MNI ASIA OPEN: Rates Sending Risk-Off Signals

EXECUTIVE SUMMARY

• MNI US: First Senate Vote On Govt Funding Package Fails
• MNI BRIEF: Trump Says He'll Announce Fed Chair Pick Next Week
• MNI MIDEAST: Axios-Israeli & Saudi Officials In D.C. To Discuss Iran Situation
• MNI US DATA: Another Trade Surprise But Goods Deficit Is Still Smallest Since 1990s
• MNI US DATA: A Mixed But Ultimately Healthy Claims Report, With Unusual Revisions

US

MNI BRIEF: Trump Says He'll Announce Fed Chair Pick Next Week

President Donald Trump said Thursday he anticipates he'll announce his pick for the next Federal Reserve Chair next week, again tying his pick to demands on the interest on the U.S. debt. "We're going to be announcing next week I think sometime, Scott [Bessent], Howard [Lutnick], and everybody, we're going to be announcing the head of the Fed, who that will be. And it will be a person that I think will do a good job. We are paying far too much in interest, the Fed rate is too high," Trump said in a White House cabinet meeting.

NEWS

MNI US: First Senate Vote On Govt Funding Package Fails

A first procedural vote on the six-bill government funding package has been blocked by Democrats in the Senate. The failed vote doesn't necessarily indicate that a bipartisan deal to avert a government shutdown on Saturday has collapsed. It suggests that Democrats want additional time today to negotiate concessions from the Trump administration on Immigration and Customs Enforcement reforms. 

MNI NATO: US' Hegseth Not Expected At Feb Meeting-Officials

Reuters reports that, according to a US official and a NATO diplomat, US Secretary of Defense/War Pete Hegseth is not expected to attend the next NATO defence ministers' meeting, scheduled for 12 February in Brussels. It is unclear whether the non-attendance refers to Hegseth not being there in person, or not joining the meeting at all, even via video link. Notably, US Secretary of State Marco Rubio also skipped the previous foreign ministers' meeting in Dec 2025, sending his deputy Christopher Landau in his stead. 

MNI DENMARK: PM & Foreign Minister's Parties Get Polling Boost Amid Greenland Furore

With the Danish election due no later than 31 October, the geopolitical furore that has dominated headlines in Europe and North America over the past fortnight, the Trump administration's demand that Greenland must come under US control, is already having an impact on the potential outcome. 

MNI MIDEAST: Axios-Israeli & Saudi Officials In D.C. To Discuss Iran Situation

Axios reports that senior defence and intelligence officials from Israel and Saudi Arabia visit Washington, D.C., this week as the Trump White House mulls military action against Iran. Inevitably, the officials from the two MENA nations will have differing aims from the visits. Axios reports the Israeli team, visiting on 27-28 Jan and led by military intel chief Gen. Shlomi Binder, shared intel with US counterparts on potential targets inside Iran.

US TSYS

MNI US TSYS: Treasuries Bounce as Risk-Off Tone Gathers Momentum

• Treasuries look to finish near session highs Thursday after a relatively volatile first half as a risk-off tone gathered momentum - likely driven by risk-off tone in weaker stocks, middle-east tensions and the chances over another US Gov shutdown late Friday
• Currently, TYH6 trades +6 at 111-26.5 (111-16.5 low / 111-28.5 high), bear threat in Treasuries remains intact as short-term gains are considered corrective. Initial firm resistance to watch is at the 20-day EMA, currently at 112-00. The 50-day EMA is at 112-09+. The area between the 20- and 50-day averages represents a key resistance zone.
  • Resumption of weakness would refocus attention on the bear trigger at 111-09, the Jan 10 low. A break of this level resumes the downtrend
• Stocks remain weaker late Thursday, off morning lows after carry-over selling in Microsoft (and a handful of software names) led a selloff in the IT sector. Despite reporting better than expected earnings late Wednesday, Microsoft fell appr 8% on large capital expenditures and weaker Azure & Copilot performance.
• Axios reported the Trump administration is hosting senior defense and intelligence officials from Israel and Saudi Arabia for talks on Iran this week as President Trump considers military strikes.
• A first procedural vote on the six-bill government funding package has been blocked by Democrats in the Senate. The failed vote doesn't necessarily indicate that a bipartisan deal to avert a government shutdown on Saturday has collapsed.
• Look ahead: German and Spanish inflation prints kick off the data calendar on Friday, before Canada GDP, US PPI and the MNI Chicago PMI are all scheduled. China CFLP Manufacturing PMI data late in the evening.

OVERNIGHT DATA

MNI US DATA: A Mixed But Ultimately Healthy Claims Report, With Unusual Revisions

Initial jobless claims were a little higher than expected at 209k (sa, cons 205k) in the week to Jan 24, having last surprised higher in the week to Dec 6. It left initial claims almost unchanged on the week after an unusually large upward revision to 210k (initial 200k, revisions typically closer to 1-2k) in the week to Jan 17. The 13k upward revision in the NSA data primarily came from California (+5.6k), Kentucky (+3.6k) and Michigan (+2.4k).

• That said, continuing claims pushed lower again to ‘just’ 1827k (sa, cons 1850k) in the week to Jan 17 below the 1830k in Nov for its lowest since Sep 2024.

MNI US DATA: Another Trade Surprise But Goods Deficit Is Still Smallest Since 1990s

Volatility remained rife in trade data for back in November, with the goods & services deficit surprising higher after the particularly small deficit in last month’s update. The recent goods-only deficit at 2.8% GDP continues to track at its lowest since the late 1990s.  

• The goods & services trade deficit swung back higher in November, to $56.8bn (cons $44bn) after $29.2bn in Oct ($29.4bn initially in what had been a much smaller than expected print last month) for its largest monthly deficit since July. It was driven entirely by the goods deficit ($86.9bn after $59bn in Oct and $78bn in Sep) whilst the services surplus held at $30.1bn after $30.0bn.

MNI US DATA: Chicago Fed U/E Rate Nowcast Looks For Marginal Dip In January

• The Chicago Fed’s advance release for January labor market indicators (link) estimates an unemployment rate of 4.35% after the 4.38% reported by the BLS in December. If accurate it would slightly extend the pullback from 4.54% in November after 4.44% in Sep and 4.32% in Aug.

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 24.27 points (-0.05%) at 48987.83
S&P E-Mini Future down 23.25 points (-0.33%) at 6983.75
Nasdaq down 229.3 points (-1%) at 23627.41
US 10-Yr yield is down 0.6 bps at 4.2373%
US Mar 10-Yr futures are up 4/32 at 111-24.5
EURUSD up 0.0012 (0.1%) at 1.1966
USDJPY down 0.34 (-0.22%) at 153.05
WTI Crude Oil (front-month) up $2.51 (3.97%) at $65.71
Gold is down $31.24 (-0.58%) at $5384.60

European bourses closing levels:
EuroStoxx 50 down 41.25 points (-0.7%) at 5891.95
FTSE 100 up 17.33 points (0.17%) at 10171.76
German DAX down 513.33 points (-2.07%) at 24309.46

US TREASURY FUTURES CLOSE

Curve update:
3M10Y -0.038, 56.507 (L: 54.777 / H: 59.892)
2Y10Y +0.618, 67.217 (L: 66.42 / H: 69.625)
2Y30Y +1.212, 129.391 (L: 128.074 / H: 133.089)
5Y30Y +1.421, 103.951 (L: 102.855 / H: 106.689)
Current futures levels:
Mar 2-Yr futures up 1/32 at 104-5.75 (L: 104-04.375 / H: 104-07)
Mar 5-Yr futures up 3.25/32 at 108-26.25 (L: 108-22 / H: 108-29.25)
Mar 10-Yr futures up 4.5/32 at 111-25 (L: 111-16.5 / H: 111-28.5)
Mar 30-Yr futures up 1/32 at 115-4 (L: 114-18 / H: 115-09)
Mar Ultra futures up 2/32 at 117-22 (L: 116-30 / H: 117-28)

MNI US 10YR FUTURE TECHS: (H6) Trend Needle Points South

• RES 4: 112-31   High Dec 18 and key short-term resistance
• RES 3: 112-22   High Jan 7
• RES 2: 112-09+ 50-day EMA
• RES 1: 112-00   20-day EMA
• PRICE:‌‌ 111-20+ @ 11:02 GMT Jan 29
• SUP 1: 111-09   Low Jan 10 and the bear trigger
• SUP 2: 111-00   Round number support
• SUP 3: 110-30+ 1.618 proj of the Oct 17 - Nov 5 - 25 price swing 
• SUP 4: 110-22+ 1.764 proj of the Oct 17 - Nov 5 - 25 price swing

A bear threat in Treasuries remains intact and short-term gains are considered corrective. Initial firm resistance to watch is at the 20-day EMA, currently at 112-00. The 50-day EMA is at 112-09+. The area between the 20- and 50-day averages represents a key resistance zone. For bears, a resumption of weakness would refocus attention on the bear trigger at 111-09, the Jan 10 low.  A break of this level resumes the downtrend.

SOFR FUTURES CLOSE

Current White pack (Mar 26-Dec 26):
Mar 26 +0.010 at 96.380
Jun 26 +0.010 at 96.545
Sep 26 +0.015 at 96.715
Dec 26 +0.015 at 96.775
Red Pack (Mar 27-Dec 27) +0.025 to +0.035
Green Pack (Mar 28-Dec 28) +0.035 to +0.040
Blue Pack (Mar 29-Dec 29) +0.040 to +0.040
Gold Pack (Mar 30-Dec 30) +0.030 to +0.035

REFERENCE RATES
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US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 3.64% (-0.02), volume: $3.146T
• Broad General Collateral Rate (BGCR): 3.62% (-0.02), volume: $1.313T
• Tri-Party General Collateral Rate (TCR): 3.62% (-0.02), volume: $1.279T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 3.64% (+0.00), volume: $88B
• Daily Overnight Bank Funding Rate: 3.63% (+0.00), volume: $181B

FED Reverse Repo Operation

RRP usage rises to $2.852B with 4 counterparties this afternoon vs. $1.103B Wednesday. Compares to December 12 low of $0.838B (lowest level since mid-March 2021); this years highest excess liquidity measure: $460.731B on June 30.

MNI PIPELINE: Corporate Bond Update: $6.5B AT&T 5Pt Launched

• Date $MM Issuer (Priced *, Launch #)
• 01/29 $7B #Morgan Stanley $2.5B 4NC3 +60, $500M SOFR+77, $4B 11NC10 +85
• 01/29 $6.5B #AT&T $1.5B 5Y +60, $1.25B 7Y +75, $1.25B 10Y +90, $1.25B 20Y +105, $850M 30Y +115
• 01/29 $3.25B #IBM $500M 3Y +40, $500M 5Y +53, $500M 7Y +62.5, $1B 10Y +75, $750M 30Y +95
• 01/29 $3B #Capital One $1.5B 6NC5 +92, $1.5B 11NC10 +117
• 01/29 $1.21B Azul Secured Finance 5NC2
• 01/29 $1B CVR Energy 5NC2 7.625%a, 8NC3 7.875%a
• 01/29 $Benchmark JP Morgan 11NC10 +97

MNI BONDS: EGBs-GILTS CASH CLOSE: Bellies Outperform In Risk-Off Trade

EGBs and Gilts enjoyed a solid rally Thursday as part of a broader risk-off move.

• The tone was set by equities tumbling in early afternoon trade, as earnings reports (notably by SAP and Microsoft) elicited concern over the sustainability AI-related stock boom in recent months.
• This pulled Bund and Gilt yields to session lows before bouncing slightly into the cash close alongside a nascent stabilization in equities.
• In data, Eurozone economic sentiment rose to a 36-month high in January. Belgian flash January CPI fell nearly 1pp but there was little reaction (and no consensus), with larger economies reporting inflation in coming days.
• Gains in both the German and UK curves were led by the belly. Periphery/semi-core EGB yields fell but spreads were mixed.
• Friday we get flash January inflation prints for Spain and Germany - our preview is here.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.7bps at 2.083%, 5-Yr is down 2.3bps at 2.418%, 10-Yr is down 1.7bps at 2.84%, and 30-Yr is down 0.5bps at 3.489%.
• UK: The 2-Yr yield is down 2.8bps at 3.714%, 5-Yr is down 4.3bps at 3.946%, 10-Yr is down 3.3bps at 4.511%, and 30-Yr is down 2.6bps at 5.27%.
• Italian BTP spread unchanged at 60.9bps / French OAT up 0.9bps at 58.8bps  

MNI FOREX: USD Index Roughly Unchanged Amid Broader Cross-Asset Volatility

• The ICE dollar index sits very close to unchanged levels on the session Thursday, despite intra-day volatility and some extremely aggressive swings for major equity indices and precious metals. De-risking on the back of softer Microsoft earnings, geopolitical concerns in the middle east and the high likelihood of another US government shutdown have prompted gold to have a near $500 intra-day range, while Nasdaq futures pulled back around 2.8% from session highs before stabilising.
• The most notable price action in G10 FX has been for the Australian dollar, where AUDUSD had an aggressive turnaround after it reached a fresh cycle high of 0.7094 overnight. The swift reversal for risk during the US session then saw the pair print a low of 0.6969 before recovering to 0.7030 as we approach the APAC crossover. Importantly, a daily close below 0.7041 would bring an end to the impressive streak of winning sessions that saw AUDUSD extend its 2026 advance to around 6.3%.
• Broader de-risking has modestly boosted the Japanese Yen, with USDJPY pulling back below 153.00, although downside momentum has failed to materialise and the most recent lows just above the 152 handle remain unscathed.
• In similar vein, the Swiss Franc remains on the front foot with USDCHF sliding back below 0.77 and EURCHF matching the most recent lows of 0.9158, and the lowest levels since the removal of the peg in 2015. SNB President Schlegel spoke today on the current economic situation and monetary policy, notably there was no mention of the recent CHF strength, with some analysts citing 0.9100 and 0.9000 as levels that will start to ring the alarm bells.
• German and Spanish inflation prints kick off the data calendar on Friday, before Canada GDP, US PPI and the MNI Chicago PMI are all scheduled.

FRIDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
30/01/2026	0630/0730	**	FR	Consumer Spending
30/01/2026	0630/0730	***	FR	GDP (p)
30/01/2026	0700/0800	**	DE	Import/Export Prices
30/01/2026	0700/0800	**	SE	Retail Sales
30/01/2026	0700/0800	***	DE	GDP (p)
30/01/2026	0745/0845	**	FR	PPI
30/01/2026	0745/0845		FR	Flash Payrolls
30/01/2026	0800/0900	***	ES	HICP (p)
30/01/2026	0800/0900	***	ES	GDP (p)
30/01/2026	0800/0900	**	CH	KOF Economic Barometer
30/01/2026	0855/0955	**	DE	Unemployment
30/01/2026	0900/1000	***	IT	GDP (p)
30/01/2026	0900/1000	***	DE	Baden Wuerttemberg CPI
30/01/2026	0900/1000	***	DE	Bavaria CPI
30/01/2026	0900/1000	***	DE	North Rhine Westphalia CPI
30/01/2026	0900/1000	**	EU	ECB Consumer Expectations Survey
30/01/2026	0930/0930	**	GB	BOE Lending to Individuals
30/01/2026	0930/0930	**	GB	BOE M4
30/01/2026	1000/1100	***	EU	EZ GDP 1st (Prelim Flash)
30/01/2026	1000/1100	**	EU	EZ Unemployment
30/01/2026	1000/1100		IT	Unemployment
30/01/2026	1100/1200	**	IT	PPI
30/01/2026	1300/1400	***	DE	Germany CPI (p)
30/01/2026	1300/1400	***	DE	Germany CPI (p)
30/01/2026	1330/0830	***	CA	Gross Domestic Product by Industry
30/01/2026	1330/0830	***	US	PPI
30/01/2026	1330/0830	***	US	PPI
30/01/2026	1442/0942	***	US	MNI Chicago PMI
30/01/2026	1600/1100		CA	Finance Dept monthly Fiscal Monitor (expected)
30/01/2026	1800/1300	**	US	Baker Hughes Rig Count Overview - Weekly
30/01/2026	1800/1300	**	US	Baker Hughes Rig Count Overview - Weekly
30/01/2026	1800/1300	**	US	Baker Hughes Rig Count Overview - Weekly
30/01/2026	1830/1330		US	St. Louis Fed's Alberto Musalem
30/01/2026	2200/1700		US	Fed's Michelle Bowman
31/01/2026	0130/0930	***	CN	CFLP Manufacturing PMI
31/01/2026	0130/0930	**	CN	CFLP Non-Manufacturing PMI