote address at the NABE annual meeting, Powell largely maintained status quo in terms of signaling another 25bp rate cut at the end of October.
• In his written remarks, Powell said "based on the data that we do have, it is fair to say that the outlook for employment and inflation does not appear to have changed much since our September meeting four weeks ago" when of course they cut rates 25bp eyeing "Rising downside risks to employment".
• Projected rate cut pricing largely steady vs. late Monday levels (*): Oct'25 at -24.2bp (-24.7bp), Dec'25 at -48.4bp (-48.1bp), Jan'26 at -61.2bp (-61bp), Mar'26 at -74.1bp (-73.5bp).
• Look ahead: Wednesday's CPI and Real Avg Hourly/Weekly Earnings suspended due to the Gov shutdown. The Fed will release it's Beige Book at 1400ET. Fed speakers continue: Fed Govs Miran and Waller at separate venues, KC Fed Schmid.

OVERNIGHT DATA

MNI US DATA: Small Businesses See Stronger Price Pressures In Sept After A Soft Aug

The NFIB small business survey saw a small decline in business confidence in September, with supply chain and inflation issues taking more prominence again after a dovish August report. Of note, the share expecting to increase prices over the next three months ticked back close to recent highs seen in June, more clearly consistent with above target inflation. The NFIB small business optimism index surprisingly fell 2pts in September to 98.8 (cons 100.6) after 100.8 in August, its first decline in three months for its lowest since June.

• From the overview (link): “While most owners evaluate their own business as currently healthy, they are having to manage rising inflationary pressures, slower sales expectations, and ongoing labor market challenges. Although uncertainty is high, small business owners remain resilient as they seek to better understand how policy changes will impact their operations.”

MNI US DATA: Redbook Retail Sales Start October Solidly, But Anecdotal Warning Signs

Retail sales rose by 5.9% Y/Y in the week ending October 11, per the latest Johnson Redbook index. As such that's the same as month-to-date (the September calendar for retailers ended Oct 4, October's ends Nov 1). Despite the seemingly robust headline growth figure, his report carried with it one of the more notable anecdotes of caution due to macroeconomic factors, which points to softer discretionary spending.

MNI CANADA DATA: Building Permits Point To Renewed Weakness In Residential Activity

Building permits fell more than expected in August when accounting for downward revisions, led by residential activity, a indication that one of the few brighter spots of growth in the Canadian economy is dimming. The 1.2% M/M drop in August (SA) comes on the heels of a 1.1% drop in July (initially -0.1%). And that's the 5th drop in 6 months (June was -9.8%), leaving the level of permit values at a 14-month low.

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA up 389.59 points (0.85%) at 46458.53
S&P E-Mini Future up 21 points (0.31%) at 6716.25
Nasdaq down 28.2 points (-0.1%) at 22668.34
US 10-Yr yield is down 1.6 bps at 4.0167%
US Dec 10-Yr futures are up 9/32 at 113-14
EURUSD up 0.0037 (0.32%) at 1.1607
USDJPY down 0.54 (-0.35%) at 151.74
WTI Crude Oil (front-month) down $0.74 (-1.24%) at $58.75
Gold is up $39.14 (0.95%) at $4149.22

European bourses closing levels:
EuroStoxx 50 down 16.14 points (-0.29%) at 5552.05
FTSE 100 up 9.9 points (0.1%) at 9452.77
German DAX down 150.99 points (-0.62%) at 24236.94
French CAC 40 down 14.64 points (-0.18%) at 7919.62

US TREASURY FUTURES CLOSE

3M10Y -1.498, 6.714 (L: 4.282 / H: 10.495)
2Y10Y +1.166, 54.023 (L: 52.649 / H: 55.309)
2Y30Y +2.611, 114.12 (L: 111.798 / H: 114.948)
5Y30Y +2.68, 101.9 (L: 99.888 / H: 102.3)
Current futures levels:
Dec 2-Yr futures up 1.5/32 at 104-13.625 (L: 104-11 / H: 104-14.125)
Dec 5-Yr futures up 4.75/32 at 109-24.5 (L: 109-17.75 / H: 109-26.5)
Dec 10-Yr futures up 9/32 at 113-14 (L: 113-02 / H: 113-17.5)
Dec 30-Yr futures up 12/32 at 118-10 (L: 117-23 / H: 118-25)
Dec Ultra futures up 14/32 at 122-13 (L: 121-21 / H: 122-31)

MNI US 10YR FUTURE TECHS: (Z5) Recovery Extends

• RES 4: 114-10   High Apr 7 (cont.)
• RES 3: 114-00   Round number resistance
• RES 2: 113-29   High Sep 11 and the bull trigger
• RES 1: 113-17+   Intraday high 
• PRICE:‌‌ 113-08 @ 1210 ET Oct 14
• SUP 1: 112-24 20-day EMA 
• SUP 2: 112-15/01 50-day EMA / 50.0% of Jul 15 - Sep 11 upleg
• SUP 3: 111-26   Low Aug 26
• SUP 4: 111-13+ Low Aug 18 and a key support 

Treasury prices rallied sharply on Friday and are climbing again, today. Last Friday’s gains resulted in a break of the 113-00 handle, signalling scope for stronger rally towards 113-29, the Sep 11 high and a bull trigger. On the downside, support at the 50-day EMA at 112-15 remains intact for now. A clear break of the average would expose 111-13+, the Aug 18 low and a key support.

SOFR FUTURES CLOSE

Current White pack (Dec 25-Sep 26):
Dec 25 steady00 at 96.375
Mar 26 +0.010 at 96.615
Jun 26 +0.005 at 96.840
Sep 26 +0.010 at 96.990
Red Pack (Dec 26-Sep 27) +0.015 to +0.015
Green Pack (Dec 27-Sep 28) +0.010 to +0.015
Blue Pack (Dec 28-Sep 29) +0.010 to +0.010
Gold Pack (Dec 29-Sep 30) +0.010 to +0.010

REFERENCE RATES 

US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 4.15% (+0.02), volume: $2.895T
• Broad General Collateral Rate (BGCR): 4.12% (+0.02), volume: $1.138T
• Tri-Party General Collateral Rate (TCR): 4.12% (+0.02), volume: $1.110T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.10% (+0.00), volume: $87B
• Daily Overnight Bank Funding Rate: 4.10% (+0.00), volume: $174B​​​​

FED Reverse Repo Operation

RRP usage resumes, usage slips to new low of $3.516B (lowest level since early April 2021) with 7 counterparties from $4,124B last Friday. Compares to this year's high usage of $460.731B on June 30.

MNI PIPELINE: Corporate Bond Update: $10B Goldman Sachs 5Pt Launched

• Date $MM Issuer (Priced *, Launch #)
• 10/14 $10B #Goldman Sachs $2.5B 4NC3 +67, $500M 4NC3 SOFR+92, $3B 6NC2 +77, $500M 6NC5 SOFR+108, $3.5B 11NC10 +92
• 10/14 $600M *KEB Hana Bank $300M 3Y SOFR+60, $300M 5Y +43
• 10/14 $3.2B Terawulf 5NC2 investor calls

MNI BONDS: EGBs-GILTS CASH CLOSE: Gilts And OATs Outperform On Local Developments

Gilts and OATs were standout performers in an eventful session Tuesday.

• Core FI saw an early bid amid renewed deterioration in Sino-U.S. trade relations.
• The tone was helped with data coming in on the soft side early too: the UK labour market report included disappointments on the wage growth, vacancies and LFS fronts (MNI's review of the data here), spurring a deepening of BOE cut pricing. Meanwhile, the German ZEW  survey readings underperformed across both expectations and current conditions.
• In the session's key development, OAT spreads to Bund tightened sharply on prospects for early elections to be avoided, after French PM Lecornu pledged among other matters to suspend the 2023 pension reforms to 2028. OAT gains extended into the cash close with 10Y yields hitting 2 month lows as the Socialists said they will not vote for a no confidence motion in the government.
• On the day, Gilts outperformed Bunds with both the German and UK curves closing bull flatter.
• OATs outperformed in the periphery/semi-core space, with 10Y spreads to Bund falling below 80bp.
• After the cash close we await commentary from various French political leaders who are expected to weigh in on the Lecornu speech.
• Wednesday's calendar includes Eurozone industrial data, with multiple ECB and BOE speakers including Ramsden, Breeden, and Villeroy.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.9bps at 1.935%, 5-Yr is down 1.5bps at 2.202%, 10-Yr is down 2.6bps at 2.61%, and 30-Yr is down 3.2bps at 3.192%.
• UK: The 2-Yr yield is down 4.9bps at 3.901%, 5-Yr is down 6.3bps at 4.038%, 10-Yr is down 6.8bps at 4.59%, and 30-Yr is down 6.9bps at 5.394%.
• Italian BTP spread down 1.5bps at 78.3bps / French OAT down 4bps at 79.8bps  

MNI FOREX: EUR Stages Late Rally on French Political Progress

• The EUR staged a late rally, putting EURUSD through to a new intraday high at the London close as French politics progressed quickly: some opposition parties appear to have conceded that they will not proceed with a no confidence vote - providing interim stability for parliament - while gaining further pledges from cabinet on pensions reform. While the rally looks firm, initial firm resistance at 1.1779, the Oct 1 high, is still some way away, leaving the medium-term bear trend intact for now.
• The USD traded mixed despite a strong start Tuesday. The USD Index faded quickly off any test of multi-month highs, as USTR's Greer confirmed that staff-level communications between US and Chinese representatives was underway. This left markets to factor out the frostier conditions between Beijing and Washington. Resultantly, risk proxies recovered, putting AUD clear of new lows, although well short of resistance.
• Meanwhile, equities traded mixed, with no visible support from the beginning of equity earnings season. Financials make up the bulk of reports this week, building up to 50% of the S&P 500 by market cap having reported by the end of the month.
• Australia's Westpac Leading Index, Chinese inflation for September and French final CPI are the data highlights Wednesday. Instead, the central bank speaker slate is likely of more interest to markets, and Wednesday is busy: Fed's Miran, Waller & Schmid, ECB's de Guindos, Rehn & Villeroy, BoE's Ramsden & Breeden and RBA's Hunter are all set to speak. 

WEDNESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
15/10/2025	0600/0800	***	SE	Final Inflation Report
15/10/2025	0600/0800	***	SE	Final Inflation Report
15/10/2025	0645/0845	***	FR	HICP (f)
15/10/2025	0700/0900	***	ES	HICP (f)
15/10/2025	0740/0940		EU	ECB de Guindos at Single Resolution Mechanism Conference
15/10/2025	0800/0900		GB	BOE Ramsden in Panel at Resolution Mechanism Conference
15/10/2025	0900/1100	**	EU	EZ Industrial Production
15/10/2025	0900/1000	*	GB	Index Linked Gilt Outright Auction Result
15/10/2025	1100/0700	**	US	MBA Weekly Applications Index
15/10/2025	-	***	CN	Money Supply
15/10/2025	-	***	CN	New Loans
15/10/2025	-	***	CN	Social Financing
15/10/2025	1230/0830	**	CA	Monthly Survey of Manufacturing
15/10/2025	1230/0830	**	CA	Wholesale Trade
15/10/2025	1230/0830	**	US	Empire State Manufacturing Survey
15/10/2025	1330/0930		US	Fed Governor Stephen Miran
15/10/2025	1545/1645		GB	BOE Breeden in Panel on Financial Regulation
15/10/2025	1610/1210		US	Atlanta Fed's Raphael Bostic
15/10/2025	1630/1230		US	Fed Governor Stephen Miran
15/10/2025	1700/1300		US	Fed Governor Christopher Waller
15/10/2025	1735/1335		US	Kansas City Fed's Jeff Schmid
15/10/2025	1800/1400		US	Fed Beige Book
15/10/2025	1800/2000		EU	ECB de Guindos at Alantra Anniversary Event
15/10/2025	1800/1900		GB	BOE Breeden in Panel at Fintech Foundation
16/10/2025	2350/0850	*	JP	Machinery orders
16/10/2025	0030/1130	***	AU	Labor Force Survey