MNI ASIA OPEN: Trade Talk, Tax Bill & Future Fed Chair Talk

EXECUTIVE SUMMARY

• MNI US TSYS: Trump Ends Trade Talk with Canada
• MNI BRIEF: Bessent Suggests Fed Chair Nomination In Fall
• BLOOMBERG: Trump Tax Bill Advances in Senate as GOP Scrounges for Votes
• MNI US DATA: Final UMichigan Slightly More Benign, But Sentiment Still Subdued
• MNI US DATA: Core PCE Prices Above-Expected, But Supercore Momentum Softening

US

MNI FED BRIEF: MN Fed Kashkari Sees Two Rate Cuts This Year

Federal Reserve Bank of Minneapolis President Neel Kashkari said Friday he sees two interest-rate cuts as likely this year, with the first potentially in September, but he maintained that policymakers should remain flexible in case inflation from tariffs take longer to appear. "Since March, we have seen much larger than expected tariffs announced and then modestly pulled back, suggesting that an inflation boost is likely coming. At the same time actual inflation data indicate renewed progress toward our inflation target," he wrote in a blog.

NEWS

MNI US TSYS: Trump Ends Trade Talk with Canada

Treasuries gained slightly while stocks are paring gains after latest Trump post re: Canada: Pres Trump social media post: "We have just been informed that Canada, a very difficult Country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products, has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country.

MNI BRIEF: Bessent Suggests Fed Chair Nomination In Fall

Treasury Secretary Scott Bessent on Friday said one potential timeline for the announcement of a new Fed chair could come in October or November, playing down speculation that President Donald Trump may consider an earlier move to nominate a successor to Federal Reserve Chair Jerome Powell. 

MNI US: Trump Peace Accord w/DRC & Rwanda Opens Door For US Rare Earth Investment

US President Donald Trump expected to meet the foreign ministers of Rwanda and DR Congo in the Oval Office to sign a US-Qatar brokered peace deal aimed at ending a decades-long conflict in Eastern Congo. The deal is expected to unlock US investment in Eastern Congo, giving US firms a foothold in a region that has been dominated by China since Beijing reached an accord with Kinshasa in 2008. The deal is likely to give the US greater access to lithium, cobalt, and coltan deposits - minerals critical to the globl digital economy and clean energy infrastructure.

BLOOMBERG: Trump Tax Bill Advances in Senate as GOP Scrounges for Votes

"The Senate has voted to open debate on President Trump's $4.5 trillion tax cut bill, with a final vote expected to spill into Monday. Republicans are seeking to convince holdouts to support the bill, with negotiations ongoing behind closed doors, and the ability to offer unlimited amendments to revise the bill."

US TSYS

MNI US TSYS: US$ Rebounds, Tsys & Stocks Retreat After Trump Cans Canada Trade Talk

• Treasuries look to finish near near lows Friday, along with stocks after President Trump unexpectedly announced via social media he would end trade talks with Canada immediately after the latter imposed a digital tax on US tech companies.
• Tsy Sep'25 10Y contract currently trades -7 at 111-25.5 after revisiting early overnight highs of 112-02 in the second half. The tech-heavy Nasdaq index is currently mildly in the red (-9.2 at 20158.80) after managing to climb to new all-time highs ahead midday (20,306.28).
• Markets see-sawed in a narrow range earlier after Pres Trump WH press conference to initially discussing Supreme Court decision on birthright citizenship - Tsys and stocks gained as Trump softened on July 4 tax bill deadline - "Not the end all". Regarding tariff deadline: "WE CAN EXTEND, SHORTEN IT" - softening the July 9 deadline expectations - after Tsy Sec Bessent floated kicking the can to Labor day (September 1) earlier.
• Regarding data: the final University of Michigan consumer survey for May saw a modest downward revision to inflation expectations to still-elevated levels, with slightly better overall sentiment than previously recorded.
• Core PCE inflation came in at 0.179% M/M unrounded in May after 0.136% in April (an upward rev from 0.116% prior), which was higher than expected (consensus roughly around 0.15%, implying a split between 0.1% and 0.2% rounded)) with a higher revision.
• Looking ahead, short week with Independence day next Friday - that pulls the June employment data forward to Thursday along with weekly claims, Factory orders and S&P services/Composite PMIs.

OVERNIGHT DATA

MNI US DATA: Final UMichigan Slightly More Benign, But Sentiment Still Subdued

The final University of Michigan consumer survey for May saw a modest downward revision to inflation expectations to still-elevated levels, with slightly better overall sentiment than previously recorded.

• Final 1Y inflation expectations were 5.0%, down from 5.1% in the prelim and reversing the tariff-impacted April-May rise to 6.50-6.60%. It's still elevated versus high 2s late in 2024 but looks to be fading. 5-10Y expectations meanwhile were also revised down 0.1pp, to 4.0%, down from 4.2% in May and 4.4% in April but above the 2024 average of 3.0%. Expectations had been for 1Y to tick up to 5.2% with 5-10Y steady with 5-10Y steady at 4.1%, so the final figures are on the soft side of expectations.
• Overall sentiment was revised marginally higher to 60.7 from 60.5 prior, confirming the first increase in 6 months, led by an improvement in current conditions to 64.8, up 1.1 points from the prelim. Expectations were 0.3 points lower at 58.1, however.
• As such, all three have clawed their way back to a 4-month high, though remain below levels seen in most of 2023-24. All of the above continue to see a major partisan split, with Democrats seeing higher inflation and weaker confidence than Republican counterparts.

MNI US DATA: Core PCE Prices Above-Expected, But Supercore Momentum Softening

Core PCE inflation came in at 0.179% M/M unrounded in May after 0.136% in April (an upward rev from 0.116% prior), which was higher than expected  (consensus roughly around 0.15%, implying a split between 0.1% and 0.2% rounded)) with a higher revision.

• That, too, comes after a slightly higher revision to Q1 core PCE this week (3.7% from 3.6%), reflected across all three months albeit front-loaded: January was revised up to 0.344% (was 0.326%), with Feb up to 0.476% (was 0.465%) and March to 0.095% (was 0.091%).
• The Y/Y gauge picked up to 2.68% (expectations had been for 2.6%) from 2.58% prior (upward rev from 2.52%).
• Core goods printed 0.24% M/M, down slightly from 0.27% in April but still running at a strong rate, while core services ticked up to 0.17% M/M from 0.12%.
• The core services ex-housing gauge ticked up to 0.129% M/M from 0.01% prior. But this "supercore" reading saw the 3-month annualized rate (ie quarterly) pull back sharply to 1.2% from 3.0% in April, which marked the weakest since June 2020.

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA up 424.96 points (0.98%) at 43808.72
S&P E-Mini Future up 28.5 points (0.46%) at 6223.25
Nasdaq up 94.9 points (0.5%) at 20261.34
US 10-Yr yield is up 4.5 bps at 4.2867%
US Sep 10-Yr futures are down 8/32 at 111-24.5
EURUSD up 0.0003 (0.03%) at 1.1703
USDJPY up 0.37 (0.26%) at 144.79
WTI Crude Oil (front-month) down $0.16 (-0.25%) at $65.08
Gold is down $56.63 (-1.7%) at $3270.91

European bourses closing levels:
EuroStoxx 50 up 81.61 points (1.56%) at 5325.64
FTSE 100 up 63.31 points (0.72%) at 8798.91
German DAX up 383.92 points (1.62%) at 24033.22
French CAC 40 up 134.24 points (1.78%) at 7691.55

US TREASURY FUTURES CLOSE

3M10Y +6.329, -2.184 (L: -8.772 / H: -1.659) 
2Y10Y +1.242, 53.07 (L: 50.748 / H: 54.544)
2Y30Y +1.439, 109.114 (L: 105.724 / H: 110.737)
5Y30Y +0.326, 100.629 (L: 98.009 / H: 101.78)
Current futures levels:
Sep 2-Yr futures down 2.5/32 at 103-30.875 (L: 103-30.125 / H: 104-00.875)
Sep 5-Yr futures down 5.5/32 at 108-26.75 (L: 108-24.75 / H: 109-00.5)
Sep 10-Yr futures down 7.5/32 at 111-25 (L: 111-22.5 / H: 112-02) 
Sep 30-Yr futures down 15/32 at 114-15 (L: 114-11 / H: 115-09) 
Sep Ultra futures down 16/32 at 117-26 (L: 117-19 / H: 118-27)

MNI US 10YR FUTURE TECHS: (U5) Bull Cycle Remains In Play

• RES 4: 114-14   High Apr 7 and key resistance
• RES 3: 113-07   76.4% retracement of the Apr 7 - 11 bear leg
• RES 2: 112-23   High May 1 and key resistance
• RES 1: 112-04+ High May 2
• PRICE:‌‌ 111-25.5 @ 1452 ET Jun 28
• SUP 1: 111-11+/110-25+ Low Jun 25 / 50-day EMA       
• SUP 2: 110-10+/109-28 Low Jun 16 / Low Jun 6 / 11
• SUP 3: 109-12+ Low May 22 and the bear trigger
• SUP 4: 109-09+ Low Apr 11 and key support

Treasury futures have traded higher this week. Price has cleared resistance at 111-14+, the Jun 5 high and 61.8% of the May 1 - 22 downleg. The clear break of this hurdle strengthens a bullish cycle. Note too that yesterday’s gains delivered a print above 111-30, 76.4% of May 1-22 downleg. A clear break of this level would strengthen current conditions. Initial pivot support to watch lies at 110-25+, the 50-day EMA.

SOFR FUTURES CLOSE

Sep 25 -0.015 at 95.985
Dec 25 -0.025 at 96.295
Mar 26 -0.025 at 96.555
Jun 26 -0.035 at 96.770
Red Pack (Sep 26-Jun 27) -0.045 to -0.04
Green Pack (Sep 27-Jun 28) -0.045 to -0.04
Blue Pack (Sep 28-Jun 29) -0.045 to -0.04
Gold Pack (Sep 29-Jun 30) -0.04 to -0.04

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

• Secured Overnight Financing Rate (SOFR): 4.40% (+0.04), volume: $2.802T
• Broad General Collateral Rate (BGCR): 4.38% (+0.05), volume: $1.104T
• Tri-Party General Collateral Rate (TCR): 4.38% (+0.05), volume: $1.071T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $124B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $282B

FED Reverse Repo Operation

RRP usage climbs to $285.742B this afternoon from $252.242B yesterday, total number of counterparties at 41. Usage had fallen to $54.772B on Wednesday, April 16 -- lowest level since April 2021. Conversely, usage had surged to the highest level since December 31, 2024 on Monday, March 31: $399.167B.

MNI PIPELINE: No new issuance Friday after $8.525B priced Thursday, $54.375B total on week
Date $MM Issuer (Priced *, Launch #)
06/26 $3B *Mizuho $1.25B 6NC5 +92, $750M 6NC5 SOFR+125, $1B 11NC10 +107
06/26 $2.4B *Takeda $1.65B 10Y +100, $750M 30Y +110
06/26 $1.5B *Williams Cos $750M 5Y +85, $750M 10Y +110
06/26 $875M *Public Storage $475M 5Y +65, $400M 10Y +80
06/26 $750M *Raizen Fuels Finance 7Y +245 
06/26 $Benchmark Softbank 5Y/10Y investor calls

MNI EGB BONDS: EGBs-GILTS CASH CLOSE: Curves Close Mixed, But End Week Steeper

European yields rose slightly on Friday, with mixed dynamics across curves.

• Core FI was under a bit of pressure in early trade, with factors including higher-than-expected June flash inflation readings for France and Spain, as well as a broader risk-on bid on US trade optimism.
• European yields ticked lower after a weak US personal spending data release, but would spend the rest of the session trading in volatile fashion amid limited volumes.
• In other data, EC economic sentiment was weaker than expected in June, and though French consumer spending beat expectations in May, underlying momentum remains weak.
• Yields closed higher, with the German curve bear flattening and the UK's lightly bear steepening. 2Y - 5Y Gilts outperformed German counterparts, but it was vice versa further down the curve with Bund and Buxl outperforming 10-30Y Gilts.
• Periphery/semi-core EGB spreads tightened modestly.
• For the week, both the UK and German steepened, with Gilts easily outperforming: Germany 2Y +1.0bp/10Y +7.5bp, UK 2Y -8.0bp/10Y -3.3bp.
• Next week sees the remaining flash Eurozone June CPIs (MNI preview here), along with several speakers at the ECB's Sintra Forum.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 3.5bps at 1.86%, 5-Yr is up 2.9bps at 2.163%, 10-Yr is up 2.3bps at 2.592%, and 30-Yr is unchanged at 3.07%.
• UK: The 2-Yr yield is up 1.2bps at 3.839%, 5-Yr is up 1.9bps at 3.968%, 10-Yr is up 3.2bps at 4.504%, and 30-Yr is up 1.9bps at 5.272%.
• Italian BTP spread down 0.3bps at 88.1bps / French OAT down 0.2bps at 67.9bps  

MNI FOREX: USD Index Set to Post Lowest Weekly Close Since February 2022

• US$ bounced off near Feb '22 lows after President Trump unexpectedly announcing the end to Canadian trade negotiations via social media, BBDXY +1.87 at 1195.88).
• Softer than expected personal income data from the US offset a marginal uptick for Core PCE prints in May. The mixed data did little to enthuse an already subdued currency market on Friday, with the dollar index just 0.1% firmer on the session.
• Softer-than-expected Japanese data may be moderately boosting cross/JPY to finish the week. Tokyo’s core inflation slowed to 3.1% y/y in June from 3.6% in May. The core-core CPI, which excludes both fresh food and energy and is a key indicator of underlying inflation, also eased to 3.1% y/y in June from 3.3% in May. The likes of EURJPY and CHFJPY have been beneficiaries of this dynamic on Friday.
• Progress for CHFJPY specifically have been notable this week, and today’s advance looks set to extend the pair’s winning streak to seven consecutive sessions. CHFJPY has now rallied over 4% from the June lows to fresh record highs above 181.40.
• Today’s price action bridged the gap to the first notable projection level (from the Apr 25 - May 13 - May 23 price swing) at 181.35. Above here, the next objective is seen at 182.32.
• In emerging markets, the Colombian peso was a notable laggard on Friday following two rating downgrades from Moody’s and S&P.
• Overall this week, the dollar has resumed its downtrend, with the USD index set to close at its lowest weekly level since February 2022. Price action has propelled the likes of EURUSD above 1.17 and GBPUSD above 1.37, while USDCHF continued to plumb fresh 10-year lows and print below 0.8000.
• It is worth highlighting that next week’s US employment report will headline the economic calendar, notably scheduled on Thursday, owing to the July 4th holiday. China PMIs and German inflation data kicks thing off on Monday.

MONDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
30/06/2025	0600/0800	**	SE	Retail Sales
30/06/2025	0600/0800	**	DE	Import/Export Prices
30/06/2025	0600/0800	**	DE	Retail Sales
30/06/2025	0600/0700	***	GB	GDP Second Estimate
30/06/2025	0600/0700	*	GB	Quarterly current account balance
30/06/2025	0700/0900	**	CH	KOF Economic Barometer
30/06/2025	0800/1000	**	EU	M3
30/06/2025	0800/1000	***	DE	Bavaria CPI
30/06/2025	0800/1000	***	DE	North Rhine Westphalia CPI
30/06/2025	0800/1000	***	DE	Baden Wuerttemberg CPI
30/06/2025	0830/0930	**	GB	BOE Lending to Individuals
30/06/2025	0830/0930	**	GB	BOE M4
30/06/2025	0830/1030		EU	ECB de Guindos At IADG Conference
30/06/2025	0900/1100	***	IT	HICP (p)
30/06/2025	1200/1400	***	DE	HICP (p)
30/06/2025	1342/0942	***	US	MNI Chicago PMI
30/06/2025	1400/1000		US	Atlanta Fed's Raphael Bostic - MNI Connect
30/06/2025	1430/1030	**	US	Dallas Fed manufacturing survey
30/06/2025	1530/1130	*	US	US Treasury Auction Result for 26 Week Bill
30/06/2025	1530/1130	*	US	US Treasury Auction Result for 13 Week Bill
30/06/2025	1600/1200	***	US	USDA Acreage - NASS
30/06/2025	1600/1200	**	US	USDA GrainStock - NASS
30/06/2025	1700/1300		US	Chicago Fed's Austan Goolsbee
30/06/2025	1900/2100		EU	ECB Lagarde Opening Remarks At Sintra Forum
01/07/2025	2300/0900	**	AU	S&P Global Manufacturing PMI (f)
01/07/2025	2301/0001	*	GB	BRC Monthly Shop Price Index
01/07/2025	2350/0850	***	JP	Tankan
01/07/2025	0030/0930	**	JP	S&P Global Final Japan Manufacturing PMI
01/07/2025	0145/0945	**	CN	S&P Global Final China Manufacturing PMI