MNI ASIA OPEN: Strong Jobs, Household Survey Data With Caveats

EXECUTIVE SUMMARY

• MNI FED: KC's Schmid: Appropriate To Hold Rates; Eying Smaller Balance Sheet
• Pentagon Prepares Second Aircraft Carrier to Deploy to the Middle East - WSJ
• MNI US: Thune Expects DHS Proposal From White House Today, Shutdown Appears Likely
• MNI US DATA: Strong Household Survey Contains Several Questionable Findings
• MNI US DATA: Private Payrolls Drive NFP Beat (With Caveats) After Major Revisions

US

MNI FED: KC's Schmid: Appropriate To Hold Rates; Eying Smaller Balance Sheet

KC Fed President Schmid (not a 2026 FOMC voter) continued to convey a hawkish monetary policy view in a speech Wednesday, and we continue to believe he's among a sizeable minority on the FOMC who don't have rate cuts as part of their 2026 baseline. In short, "With demand outpacing supply and inflation running closer to 3% than 2%, I see it as appropriate to maintain a somewhat restrictive policy stance."

NEWS

Pentagon Prepares Second Aircraft Carrier to Deploy to the Middle East - WSJ - The Pentagon has told a second aircraft carrier strike group to prepare to deploy to the Middle East as the U.S. military prepares for a potential attack on Iran, according to three U.S. officials.

MNI EU: Macron Talks Up EU Strategic Autonomy As Essential For Economic Security

Speaking at the European Industry Summit in Antwerp, French President Emmanuel Macron delivers an impassioned address calling for significant changes in the way the EU treats its strategic sectors amid an increasingly fraught geoeconomic landscape. 

MNI US: Thune Expects DHS Proposal From White House Today, Shutdown Appears Likely

Senate Majority Leader John Thune (R-SD) is expecting to receive a White House proposal for Department of Homeland Security reforms today. All agencies under the purview of the DHS, including TSA, FEMA, and the US Coast Guard, will shut down at midnight on Friday if Congress fails to reach a funding agreement. 

US TSYS

MNI US TSYS: Treasury Yields Rise After Stronger Than Expected Job Gains

• Treasuries look to finish broadly weaker Wednesday, off initial knee-jerk lows following this morning's Jan employment data release.
• Nonfarm payrolls growth was far stronger than expected in January at 130k (cons 65k) after negligible two-month revisions of -17k (mainly in Nov). Private payrolls saw a larger beat, both with the 172k (68k cons) in January but with also a two-month revision of +49k (fairly evenly split over Dec and Nov).
• The Household survey showed a stronger labor market than expected, with the unrounded unemployment rate of 4.283% not just below the consensus of 4.4% and 4.375% prior, but also the lowest since July.
• Treasuries dropped from 112-19 to 112-00 low(-16.5) - the initial technical support (20-day EMA) holding while futures see-sawing off lows through midday. Brief risk-off support as Bitcoin fell 4% to near 66k before paring losses to -2.05%.
• Treasuries retreated after the $42B 10Y note auction (91282CPZ8) tailed, drawing 4.177% high yield vs. 4.162% WI; 2.39x bid-to-cover vs. 2.55x prior. Lowest since Aug 2025: indirect take-up retreats 64.54% vs. 69.65% prior.
• Looking ahead: UK GDP and US jobless claims highlight a lighter calendar on Thursday, before he focus turns to Friday’s release of US CPI.

OVERNIGHT DATA

MNI US DATA: Private Payrolls Drive NFP Beat (With Caveats) After Major Revisions

Nonfarm payrolls growth was far stronger than expected in January at 130k (cons 65k) after negligible two-month revisions of -17k (mainly in Nov). Private payrolls saw a larger beat, both with the 172k (68k cons) in January but with also a two-month revision of +49k (fairly evenly split over Dec and Nov). 

• The heaviest downward revisions were concentrated back in Nov 2024-Jan 2025 along with May 2024.
• Looking at what revisions mean for latest data, NFP growth was 5k/month higher in 4Q25 than previously thought but 28k/month lower in 3Q25. Private payrolls fared relatively better, revised up an average 20k/month in Q4 after -19k/month in Q3 with these revisions driven by non-healthcare.
• However, largely owing to the benchmark revision, what was seen as just 20k of jobs creation over 2025 for private ex health & social assistance is now estimated to have been a heavy -326k decline. 

MNI US DATA: Strong Household Survey Contains Several Questionable Findings

The Household Survey was anticipated to provide a cleaner read on current labor market conditions in January than the much-revised Establishment Survey. Whether it accomplished that is questionable. It showed a stronger labor market than expected, with the unrounded unemployment rate of 4.283% not just below the consensus of 4.4% and 4.375% prior, but also the lowest since July. We start by looking at the areas of strength in the report, before examining some of the curiosities that call that apparent strength into question.

MNI US DATA: Weekly Mortgage Applications Steady Out Alongside Rates

MBA mortgage applications fell for a 3rd consecutive week (-0.3% W/W) to Feb 6, though the pullback since the multi-year high in apps in mid-January has slowed (prior two weeks saw drops of 8+%). Refi activity actually picked up slightly (+1.2% W/W) with purchases down for a 3rd week for the lowest since Jan 2.

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 56.52 points (-0.11%) at 50134.02
S&P E-Mini Future up 2 points (0.03%) at 6963.25
Nasdaq down 31.2 points (-0.1%) at 23071.18
US 10-Yr yield is up 3.4 bps at 4.1764%
US Mar 10-Yr futures are down 8.5/32 at 112-8
EURUSD down 0.0021 (-0.18%) at 1.1874
USDJPY down 1.23 (-0.8%) at 153.16
WTI Crude Oil (front-month) up $0.97 (1.52%) at $64.93
Gold is up $60.39 (1.2%) at $5085.80

European bourses closing levels:
EuroStoxx 50 down 11.42 points (-0.19%) at 6035.64
FTSE 100 up 118.27 points (1.14%) at 10472.11
German DAX down 131.7 points (-0.53%) at 24856.15
French CAC 40 down 14.64 points (-0.18%) at 8313.24

US TREASURY FUTURES CLOSE

Curve update:
3M10Y +2.115, 47.992 (L: 42.835 / H: 50.256)
2Y10Y -2.629, 66.027 (L: 63.719 / H: 68.876)
2Y30Y -2.555, 130.229 (L: 125.384 / H: 133.315)
5Y30Y -0.894, 107.209 (L: 102.86 / H: 110.605)
Current futures levels:
Mar 2-Yr futures down 3.75/32 at 104-8.25 (L: 104-06 / H: 104-12.625)
Mar 5-Yr futures down 7/32 at 109-3.5 (L: 108-29.75 / H: 109-12.25)
Mar 10-Yr futures down 8.5/32 at 112-8 (L: 112-00 / H: 112-20)
Mar 30-Yr futures down 13/32 at 116-2 (L: 115-23 / H: 116-25)
Mar Ultra futures down 19/32 at 118-15 (L: 118-05 / H: 119-14)

MNI US 10YR FUTURE TECHS: (H6) Bull Cycle Intact

• RES 4: 113-04   76.4% retracement of the Nov 25 - Jan 20 bear leg
• RES 3: 112-31   High Dec 18 and key short-term resistance
• RES 2: 112-25   61.8% retracement of the Nov 25 - Jan 20 bear leg
• RES 1: 112-20   Intraday high
• PRICE:‌‌ 112-12  @ 16:51 GMT Feb 11
• SUP 1: 112-00   20-day EMA
• SUP 2: 111-26   Low Feb 9
• SUP 3: 111-13+ Low Feb 3 
• SUP 4: 111-09   Low Jan 20 and the bear trigger

Treasuries are holding on to their latest gains, despite an intraday dip on the back of the stronger-than-expected NFP data. This week’s rally has strengthened the short-term bullish condition. A continuation higher here would pave the way for a move towards 112-25 next, the 61.8% retracement of the Nov 25 - Jan 20 bear leg. Clearance of this price point would open 112-31, the Dec 18 high. Initial support to watch lies at 112-00, the 20-day EMA. A break of this level would highlight a potential reversal.  

SOFR FUTURES CLOSE

Current White pack (Mar 26-Dec 26):
Mar 26 -0.050 at 96.360
Jun 26 -0.085 at 96.545
Sep 26 -0.075 at 96.750
Dec 26 -0.065 at 96.840
Red Pack (Mar 27-Dec 27) -0.06 to -0.05
Green Pack (Mar 28-Dec 28) -0.05 to -0.04
Blue Pack (Mar 29-Dec 29) -0.04 to -0.035
Gold Pack (Mar 30-Dec 30) -0.03 to -0.02

REFERENCE RATES
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US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 3.65% (+0.02), volume: $3.194T
• Broad General Collateral Rate (BGCR): 3.63% (+0.02), volume: $1.334T
• Tri-Party General Collateral Rate (TCR): 3.63% (+0.02), volume: $1.314T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 3.64% (+0.00), volume: $104B
• Daily Overnight Bank Funding Rate: 3.63% (+0.00), volume: $204B

FED Reverse Repo Operation

RRP usage recedes to $1.048B with 6 counterparties this afternoon vs. $1.447B Tuesday. 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 Roundup: $600M Marsh McLennan 10Y Priced

• Date $MM Issuer (Priced *, Launch #)
• 02/11 $1.5B #First Quantum 10NC5 6.375%
• 02/11 $600M *Marsh McLennan 10Y +78
• 02/11 $Benchmark Citadel Finance investor calls

MNI BONDS: EGBs-GILTS CASH CLOSE: Full Recovery From US Payroll-Related Losses

European yields fell in a bull flattening move Wednesday, despite a stronger-than-expected US labour market report.

• After posting modest gains in morning trade, EGBs and Gilts reversed sharply to the session's worst levels after the US unemployment rate came in lower than expected in January with payroll gains above-consensus.
• But from that point on, there was a steady rally that more than reversed the initial pullback. Part of this appeared related to equity weakness, with US Treasuries lagging European counterparts.
• Both the German and UK curves bull flattened on the day, with Gilts slightly outperforming Bunds across the curve.
• Periphery/semi-core EGB spreads closed mixed but little changed.
• OATs notably outperformed after a 30Y syndication saw strong demand with a record book size for France.
• The highlight early Thursday is UK GDP data - sell-side analysts, and the BOE's latest forecast, look for 0.2% Q/Q growth in the first estimate of Q4 GDP. ECB speakers Thursday include Makhlouf, Nagel, and Lane.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.3bps at 2.066%, 5-Yr is down 0.5bps at 2.378%, 10-Yr is down 1.6bps at 2.792%, and 30-Yr is down 3.4bps at 3.456%.
• UK: The 2-Yr yield is down 1.9bps at 3.624%, 5-Yr is down 1.9bps at 3.875%, 10-Yr is down 3bps at 4.476%, and 30-Yr is down 4bps at 5.285%.
• Italian BTP spread unchanged at 60.5bps / French OAT down 0.8bps at 59bps

MNI FOREX: JPY Extends Post-Election Surge Despite Payrolls Volatility

• Higher-than-expected headline figures within the January US employment report sparked some recovery strength on Wednesday. However, intricacies within the report and the overarching bearish dollar narrative quickly sapped the initial greenback enthusiasm. The net impact is a slightly lower dollar index on the session, although this has been dragged by particularly strong performance for both the Japanese yen and the Australian dollar.
• The Japanese yen extended its post-election rebound in APAC trade, prompting USDJPY to fall to a 152.80 low. The pair recovered ahead of the US data, and had an aggressive spike to 154.65 following the release, however, the rally was extremely short-lived with a vicious reversal taking the pair back below 153 in rapid fashion.
• After a few hours of steadier trade between 153.20-80, spot has now edged back below 153.00 as has made fresh session lows below 152.80 as we approach the APAC crossover, further narrowing the gap to 152.10 support, the Jan 27 low.
• AUD outperformance has been linked to a stable session for equities and the positive performance for precious metals. Furthermore, a hawkish leaning RBA Hauser has underpinned the bullish AUD narrative, prompting AUDUSD to close in on the 2023 highs at 0.7158. Aussie strength has been very notable in the crosses, with the likes of EURAUD and GBPAUD extending their 2026 selloffs to around 5.5%, and AUDCHF showing nascent signs of a technical breakout, rising 1.15% today.
• In similar vein, the more stable session for the Euro and sterling have prompted solid corrections for EURJPY and GBPJPY, with the latter extending significantly below its 50-day EMA and the January lows to reach a session low of 208.45.
• UK GDP and US jobless claims highlight a lighter calendar on Thursday, before he focus turns to Friday’s release of US CPI.

THURSDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
12/02/2026	0700/0700	***	GB	UK Monthly GDP
12/02/2026	0700/0700	**	GB	Trade Balance
12/02/2026	0700/0700	**	GB	Index of Production
12/02/2026	0700/0700	**	GB	Output in the Construction Industry
12/02/2026	0700/0700	**	GB	Index of Services
12/02/2026	0700/0700	***	GB	GDP First Estimate
12/02/2026	0900/1000		EU	ECB's Cipollone At Commissione Europa Conference
12/02/2026	-		GB	BOE MPG Meeting
12/02/2026	-	***	CN	New Loans
12/02/2026	-	***	CN	Money Supply
12/02/2026	-	***	CN	Social Financing
12/02/2026	1330/0830	***	US	Jobless Claims
12/02/2026	1330/0830	**	US	WASDE Weekly Import/Export
12/02/2026	1345/0845		CA	BOC's Rogers panel talk on productivity
12/02/2026	1500/1000	***	US	NAR existing home sales
12/02/2026	1530/1030	**	US	Natural Gas Stocks
12/02/2026	1630/1130	*	US	US Bill 08 Week Treasury Auction Result
12/02/2026	1630/1130	**	US	US Bill 04 Week Treasury Auction Result
12/02/2026	1800/1300	***	US	US Treasury Auction Result for 30 Year Bond
12/02/2026	1830/1930		EU	ECB's Lane At The World Ahead 2026 Gala Dinner
12/02/2026	0000/1900		US	Fed's Lorie Logan, Stephen Miran