MNI ASIA OPEN: Soft JOLTS Jobs Report Precursor to ADP, NFP

EXECUTIVE SUMMARY

• MNI FED: St Louis's Musalem: Current Rates Appropriate Despite Higher Labor Risks
• MNI FED: Kashkari Sees Breakeven Hiring Rate Of 75k A Month, Within Ranges
• MNI FED: Beige Book: Improved Activity, But Labor And Price Concerns Linger 
• MNI US LABOR MARKET: MNI US Payrolls Preview: Slack Metrics Eyed With Risks Rising
• MNI US DATA: A Soft JOLTS Report As Vacancy To Unemployed Tilts Lower

US

MNI FED: St Louis's Musalem: Current Rates Appropriate Despite Higher Labor Risks

St Louis Fed President Musalem (2025 FOMC Voter, hawk) suggests that rates are currently at the right level given economic conditions. He doesn't explicitly argue for a rate hold in September - leaving it uncertain whether he would dissent against the Committee's likely decision to cut 25bp. But it's pretty clear that while he is prepared to ease policy at some point in the future, and he recognizes that the balance of risks is tilting a little more toward missing on the employment mandate, he is comfortable with keeping policy "modestly restrictive" for now.

MNI FED: Kashkari Sees Breakeven Hiring Rate Of 75k A Month, Within Ranges

Minneapolis Fed’s Kashkari (’26 voter) saw he sees the breakeven hiring rate about 75k a month. He also adds that he’s skeptical that AI is showing up in economic data. As noted in the preview, there continues to be focus on the potential “breakeven” rate of payrolls growth, that is the pace at which the unemployment rate would be kept steady when allowing for differences between the establishment and household surveys.

NEWS

MNI US: Govt Shutdown Risk Recedes Slightly After Report Of Johnson/Jeffries Meeting

The risk of a government shutdown on Oct. 1 receded slightly after Politico reported House Speaker Mike Johnson (R-LA) and House Minority Leader Hakeem Jeffries (D-NY) “last week discussed a short-term stopgap funding bill going into November or December.” Politico notes, “There is no official plan yet, one person said, but the two leaders floated the idea to avoid a government shutdown on Oct. 1.”

MNI SECURITY: Putin Offers To Meet Zelenskyy And Trump In Moscow

Reuters reporting comments from Russian President Vladimir Putin’s wide-ranging press conference in Beijing. Putin confirms an invitation is "on the table" for President Donald Trump to visit Russia, but there are "no preparations" for such a trip at the moment. Putin said he is ready to meet Ukrainian President Volodymyr Zelenskyy, if the Ukrainian leader came to Moscow, but questioned the “sense” of a meeting: “If meeting with Zelenskyy is well prepared, then I am ready to meet. Let Zelenskyy come to Moscow and the meeting will happen.”

US TSYS

MNI US TSYS: Trimming Gains Ahead More Employ Data

• Treasuries look to finish near late session highs, trimming gains ahead of upcoming data: Thursday's ADP, Jobless Claims, ISM Services, followed by the August Employment report on Friday.
• Treasuries gapped higher after this morning's lower than expected JOLTS jobs data: Job openings were lower than expected at 7181k (sa, cons 7380k) in July after downward revised 7357k (initial 7437k) in June. Combined with the already known sizeable rise in unemployment from last month’s payrolls report and the ratio of openings to unemployed fell to 0.99 from 1.05 (initial 1.06).
• Currently, the Dec'25 10Y trades +12.5 at 112-17 (yld 4.2168 -.0446) vs. 112-21 high - briefly through initial technical resistance: 112-20+ Aug 28 / 29 A breach of this hurdle confirms a resumption of the current bull cycle and signals scope for an extension towards the 113-00 handle.
• Curves bull flatten: 2s10s -1.804 at 60.209 5s30s -2.961 at 120.651.
• The USD index is roughly 0.3% lower on the session as we approach the APAC crossover, with GBP and AUD marginally outperforming while the likes of CAD and CHF remain closer to unchanged on the day.

OVERNIGHT DATA

MNI US LABOR MARKET: MNI US Payrolls Preview: Slack Metrics Eyed With Risks Rising

Nonfarm payrolls growth is seen at 75k in August (sa) per the broad Bloomberg survey, after 73k in July. Revisions are going to be particular focus after last month’s huge downward revisions heavily altered recent trends, with non-health private payrolls growth at best stalling for the past three months, and dominated the market reaction.   The median primary dealer analyst eyes 70k whilst the Bloomberg whisper currently sits at 83k but with the ADP report still to come after publication of this preview.   

MNI US DATA: A Soft JOLTS Report As Vacancy To Unemployed Tilts Lower

The JOLTS report for July was softer than expected, primarily on the openings front as the ratio of vacancies to unemployed fell to a new recent low. Powell at Jackson Hole had pointed to this metric in the category of little changed to only modestly softer over the past year, leaving sensitivity to any subsequent declines here. 

• Job openings were lower than expected at 7181k (sa, cons 7380k) in July after downward revised 7357k (initial 7437k) in June. Combined with the already known sizeable rise in unemployment from last month’s payrolls report and the ratio of openings to unemployed fell to 0.99 from 1.05 (initial 1.06).

MNI FED: Beige Book: Improved Activity, But Labor And Price Concerns Linger 

The Fed's latest Beige Book pointed to a slightly improved assessment of current economic activity in August versus the prior edition in July, with selling price pressures remaining modestly/moderately to the upside. However, expectations were for future price increases (in part due to tariffs), and the latest edition suggests that labor market conditions have weakened. The table below summarizes the region-by-region findings.

• Economic Activity: Most regional banks reported little or no change in activity vs the July report, with four noting slight declines in activity (New York, Atlanta, Minneapolis, San Francisco), two unchanged (St Louis, Kansas City), two "slight" growth (Boston, Cleveland) and four "modest" expansion (Philadelphia, Richmond, Chicago, Dallas).
• This is actually slightly more upbeat than July's report in which just one (Richmond) Fed reported "modest" growth, with the majority (7) reporting unchanged activity.
• The national summary notes that "across Districts, contacts reported flat to declining consumer spending because, for many households, wages were failing to keep up with rising prices. Contacts frequently cited economic uncertainty and tariffs as negative factors."  
• While the reported sector-by-sector dynamics were mixed, the consumer demand story was largely downbeat, leading firms to cut prices, offer promotions, and/or adopt automation via AI.
• As for the outlook, "overall, sentiment was mixed among the Districts. Most firms either reported little to no change in optimism or expressed differing expectations about the direction of change from their contacts."

MNI US DATA: Underlying Factory Orders See Solid July, But Overall Trend Is Moderate

July's full Manufacturers’ Shipments, Inventories, & Orders report showed core activity improving but overall settling in below the strong levels seen earlier in the year. In other words, activity is not as bad as it appeared in the post-tariff-front running hangover months of the summer, but likewise there doesn't appear to be an imminent upturn in manufacturing activity or equipment investment. While we caution against taking too much signal from month-to-month readings given significant volatility, July factory orders fell 1.3% M/M (-4.8% prior), with ex-transport orders rising 0.6% (0.4%), both exactly in line with consensus expectations.

MNI US DATA: Mortgage Applications Fade Latest Dip In Mortgage Rates

• MBA composite mortgage applications dipped -1.2% (sa) last week, a third consecutive small weekly decline after a refi-driven 11% increase earlier in August.  
• New purchase applications -3.1% after 2.2%, refi applications 0.9% after -3.5%.
• Levels relative to 2019 averages: composite 58%, new purchases 61% and refis 52%.
• There wasn’t much sign of a boost from the 5bp decline in the 30Y conforming mortgage rate to 6.64% for a new low since early April’s 6.61% ytd low.
• The spread to average 10Y swap rates over the week meanwhile held at its slightly lower recent levels, between 291-293bp for three weeks now vs the range of 300bp +/-5bp seen mostly since reciprocal tariff announcements in April vs 285bps averaged in Q1. It’s a mild relative easing in lending standards recently.
• US Tsy Sec Bessent has in recent weeks talked on wanting to keep the spread between mortgage rates and treasuries flat or even bring it down. To this end, spreads to 10Y Tsy yields (the usual point of focus) have averaged 240bp over the past month, pretty stable considering they’ve averaged 245bp all year, although that’s down significantly from the closer to 300bp in 2023. 

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 88.25 points (-0.19%) at 45208.4
S&P E-Mini Future up 26.75 points (0.42%) at 6452.5
Nasdaq up 200.1 points (0.9%) at 21478.76
US 10-Yr yield is down 4.5 bps at 4.2168%
US Dec 10-Yr futures are up 12.5/32 at 112-17
EURUSD up 0.0019 (0.16%) at 1.1659
USDJPY down 0.26 (-0.18%) at 148.11
WTI Crude Oil (front-month) down $1.7 (-2.59%) at $63.89
Gold is up $30.78 (0.87%) at $3562.98

European bourses closing levels:
EuroStoxx 50 up 33.97 points (0.64%) at 5325.01
FTSE 100 up 61.3 points (0.67%) at 9177.99
German DAX up 107.47 points (0.46%) at 23594.8
French CAC 40 up 65.46 points (0.86%) at 7719.71

US TREASURY FUTURES CLOSE

3M10Y -3.405, 9.132 (L: 7.132 / H: 15.745)
2Y10Y -1.997, 60.016 (L: 59.277 / H: 63.867)
2Y30Y -4.092, 128.022 (L: 127.52 / H: 133.896)
5Y30Y -3.338, 120.274 (L: 119.744 / H: 124.215)
Current futures levels:
Dec 2-Yr futures up 2.375/32 at 104-8.625 (L: 104-05.75 / H: 104-09.875)
Dec 5-Yr futures up 6.5/32 at 109-14.75 (L: 109-06 / H: 109-17.75)
Dec 10-Yr futures up 12.5/32 at 112-17 (L: 112-00 / H: 112-21)
Dec 30-Yr futures up 1-0/32 at 114-14 (L: 113-01 / H: 114-22)
Dec Ultra futures up 1-12/32 at 116-29 (L: 114-31 / H: 117-05)

MNI US 10YR FUTURE TECHS: (Z5) Pullback Appears Corrective

• RES 4: 113-06   2.236 proj of the Jul 15 - 22 - 28 price swing
• RES 3: 113-00   Round number resistance 
• RES 2: 112-28+ 2.000 proj of the Jul 15 - 22 - 28 price swing 
• RES 1: 112-19/20+ High Sep 3 / Aug 28 / 29
• PRICE:‌‌ 112-18 @ 16:58 BST Sep 3
• SUP 1: 111-31+ 20-day EMA
• SUP 2: 111-19   50-day EMA
• SUP 3: 111-13+ Low Aug 18 and a key support 
• SUP 4: 110-25   Low Aug 1 

The trend outlook in Treasury futures is bullish and the latest pullback appears corrective. Recent gains delivered a print above 112-15+, the Aug 5 high and a bull trigger. A breach of this hurdle confirms a resumption of the current bull cycle and signals scope for an extension towards the 113-00 handle. Moving average studies are in a bull-mode position, reinforcing a bull theme. First support to watch is 111-31+, the 20-day EMA. 

SOFR FUTURES CLOSE

Current White pack (Sep 25-Jun 26):
Sep 25 +0.018 at 95.925
Dec 25 +0.030 at 96.245
Mar 26 +0.030 at 96.490
Jun 26 +0.040 at 96.755
Red Pack (Sep 26-Jun 27) +0.035 to +0.040
Green Pack (Sep 27-Jun 28) +0.035 to +0.040
Blue Pack (Sep 28-Jun 29) +0.040 to +0.045
Gold Pack (Sep 29-Jun 30) +0.045 to +0.055

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

• Secured Overnight Financing Rate (SOFR): 4.39% (+0.05), volume: $2.947T
• Broad General Collateral Rate (BGCR): 4.36% (+0.03), volume: $1.142T
• Tri-Party General Collateral Rate (TCR): 4.36% (+0.03), volume: $1.118T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $120B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $220B

FED Reverse Repo Operation

RRP usage continues to retreat to lowest levels since early April 2021 today: $17.923B with 17 counterparties this afternoon, from $21.066B yesterday. Compares to this year's high usage of $460.731B on June 30.

MNI PIPELINE: Corporate Bond Update: Over $17B to Price Wednesday

$17.05B to price Wednesday - well off Tuesday's record high of $50.95B, with details from a handful of names yet to announce:

• Date $MM Issuer (Priced *, Launch #)
• 09/03 $2B *AIIB 3Y SOFR+31
• 09/03 $1.5B *OKB 5Y SOFR+43
• 09/03 $1.4B #Dow Chemical $750M +5Y +115, $650M +10Y +145
• 09/03 $1.25B #Plains All American $700M +5Y +105, $550M +10Y +142
• 09/03 $1.2B Clarios 7NC3 6.75%
• 09/03 $1.1B *PTT Global Chem $600M PerpNC5.25 6.5%, $500M PerpNC10 7.125
• 09/03 $1.05B #PECO Energy $525M each: 10Y +68, 30Y +75
• 09/03 $1B #Suzano Netherlands +10Y +145
• 09/03 $850M #Nordea Bank Perp Nov'33 6.75%
• 09/03 $850M #Southern Co Gas $425M 3Y +52, $425M 10Y +93
• 09/03 $800M #F&G Global $500M 3Y +108, $300M 3Y SOFR+132.5
• 09/03 $750M #Pacific Life 30Y +105
• 09/03 $600M *Commercial Bank (PSQC) 5Y +100
• 09/03 $500M #BNY Mellon PerpNC5 5.95%
• 09/03 $600M Tallgrass Energy 8.5NC3.5 6.75%
• 09/03 $600M Cleveland-Cliffs 8.25NC3.25 7.75%
• 09/03 $500M #Colburn 10Y +120
• 09/03 $500M Lithia Motors 5NC2 5.625%
• 09/03 $500M OneMain Finance 7.5NC3 6.5%
• 09/03 $500M Century Comm 8NC3 6.875%
• 09/03 $Benchmark Swedish Export Credit 5Y SOFR+51
• 09/03 $500M #Blackstone Private Credit 5Y +160
• 09/03 $Benchmark Petrobras Global +5Y 5.4%, +10Y 6.6%
• 09/03 $Benchmark Turkie Wealth Fund +5Y 7.625%a, 10Y 8.735%a
• 09/03 $Benchmark Sumitomo Life Insurance 30NC10 5.875%

MNI BONDS: EGBs-GILTS CASH CLOSE: Pressure On Long End Abates

Yields reversed an early rise to finish lower Wednesday, with strong bull flattening evident across EGBs and Gilts.

• Gilt futures pierced Tuesday's lows in early trade, with ongoing fiscal concerns continuing to weigh on the space, but eventualy bounced; meanwhile 10Y Bund yields weakened but held the 2.80% level.
• Having found an early footing, bonds rallied through much of the remainder of the session.
• Weak US job openings data added a final up-leg to global core FI in mid-afternoon, with yields closing near their session lows. Long-end Gilts also benefited from DMO cancelling a 30Y auction in the FQ3 quarter.
• In BOE Treasury Select Committee testimony, some highlights included Lombardelli sounding more hawkish that MNI's Markets Team had assumed, while BoE's Bailey noted that the bank's decision on QT in the next few weeks "is an open decision".
• European data wasn't a market-mover, with composite PMIs in the Eurozone and UK respectively revised slightly lower/higher in the final readings.
• The German and UK curves bull flattened, with Gilts outperforming; periphery/semi-core EGB spreads tightened, with BTPs outperforming.
• Thursday's schedule includes Eurozone retail sales and an appearance by ECB's Cipollone, while Swiss and Swedish inflation will garner some attention.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.8bps at 1.966%, 5-Yr is down 3.3bps at 2.28%, 10-Yr is down 4.6bps at 2.74%, and 30-Yr is down 5bps at 3.356%.
• UK: The 2-Yr yield is down 2.2bps at 3.96%, 5-Yr is down 4.1bps at 4.13%, 10-Yr is down 5.2bps at 4.748%, and 30-Yr is down 9bps at 5.603%.
• Italian BTP spread down 1.7bps at 87.3bps / French OAT down 0.2bps at 79.9bps  

MNI FOREX: USD Reverts Lower Following Soft JOLTS Jobs Report

• It was a tale of two halves for G10 currency markets on Wednesday, as initial greenback strength reversed and subsequently extended lower following a softer-than-expected US JOLTS jobs report, stoking the softening labour market narrative as we approach Friday’s release of non-farm payrolls.
• The USD index is roughly 0.3% lower on the session as we approach the APAC crossover, with GBP and AUD marginally outperforming while the likes of CAD and CHF remain closer to unchanged on the day.
• Initial sterling weakness saw GBPUSD print a near one month low of 1.3333, however, greater stability for risk and the associated reversal lower for UK Gilt yields helped underpin a solid GBP recovery. Cable rose around 120 pips to 1.3450 amid these dynamics erasing a solid portion of the steep declines from Tuesday’s session.
• For AUD, there was a more resilient tone across the entire session following Australian Q2 GDP coming in stronger than both the RBA and consensus expected. Additional hawkish comments from RBA’s Bullock helped underpin the Aussie rally, which has seen AUDUSD close within close proximity of 0.6569 resistance. Clearance of this level would expose key resistance and the bull trigger at 0.6625, the Jul 24 high.
• Additionally, AUDNZD strength continues to stand out, reaching fresh cycle highs today above 1.1140. A breach of the key 1.1180 mark would place the cross at the highest level since late 2022. Above here, 1.1250 marks a significant 76.4% retracement point of the 2022 selloff.
• USDJPY nicely respected Fibonacci resistance at 149.12, printing a high of 149.14 during early European trade. Following that, waning dollar momentum and the subsequent price action following the US data helped USDJPY eventually back below the 148 handle. Heightened political uncertainty in Japan allows USDJPY to hold onto its 100 pip advance this week.
• Swiss CPI kick starts tomorrow’s calendar before US ADP, jobless claims and ISM Services PMI are released.

THURSDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
04/09/2025	0600/0800	***	SE	Flash Inflation Report
04/09/2025	0600/0800	***	SE	Flash Inflation Report
04/09/2025	0630/0830	***	CH	CPI
04/09/2025	0700/0900	**	CH	Unemployment
04/09/2025	0730/0930	**	EU	S&P Global Final Eurozone Construction PMI
04/09/2025	0830/0930		GB	Decision Maker Panel data
04/09/2025	0830/0930	**	GB	S&P Global/CIPS Construction PMI
04/09/2025	0900/1000	*	GB	Index Linked Gilt Outright Auction Result
04/09/2025	0900/1100	**	EU	EZ Retail Sales
04/09/2025	0930/1130		EU	ECB Cipollone Speaks at Digital Euro Hearing, European Parliament
04/09/2025	1215/0815	***	US	ADP Employment Report
04/09/2025	1230/0830	***	US	Jobless Claims
04/09/2025	1230/0830	**	CA	International Merchandise Trade (Trade Balance)
04/09/2025	1230/0830	**	US	Trade Balance
04/09/2025	1230/0830	**	US	Non-Farm Productivity (f)
04/09/2025	1230/0830	**	US	Trade Balance
04/09/2025	1345/0945	***	US	S&P Global Services Index (final)
04/09/2025	1345/0945	***	US	S&P Global US Final Composite PMI
04/09/2025	1400/1000	***	US	ISM Non-Manufacturing Index
04/09/2025	1400/1000		US	Fed nominee Stephen Miran
04/09/2025	1430/1030	**	US	Natural Gas Stocks
04/09/2025	1530/1130	**	US	US Bill 04 Week Treasury Auction Result
04/09/2025	1530/1130	*	US	US Bill 08 Week Treasury Auction Result
04/09/2025	1600/1200	**	US	DOE Weekly Crude Oil Stocks
04/09/2025	1600/1200	**	US	US DOE Petroleum Supply
04/09/2025	1605/1205		US	New York Fed's John Williams
04/09/2025	2300/1900		US	Chicago Fed's Austan Goolsbee
05/09/2025	2330/0830	**	JP	average wages (p)
05/09/2025	2330/0830	**	JP	Household spending