MNI ASIA OPEN: The "Kevins" Join List of Fed Chair Hopefuls

EXECUTIVE SUMMARY

• MNI FED: Trump: "Kevins" And Others Are In Running For Chair
• MNI US: GOP Study Ctte To Meet Wednesday To Discuss Second Big Beautiful Bill
• MNI US-EU: EU Off.-Expect Further "Turbulence" In Talks, But Have Solid Foundation
• MNI US DATA: Final PMIs For July Revised Up Further With Robust Services
• MNI US DATA: ISM Services Points To Stagflationary Developments Amid Tariffs

US

MNI FED: Trump: "Kevins" And Others Are In Running For Chair

Pres Trump on CNBC refers to previously-mentioned Kevins - NEC director Hassett and ex-Fed Gov Warsh - as candidates to succeed Jerome Powell as Fed Chair, saying there's also "other" candidates in the running ("both Kevins are very good, and there are other people that are very good too.") 

• However, he also says that one of the previous administrations officials considered to be a candidate, Treasury Secretary Bessent, removed himself from consideration for the role. When current Gov Waller's name was brought up among other candidates, Trump did not have anything specific to say about him.

NEWS

MNI US: GOP Study Ctte To Meet Wednesday To Discuss Second Big Beautiful Bill

The House Republican Study Committee will host GOP staff on Wednesday for a discussion on crafting a second megabill, according to an invite seen by Politico. Politico notes: “The briefing will be held in-person, and aides will hear from leaders of the Economic Policy Innovation Center, a conservative think tank, including executive vice president Brittany Madni, director of budget policy Matthew Dickerson and senior analyst in fiscal policy David Ditch.”

MNI US-EU: EU Off.-Expect Further "Turbulence" In Talks, But Have Solid Foundation

More comments from an unnamed EU official talking on trade with the US are being reported by Reuters. Says "We are really trying to get as many products as possible into the list of US tariff rate exemptions, at [a] zero-for-zero rate." Official: "We believe [that] medical products should be in the zero-for-zero tariff rate, or at most favoured nation rate, along with some chemicals and wines." 

MNI US-RUSSIA: Kremlin Raises Stakes As Nuclear-Capable Missiles Sent To NATO Border

Military tensions between Russia and the US continue to escalate ahead of the 8 August deadline for Russia to agree a ceasefire in Ukraine. Over the weekend, President Donald Trump redeployed nuclear submarines in the context of perceived verbal threats from National Security Council Deputy Chair Dmitry Medvedev. 

MNI SWITZERLAND: Keller-Sutter To Visit US In Effort To Avoid 39% Tariffs

The Swiss gov't has confirmed president of the Swiss Confederation, Karin Keller-Sutter, will travel to Washington, D.C., today (5 August) to discuss the 39% tariff rate imposed as part of US President Donald Trump's 'reciprocal' tariffs. Says the "aim is to present the US with [a] more attractive offer to reduce the level of additional tariffs on Swiss exports". 

US TSYS

MNI US TSYS: Tsy Curves Twist Flatter, July ISM Services Data Stagflationary

• Treasuries look to finish mixed Tuesday, curves twisting flatter (2s10s -3.504 at 48.004) w/ 2s-10s down 2.5-4 following stagflationary July's ISM Services data and a weak 3Y auction that drew 3.669% high yield vs. 3.662% WI.
• The headline Services PMI reading fell by 0.7 points to 50.1 (51.5 expected, 50.8 prior), merely a 2-month low but suggesting that an expected pickup in momentum and sentiment is not materializing.
• Meanwhile, S&P Global final PMIs for July were stronger than first thought, with the services PMI further confirming a fresh high since December. The soon to be released ISM Services will provide a useful alternative indicator for services activity in July after undershooting by 2.1pts back in June.
• The USD Index remained rangebound Tuesday, however the inability of markets to press the USD lower still after Friday's NFP print may suggest the price is building a base. The JPY was the poorest performing currency against all others in G10, aiding EUR/JPY to recovery back toward Y171.
• Trump spoke on his possible Fed picks to replace Kugler following her resignation over the weekend. The President declared he had a shortlist of 4, which includes both Kevin Warsh and Kevin Hassett, and while the President said he may use this Fed pick as a precursor to selecting the next Fed chair, he remained vague about the timing of such an announcement.

OVERNIGHT DATA

MNI US DATA: ISM Services Points To Stagflationary Developments Amid Tariffs

July's ISM Services data were more "stagflationary" than anticipated, with a dip in activity amid a pickup in price pressures. The report overall suggests that firms' tariff-related concerns linger, with momentum failing to build on a brief improvement in June. Combined with the headline index, the subcomponents of the survey show a clear slowing in activity since late 2024.

• The headline Services PMI reading fell by 0.7 points to 50.1 (51.5 expected, 50.8 prior), merely a 2-month low but suggesting that an expected pickup in momentum and sentiment is not materializing. The ISM report writes that the index is consistent with 0.5% annualized real GDP growth. Business activity fell 1.6 points to 52.6.

MNI US DATA: Final PMIs For July Revised Up Further With Robust Services

The S&P Global final PMIs for July were stronger than first thought, with the services PMI further confirming a fresh high since December. The soon to be released ISM Services will provide a useful alternative indicator for services activity in July after undershooting by 2.1pts back in June. 

• Services PMI: 55.7 (cons & prelim 55.2) in July after 52.9 in June
• Composite PMI: 55.1 (cons & prelim 54.6) in July after 52.9 in June. 

MNI US DATA: Redbook Posts Another Solid Month Of Retail Sales Gains In July

July's full-month retail sales came in at 5.4% Y/Y per the Johnson Redbook retail sales index, following a  6.5% Y/Y rise in the final week of the retail month (to Aug 2). While more details will be available on Wednesday after the same-store sales index is released, it appears as though July continued a string of robust Redbook sales (6 months consecutive, and 11 in 12, above 5% Y/Y).

MNI US DATA: US-China Goods Deficit At Smallest Since At Least 2009

There weren’t any major surprises in the final goods & services trade data for June as last week’s surprisingly small goods deficit in the advance report had already set the tone. US trade deficits with both the EU and China narrowed further, with the goods deficit to China of 0.6% GDP in Q2 the lowest quarterly deficit since at least 2009. 

• The goods & services trade deficit was close to expectations in June at $60.2bn (cons $61bn) after a near unrevised $71.7bn (initial $71.5bn) in May, after last week’s advance release just for goods had suggested similar.

MNI CANADA DATA: Canada's June Trade Deficit Widens to CAD5.9B

Canada June trade balance widened to -5.9B after -CAD5.5B in May.  Exports rose for the second straight month driven by energy +0.9% MOM in June following +2.0% in May. Imports +1.4% MOM, first increase in four months due to a one-time high value shipment of industrial machinery and equipment.

• Trade surplus with the U.S. widened to +CAD3.9B in June from +CAD3.6B in May. Excluding the U.S., trade deficit widened to -CAD9.8B in June from -CAD9.1B in May. Q2 exports -12.8% QOQ while imports -3.9%. Q2 exports -5.4% YOY. May trade deficit revised to -CAD5.5B from -CAD5.9B.

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 61.9 points (-0.14%) at 44111.74
S&P E-Mini Future down 27.25 points (-0.43%) at 6328.75
Nasdaq down 137 points (-0.7%) at 20916.55
US 10-Yr yield is up 0.4 bps at 4.1963%
US Sep 10-Yr futures are down 2.5/32 at 112-9.5
EURUSD up 0.0002 (0.02%) at 1.1573
USDJPY up 0.51 (0.35%) at 147.6
WTI Crude Oil (front-month) down $1.09 (-1.64%) at $65.19
Gold is up $5.65 (0.17%) at $3379.25

European bourses closing levels:
EuroStoxx 50 up 7.27 points (0.14%) at 5249.59
FTSE 100 up 14.43 points (0.16%) at 9142.73
German DAX up 88.38 points (0.37%) at 23846.07
French CAC 40 down 10.97 points (-0.14%) at 7621.04

US TREASURY FUTURES CLOSE

3M10Y +2.423, -4.095 (L: -11.18 / H: -2.125)
2Y10Y -3.484, 48.024 (L: 46.603 / H: 51.751)
2Y30Y -6.364, 105.125 (L: 104.5 / H: 111.62)
5Y30Y -4.866, 100.369 (L: 100.27 / H: 105.375)
Current futures levels:
Sep 2-Yr futures down 2.25/32 at 103-29.75 (L: 103-29 / H: 104-01.25)
Sep 5-Yr futures down 3.5/32 at 109-1 (L: 108-31.25 / H: 109-06.5)
Sep 10-Yr futures down 2.5/32 at 112-9.5 (L: 112-05 / H: 112-15.5) 
Sep 30-Yr futures up 6/32 at 116-3 (L: 115-18 / H: 116-07) 
Sep Ultra futures up 16/32 at 119-18 (L: 118-22 / H: 119-22)

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

• RES 4: 113-23   76.4% retracement of the Sep’24 - Jan’25 sell-off
• RES 3: 113-07   76.4% retracement of the Apr 7 - 11 sell-off
• RES 2: 112-23   High May 1
• RES 1: 112-15+ High Aug 5
• PRICE:‌‌ 112-09 @ 14:03 BST Aug 5
• SUP 1: 110-19+/08+ Low Jul 24 / 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 remain strong on the back of the post-NFP rally, clearing resistance into the bull trigger at 112-12+, the Jul 1 high. This opens the May 1 high for direction at 112-23, a multi-month high. Clearance here opens retracement levels layered at 113-07 - 113-23. On the downside, key support is 110-08+, the Jul 14 and 16 low. First support lies at 110-19+, the Jul 24 low.   

SOFR FUTURES CLOSE

Sep 25 -0.015 at 95.935
Dec 25 -0.035 at 96.255
Mar 26 -0.040 at 96.485
Jun 26 -0.035 at 96.720
Red Pack (Sep 26-Jun 27) -0.04 to -0.015
Green Pack (Sep 27-Jun 28) -0.02 to -0.015
Blue Pack (Sep 28-Jun 29) -0.015 to -0.005
Gold Pack (Sep 29-Jun 30) -0.01 to steady

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

• Secured Overnight Financing Rate (SOFR): 4.33% (-0.01), volume: $2.828T
• Broad General Collateral Rate (BGCR): 4.31% (-0.01), volume: $1.141T
• Tri-Party General Collateral Rate (TCR): 4.31% (-0.01), volume: $1.117T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $117B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $265B

FED Reverse Repo Operation

RRP usage retreats to $84.356B (lowest levels since April 25) this afternoon from $125.730B yesterday, total number of counterparties at 23. Lowest usage of the year at $54.772B on Wednesday, April 16 -- in turn the lowest level since April 2021 - compares to July 1: $460.731B highest usage since December 31.

MNI PIPELINE: Corporate Bond Update: $2B Standard Chartered Launched

• Date $MM Issuer (Priced *, Launch #)
• 08/05 $2B #Standard Chartered 11NC10 +120
• 08/05 $1.9B #Daimler Truck $550M 2Y +60, $750M +5Y +92, $600M +7Y +105
• 08/05 $1.25B #Tennessee Valley Authority 5Y +20
• 08/05 $1.25B #MSCI 10Y +112.5
• 08/05 $1B #Macquarie Bank 11NC10 +145
• 08/05 $500M #Essential Utilities 10Y +107
• 08/05 $500M #Healthpeak LLC +7Y +92
• 08/05 $500M #CNA Financial WNG 10Y +103
• 08/05 $500M Freedom Mortgage 7.75NC3
• 08/06 $500M Travel + Leisure 8NC3

MNI BONDS: EGBs-GILTS CASH CLOSE: Mixed After Initial Rally

EGB and Gilt yields finished up from their intraday highs Tuesday to trade mixed overall.

• Early trade was constructive, with Friday's poor US employment report continuing to buoy core instruments. At the onset of the session, the 10Y Bund yield hit its lowest intraday levels since Jul 23; for Gilts, Jul 2.
• However yields would mostly drift higher from there despite few evident catalysts, as equities and the US dollar pulled back.
• Data was relatively non-impactful. We saw above-expected Spanish and French industrial production alongside slight downward revisions to Eurozone final July services/composite PMIs, with UK services PMI seeing an upward revision. Eurozone June PPI was a touch lower than expected.
• A soft US ISM Services reading saw bonds rally, though a higher prices paid component muted the impact.
• For the session, both the UK and German curves leaned slightly flatter, with Gilts underperforming despite a solid 10Y UK auction. Periphery/semi-core EGB spreads were mostly tighter on the day, with 10Y BTPs failing to close below the 80bp mark to Bund.
• German factory orders highlight Tuesday's docket, with Italian industrial production and Eurozone retail sales also due. Thursday's BOE decision remains the calendar highlight of the week - MNI's preview is here.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.7bps at 1.908%, 5-Yr is down 0.2bps at 2.215%, 10-Yr is unchanged at 2.624%, and 30-Yr is up 0.3bps at 3.138%.
• UK: The 2-Yr yield is up 2bps at 3.826%, 5-Yr is up 1.8bps at 3.956%, 10-Yr is up 0.7bps at 4.516%, and 30-Yr is up 1.2bps at 5.339%.
• Italian BTP spread down 0.1bps at 80.2bps / French OAT down 0.3bps at 65.9bps  

MNI FOREX: USD Index May be Building a Base

• The USD Index remained rangebound Tuesday, however the inability of markets to press the USD lower still after Friday's NFP print may suggest the price is building a base. ISM services data came in mixed, with headline activity softer-than-expected against a higher-than-expected prices paid subcomponent, and proved USD negative upon release, but the pullback was mild.
• The JPY was the poorest performing currency against all others in G10, aiding EUR/JPY to recovery back toward Y171. This keeps markets clear of the uptrending 50-dma support at 169.04, ahead of which the outlook remains bullish, and targets 171.85 - the 50% retracement for the fade off the cycle high at 173.97.
• Meanwhile, Trump spoke on his possible Fed picks to replace Kugler following her resignation over the weekend. The President declared he had a shortlist of 4, which includes both Kevin Warsh and Kevin Hassett, and while the President said he may use this Fed pick as a precursor to selecting the next Fed chair, he remained vague about the timing of such an announcement.
• GBP fared better, rising against most others in G10 as markets look ahead to Thursday's BoE rate decision. The MPC are expected to cut rates by 25bps, and anything other than this would mark a sizeable surprise against expectations. It's the vote split among the MPC that should prove more consequential - and should provide a strong signal for the Bank's easing plans through the second half of this year. Despite today's modest recovery, a bearish theme in GBPUSD remains intact for now - despite Friday’s rally. Last week’s sell-off resulted in a breach of the bear trigger at 1.3365, the Jul 16 low. The break confirms a resumption of the downleg that started Jul 1 and highlights a clear breach of the trendline drawn from the Jan 13 low.
• German factory orders, Italian industrial production and the Canadian services PMI data are the data highlights Wednesday. Fed's Cook, Collins and Daly are also set to make appearances. 

WEDNESDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
06/08/2025	0600/0800	**	DE	Manufacturing Orders
06/08/2025	0730/0930	**	EU	S&P Global Final Eurozone Construction PMI
06/08/2025	0800/1000	*	IT	Industrial Production
06/08/2025	0830/0930	**	GB	S&P Global/CIPS Construction PMI
06/08/2025	0900/1100	**	EU	Retail Sales
06/08/2025	1100/0700	**	US	MBA Weekly Applications Index
06/08/2025	1430/1030	**	US	DOE Weekly Crude Oil Stocks
06/08/2025	1430/1030	**	US	US DOE Petroleum Supply
06/08/2025	1700/1300	**	US	US Note 10 Year Treasury Auction Result
06/08/2025	1800/1400		US	Boston Fed's Susan Collins
06/08/2025	1800/1400		US	Fed Governor Lisa Cook
06/08/2025	1910/1510		US	San Francisco Fed's Mary Daly
07/08/2025	0130/1130	**	AU	Trade Balance