MNI ASIA OPEN: Tsy Curves Bear Steepen Ahead Fed Rate Decision
EXECUTIVE SUMMARY
- MNI FED: Jul 2025 FOMC Analyst Views: See You In The Fall
- MNI US-EU: European Leaders Divided On Deal To Avert Worst Of Tariffs
- MNI US-CHINA: Delegations Arrive At Venue For Third Round Of US-China Trade Talks
- MNI US-RUSSIA: New Deadline For Deal '10-12 Days' TBC, Secondary Sanctions If Not
- MNI US DATA: Dallas Mfg Rounds Out Regional Fed Surveys Eyeing Nudge Higher In ISM
US
MNI FED: Jul 2025 FOMC Analyst Views: See You In The Fall
This update of our July 25 Fed preview includes analyst expectations: No analysts expect the Fed to cut rates or adjust balance sheet policy at the July FOMC, per the 32 meeting previews seen by MNI. This is unchanged from the June meeting at which even at that point, no July cut was seen.
- It’s virtually unanimous that there will be two dissents in favor of a cut at this meeting, with Gov Waller widely expected to do so and Gov Bowman also likely (among analysts who expressed an opinion on this).
- Statement changes are expected to be limited, with perhaps some downgrading of the characterization of growth in the first paragraph, and many seeing the language on uncertainty changing (“has diminished but remains elevated” to remove “has diminished but”).
- Powell’s press conference is expected to see extensive questioning about political interference in the Fed, and his own future as Chair.
- In terms of actual policy, Powell is seen conveying a fairly neutral stance on future cuts, with reiteration of the June Dot Plot (50bp of cuts by year-end) seen as a potential dovish outcome.
NEWS
MNI US-EU: European Leaders Divided On Deal To Avert Worst Of Tariffs
A number of high-ranking European politicians have expressed their disappointment at the trade deal agreed between US President Donald Trump and European Commission President Ursula von der Leyen over the weekend in Scotland. Most prominent has been French PM Francois Bayrou, who posted on X: “It is a dark day when an alliance of free peoples, united to assert their values and defend their interests, resigns itself to submission”. Chair of the European Parliament's Trade Committee, German MEP Bernd Lange said "My first assessment: not satisfactory. This is a lopsided deal. Concessions have clearly been made that are difficult to accept."
MNI US-CHINA: Delegations Arrive At Venue For Third Round Of US-China Trade Talks
A Chinese trade delegation, led by Vice Premier He Lifeng, and a US delegation, led by Treasury Secretary Scott Bessent, have arrived at the venue in Stockholm, Sweden, for the third round of trade talks. MNI noted in the Political Risk Week Ahead that there is increasing speculation that another 90-day extension will be agreed upon to avoid the imposition of 100%+ tariffs. SCMP reported overnight that another 90-day pause is expected, during which time “the two nations will commit to not impose additional tariffs on each other, nor escalate the trade war by other means.”
MNI US-RUSSIA: Odds Of US Sanctions On Russia Spike Following Trump Comments
The implied probability of President Donald Trump increasing sanctions on Russia by September 15 spiked from 23% to 50%, following hawkish comments from Trump ahead of a meeting with UK PM Keir Starmer. Trump said: “I’m disappointed in [Russian] President Putin... So we’re going to have to look and I’m going to reduce that 50 days that I gave him to a lesser number.”
MNI US-RUSSIA: New Deadline For Deal '10-12 Days' TBC, Secondary Sanctions If Not
US President Donald Trump has said that a new deadline of 10-12 days will be in place for Russia and Ukraine to agree on a peace deal (see 'US-RUSSIA: Odds Of US Sanctions On Russia Spike Following Trump Comments, 14:01BST). Says that the exact deadline will be confirmed "probably tonight or tomorrow". Trump: "We're going to do secondary sanctions unless we make a deal. We might make a deal, you don't know," adds "I don't want to do that to Russia. I love the Russian people."
MNI US-RUSSIA: Medvedev Warns Trump Against Playing Games with Russia
"RUSSIA'S MEDVEDEV SAYS TRUMP IS PLAYING A GAME OF ULTIMATUMS WITH RUSSIA -RIA, SAYS THIS IS A 'STEP TOWARDS WAR' -RIA" - Reuters
US TSYS
US TSYS: Holding Weaker Levels/Narrow Ranges Ahead Wednesday's FOMC
- Treasuries are holding modestly weaker levels/narrow ranges since midmorning, curves bear steepening (2s10s +2.376 at 48.412) ahead of Wednesday's widely expected steady FOMC rate announcement.
- It’s virtually unanimous that there will be two dissents in favor of a cut at this meeting, with Gov Waller widely expected to do so and Gov Bowman also likely (among analysts who expressed an opinion on this).
- Projected rate cut pricing gained slightly vs. early morning (*) levels: Jul'25 at -0.8bp (-0.05bp), Sep'25 at -17.4bp (-16.7bp), Oct'25 at -28.2bp (-27.6bp), Dec'25 at -44.5bp (-43.6bp). Year end projection well off early July level of appr -65.0bp.
- Currently, the Sep'25 10Y contract trades -5 at 110-26.5 (110-24.5 low). Key support to watch is 110-08+, the Jul 14 and 16 low. Clearance of this support would reinstate a bearish theme. First support is at 110-19+, the Jul 24 low.
- EUR sank sharply against all others in G10 Monday, swiftly reversing the opening bid on the back of the EU-US trade deal headlines. Bbg's US$ index looks to finish near late session highs: BBDXY +9.42 at 1209.99.
- Stock earnings resume after the close with the following reporting: Woodward Inc, Whirlpool Corp, Waste Management, Brown & Brown, Cadence Design Systems, Beyond Inc, Universal Health Services, Nucor Corp, Welltower Inc and The Western Union Co.
OVERNIGHT DATA
MNI US DATA: Dallas Mfg Rounds Out Regional Fed Surveys Eyeing Nudge Higher In ISM
- The Dallas Fed manufacturing index was stronger than expected in July as it increased to 0.9 (cons -9.5) from -12.7 in June. It’s a third consecutive increase from the -35.8 in April, at what had been its lowest since Jan’16 outside of Mar-May 2020, and leaves it at the first positive reading since January.
- Within the details, new orders improved but remained in contractionary territory at -3.6 after -7.3.
MNI US DATA: Mixed Ability Of Firms To Pass Cost Increases On In Dallas Fed District
The improvement in the Dallas Fed manufacturing survey for July came despite an apparent relative re-compression in margins although this in turn was countered by the opposite when looking six months out.
- The prices paid index remained at an elevated 41.7 after 43.0 in June (average of 43.5 since Apr 2 reciprocal tariff announcements, 30 in 1Q25 and 21 in 2024) but prices received dropped from 26.1 to 11.1 for the lowest since March (average 16.8 since Apr, 7 in 1Q25 and 7 in 2024).
- Countering this, the six-months ahead measures saw a marked increase in expectations for prices received with its highest since April 2022. The 43.2 compares with an average of 32 since April, 35 in 1Q25 and 21 in 2024.
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA down 64.36 points (-0.14%) at 44837.56
S&P E-Mini Future down 0.5 points (-0.01%) at 6424.5
Nasdaq up 70.3 points (0.3%) at 21178.58
US 10-Yr yield is up 2.4 bps at 4.4118%
US Sep 10-Yr futures are down 5/32 at 110-26.5
EURUSD down 0.0148 (-1.26%) at 1.1594
USDJPY up 0.83 (0.56%) at 148.52
WTI Crude Oil (front-month) up $1.91 (2.93%) at $67.08
Gold is down $19.84 (-0.59%) at $3317.29
European bourses closing levels:
EuroStoxx 50 down 14.58 points (-0.27%) at 5337.58
FTSE 100 down 38.87 points (-0.43%) at 9081.44
French CAC 40 down 33.7 points (-0.43%) at 7800.88
US TREASURY FUTURES CLOSE
3M10Y +3.741, 6.891 (L: 0.697 / H: 7.49)
2Y10Y +2.376, 48.412 (L: 44.897 / H: 48.811)
2Y30Y +3.072, 103.287 (L: 98.898 / H: 103.597)
5Y30Y +1.927, 99.089 (L: 96.142 / H: 99.309)
Current futures levels:
Sep 2-Yr futures down 0.75/32 at 103-18.125 (L: 103-17.125 / H: 103-19.375)
Sep 5-Yr futures down 2.5/32 at 108-5.25 (L: 108-03.5 / H: 108-09.5)
Sep 10-Yr futures down 5.5/32 at 110-26 (L: 110-24.5 / H: 111-03)
Sep 30-Yr futures down 12/32 at 113-7 (L: 113-03 / H: 113-30)
Sep Ultra futures down 18/32 at 115-26 (L: 115-22 / H: 116-27)
MNI US 10YR FUTURE TECHS: (U5) Monitoring Support
- RES 4: 112-15 61.8% retracement of the Apr 7 - 11 sell-off
- RES 3: 112-12+ High Jul 1 and a bull trigger
- RES 2: 111-28 High Jul 3
- RES 1: 111-14+ High Jul 22
- PRICE: 110-25+ @ 1515 ET Jul 28
- 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 are for now trading above last week’s low. Recent gains resulted in a break of the 20-day EMA, strengthening the recovery. Note too that resistance at 111-13+, Jul 10 high, has been pierced. A clear break of it would highlight a stronger reversal and open 111-28, the Jul 3 high. Key support to watch is 110-08+, the Jul 14 and 16 low. Clearance of this support would reinstate a bearish theme. First support is at 110-19+, the Jul 24 low.
SOFR FUTURES CLOSE
Sep 25 -0.005 at 95.835
Dec 25 -0.010 at 96.070
Mar 26 -0.015 at 96.285
Jun 26 -0.015 at 96.505
Red Pack (Sep 26-Jun 27) -0.015 to -0.015
Green Pack (Sep 27-Jun 28) -0.02 to -0.01
Blue Pack (Sep 28-Jun 29) -0.02 to -0.01
Gold Pack (Sep 29-Jun 30) -0.025 to -0.015
REFERENCE RATES (PRIOR SESSION)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.36% (+0.06), volume: $2.766T
- Broad General Collateral Rate (BGCR): 4.35% (+0.06), volume: $1.144T
- Tri-Party General Collateral Rate (TCR): 4.35% (+0.06), volume: $1.110T
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $114B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $266B
FED Reverse Repo Operation
RRP usage rises to $170.463B this afternoon from $150.509B last Friday, total number of counterparties at 42. Usage had fallen to $54.772B on Wednesday, April 16 -- lowest level since April 2021 - compares to July 1: $460.731B highest usage since December 31.
MNI PIPELINE: Corporate Bond Update: $2.75B RBC 3Pt Launched
- Date $MM Issuer (Priced *, Launch #)
- 07/28 $12B #Mexico 5Y +170
- 07/28 $2.75B #RBC $1.25B 4NC3 +62.5, $500M 4NC3 SOFR+88, $1B 6NC5 +73
- 07/28 $2B #Deutsche Bank $1.7B 6NC5 +98, $300M 6NC5 SOFR
- 07/28 $1.5B Community Health Systems 8.5NC3 9.5%a
- 07/28 $750M #M&T Bank 10NC5 +143
- 07/28 $600M #Ally Financial 8NC7 +137
- 07/28 $650M EW Scripps 5NC2 investor calls (expected to launch 7/29)
MNI BONDS: EGBs-GILTS CASH CLOSE: Gilts Underperform Bunds After EU-US Trade Pact
EGBs outperformed Gilts Monday as the implications of the EU-US trade pact agreed over the weekend were digested.
- Yields headed lower in early trade on the growth concerns implied by an increased tariff on EU exports to the US and the diminished prospects for EU retaliation on US imports, but the rest of the session saw a pronounced divergence between Gilts and Bunds.
- An MNI Policy sources piece ("MNI SOURCES: Markets Overplaying ECB's Hawkish Shift") boosted EGBs, led by the short end.
- German yields spiked briefly on defense spending headlines, but the move faded as there was nothing new (previously reported in June).
- The German curve bull steepened, with the UK's bear flattening.
- Periphery/semi-core EGB spreads were mostly lower.
- Tuesday's calendar includes UK money supply/consumer credit data, ECB CPI expectations, and Spanish retail sales.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 3bps at 1.918%, 5-Yr is down 3.1bps at 2.267%, 10-Yr is down 2.9bps at 2.689%, and 30-Yr is down 1.1bps at 3.196%.
- UK: The 2-Yr yield is up 2.2bps at 3.906%, 5-Yr is up 1.7bps at 4.075%, 10-Yr is up 1.2bps at 4.647%, and 30-Yr is up 0.5bps at 5.454%.
- Italian BTP spread down 1.7bps at 81.7bps / Spanish down 1.1bps at 58.5bps
MNI FOREX: EUR Seals Worst Session of the Year as Markets See Flaws in EU-US Deal
- EUR sank sharply against all others in G10 Monday, swiftly reversing the opening bid on the back of the EU-US trade deal headlines. The scale of Monday's reversal signals the markets' surprise at the terms of the EU-US trade deal. The 15% export tariff, minimal industry carve-outs and reduction of many tariffs to zero for EU-bound US products have opened the deal up for criticism - particularly in France. This leaves risks to growth larger than the ECB had anticipated, even as the worst case scenario has been avoided.
- Resultantly, cracked through first support with very little difficulty, nearing the 50-dma as the next key level at 1.1564.
- Spillover sales helped trigger GBP and CHF weakness, both of which hit multi-week lows. In GBP/USD, spot is now through the bear trigger at 1.3365, the Jul 16 low, has been cleared. This confirms a resumption of the down-leg that started Jul 1. Monday’s moves open 1.3335 initially, the May 20 low. Note that a break of 1.3365 would also confirm a breach of the trendline drawn from the Jan 13 low - cancelling a false break scenario.
- Oil prices fared very well. Both WTI and Brent crude futures rose over 2.5% intraday on the back of Trump cutting the imposed deadline on Russia to halt fighting in Ukraine down to 10-12 days from 50 days previously. This brings forward the threat of secondary sanctions on Russian trade partners - and could further cut off the international energy market from Russian supply. Compounding the market move, Russia proceeded with an export ban on gasoline to ensure domestic supply.
- Firmer oil prices helped contain losses for CAD, NOK against the USD - helping NOK/SEK rally back above the 100-dma in the process.
- Focus Tuesday shifts to ECB inflation expectations data, advance trade balance data, wholesale inventories numbers for June. Meanwhile, the JOLTS jobs openings data will be watched carefully for clues ahead of Friday's NFP print. Central bank speak remains quiet as the Fed remain inside their pre-decision media blackout period.
TUESDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 29/07/2025 | 0600/0800 |  SE | Flash Quarterly GDP Indicator | |
| 29/07/2025 | 0700/0900 | *** |  ES | GDP (p) |
| 29/07/2025 | 0800/1000 | ** |  EU | ECB Consumer Expectations Survey |
| 29/07/2025 | 0830/0930 | ** |  GB | BOE Lending to Individuals |
| 29/07/2025 | 0830/0930 | ** | GB | BOE M4 |
| 29/07/2025 | 0900/1000 | ** | GB | Gilt Outright Auction Result |
| 29/07/2025 | 1230/0830 | ** |  US | Advance Trade, Advance Business Inventories |
| 29/07/2025 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 29/07/2025 | 1300/0900 | ** | US | S&P Case-Shiller Home Price Index |
| 29/07/2025 | 1300/0900 | ** | US | FHFA Home Price Index |
| 29/07/2025 | 1300/0900 | ** | US | FHFA Home Price Index |
| 29/07/2025 | 1400/1000 | *** | US | Conference Board Consumer Confidence |
| 29/07/2025 | 1400/1000 | *** | US | JOLTS jobs opening level |
| 29/07/2025 | 1400/1000 | *** | US | JOLTS quits Rate |
| 29/07/2025 | 1430/1030 | ** | US | Dallas Fed Services Survey |
| 29/07/2025 | 1530/1130 | ** | US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 29/07/2025 | 1700/1300 | ** | US | US Treasury Auction Result for 7 Year Note |
| 30/07/2025 | - |  JP | Bank of Japan Meeting | |
| 30/07/2025 | 0130/1130 | *** |  AU | CPI inflation |
| 30/07/2025 | 0130/1130 | *** | AU | CPI Inflation Monthly |
