MNI ASIA OPEN: Tsy Yields Rise, Curves Steepen Ahead CPI, PPI

EXECUTIVE SUMMARY

• MNI FED: Chicago's Goolsbee: Latest Tariffs Require Caution
• MNI BRIEF: Carney Declines Counter Tariff Threat, Calls Cabinet
• MNI BRIEF: US Budget Surplus $27B In June; YTD Deficit $1.3T
• MNI US-RUSSIA: Trump Demand For Unchecked Authority Could Sink Russia Sanction Bill
• MNI US INFLATION: CPI Seen Picking Up In June, Core Goods Eyed For Early Tariff Hit

US

MNI FED: Chicago's Goolsbee: Latest Tariffs Require Caution

Chicago Fed President Goolsbee tells the Wall Street Journal in an interview Friday (link) that this week's latest round of tariff announcements could force him and the FOMC to wait for longer before having enough clarity to cut rates. "I'm hopeful that when we go back and talk to [businesses] now, they don't say, 'Oh, this is putting us back to where we were on April 3... But I don't know, because this has just happened...The more we keep adding things to the mix that make it hard to figure out, 'Are prices going to be rising or not?' The more it's just throwing more dirt back in the air."

NEWS

MNI BRIEF: Carney Declines Counter Tariff Threat, Calls Cabinet

Canadian Prime Minister Mark Carney on Friday declined to threaten counter-tariffs in response to President Donald Trump's revised Aug. 1 deadline for a 35% levy, and said he will consult with cabinet Tuesday morning. "Throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and businesses," read a statement from Carney's office.

MNI US-RUSSIA: Trump Demand For Unchecked Authority Could Sink Russia Sanction Bill

Senate Democrats could withdraw support from the pending 'Sanctioning Russia Act of 2025' if President Donald Trump is provided unchecked authority over the implementation of primary sanctions and secondary tariffs. Bill co-author, Senator Lindsay Graham (R-SC), has touted the package as having veto-proof support. However, as Trump leans towards endorsing the package, Graham is including language to insulate Trump from Congressional oversight. Trump told NBC that the bill "lets the president do whatever he wants... it’s at my option if I want to use it.”

MNI RUSSIA: Kremlin Waits On Trump Statement As US Pres Could Use PDA For Weapons

Kremlin spox Dmitry Peskov, speaking to reporters, says that regarding US President Donald Trump's comments regarding a "major statement" on Russia to be delivered on 14 July, "We are waiting for it, [we] want to understand what he meant." There is speculation that Trump could agree to sign off on a Senate-passed bill that significantly increases sanctions on Russia, while there are also unconfirmed reports that Trump could use the presidential drawdown authority (PDA), last used by his predecessor Joe Biden in January, to send more weapons to Kyiv.

US TSYS

MNI US TSYS: Tsys Hug Lows, Curves Bear Steepen, Focus on Next Week's CPI

• Treasuries look to finish weaker late Friday, curves bear steepening with the short end outperforming despite large late session selling in Sep'25 SOFR futures.
• Tariff headlines buoyed Treasuries briefly overnight -- gaining after Pres Trump announced a 35% tariff on Canada starting August 1, while considering 15%-20% tariffs on most other trading partners. Support for Treasuries gradually faded as exact tariff details still to be annc'd (whether USMC trade exemptions will still apply). Rates ignored Trump to make a "major statement" on Russia Monday while stocks retreated.
• Currently, Sep'25 10Y futures trade -14.5 at 110-24.5 vs. 110-22.5 low (10Y yld tapped 4.4253% high), breaching the 50-day EMA, at 110-31+. This undermines a recent bull theme and exposes 110-17 next, a Fibonacci retracement point and a key support. Resistance to watch is at 111-28, the Jul 3 high.
• Curves rebound from Thursday's lows, 2s10s +4.826 at 52.384, 5s30s +4.263 at 97.617. Projected rate cut pricing consolidated slightly vs morning (*) levels: Jul'25 at -1.2bp (-1.7bp), Sep'25 at -17bp (-17.8bp), Oct'25 at -31.7bp (-32.7bp), Dec'25 at -49.6bp (-50.9bp).
• Data limited to Federal Budget Balance - U.S. government posted a USD27 billion budget surplus for June, up USD98 billion from a year earlier, reflecting strong tax receipts and collections of import duties. Focus on next week's CPI, PPI, Retail Sales and UofM inflation/sentiment data.

OVERNIGHT DATA

MNI BRIEF: US Budget Surplus $27B In June; YTD Deficit $1.3T

MNI US INFLATION: CPI Seen Picking Up In June, Core Goods Eyed For Early Tariff Hit

June CPI is the highlight of next week's US data slate, with MNI's early roundup of analyst expectations showing an anticipated acceleration in the main measures of inflation. Both core and headline CPI are seen rising to the mid 0.20s% M/M, from May's readings of 0.13% for core and 0.08% for headline. 

• Such outturns would mean the strongest M/M headline CPI since January, with core continuing to range between 0.0-0.3% for a 5th consecutive month. They would also bring the Y/Y core reading to  2.9% or 3.0%, with headline at 2.6% or 2.7% (both would be 4-month highs).

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 262.77 points (-0.59%) at 44383.68
S&P E-Mini Future down 17.75 points (-0.28%) at 6306
Nasdaq down 35.2 points (-0.2%) at 20593.96
US 10-Yr yield is up 7.2 bps at 4.4213%
US Sep 10-Yr futures are down 15/32 at 110-24
EURUSD down 0.0012 (-0.1%) at 1.1689
USDJPY up 1.19 (0.81%) at 147.45
WTI Crude Oil (front-month) up $2.01 (3.02%) at $68.59
Gold is up $34.45 (1.04%) at $3358.53

European bourses closing levels:
EuroStoxx 50 down 54.79 points (-1.01%) at 5383.48
FTSE 100 down 34.54 points (-0.38%) at 8941.12
German DAX down 201.5 points (-0.82%) at 24255.31
French CAC 40 down 72.96 points (-0.92%) at 7829.29

US TREASURY FUTURES CLOSE

3M10Y +8.342, 7.528 (L: -3.035 / H: 7.668)
2Y10Y +5.025, 52.583 (L: 46.986 / H: 52.593)
2Y30Y +6.874, 106.398 (L: 98.721 / H: 106.607)
5Y30Y +4.263, 97.617 (L: 92.747 / H: 97.792)
Current futures levels:
Sep 2-Yr futures down 1.875/32 at 103-20.75 (L: 103-19.5 / H: 103-22.75)
Sep 5-Yr futures down 7.25/32 at 108-4.5 (L: 108-02.75 / H: 108-12.5)
Sep 10-Yr futures down 15/32 at 110-24 (L: 110-22.5 / H: 111-08) 
Sep 30-Yr futures down 1-12/32 at 112-28 (L: 112-26 / H: 114-11) 
Sep Ultra futures down 1-27/32 at 115-25 (L: 115-23 / H: 117-23)

MNI US 10YR FUTURE TECHS: (U5) Support Intact For Now

• RES 4: 112-23   High May 1 and key resistance
• RES 3: 112-15   61.8% retracement of the Apr 7 - 11 sell-off
• RES 2: 112-12+ High Jul 1 and a bull trigger
• RES 1: 111-13+/111-28 High Jul 10 / High Jul 3
• PRICE:‌‌ 110-25+ @ 1220 ET Jul 11
• SUP 1: 110-21+/17 Low Jul 8 / 61.8% of the May 22 - Jul 1 bull leg     
• SUP 2: 110-10+ Low Jun 16
• SUP 3: 110-03   76.4% of the May 22 - Jul 1 bull leg
• SUP 4: 109-28   Low Jun 6 and 11 

Treasury futures maintain a softer short-term tone following the retracement that started Jul 1. Price has breached the 50-day EMA, at 110-31+. This undermines a recent bull theme and exposes 110-17 next, a Fibonacci retracement point and a key support. Clearance of this level would strengthen a bearish threat. Note that it also remains possible that the recent move down is a correction. Resistance to watch is at 111-28, the Jul 3 high.

SOFR FUTURES CLOSE

Sep 25 -0.020 at 95.865
Dec 25 -0.030 at 96.150
Mar 26 -0.035 at 96.390
Jun 26 -0.040 at 96.60
Red Pack (Sep 26-Jun 27) -0.035 to -0.025
Green Pack (Sep 27-Jun 28) -0.055 to -0.035
Blue Pack (Sep 28-Jun 29) -0.07 to -0.06
Gold Pack (Sep 29-Jun 30) -0.08 to -0.07

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

• Secured Overnight Financing Rate (SOFR): 4.31% (-0.01), volume: $2.735T
• Broad General Collateral Rate (BGCR): 4.30% (-0.01), volume: $1.123T
• Tri-Party General Collateral Rate (TCR): 4.30% (-0.01), volume: $1.098T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $106B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $284B

FED Reverse Repo Operation:

RRP usage slipped to $181.637B this afternoon from $183.339B yesterday, total number of counterparties at 37. Usage had fallen to $54.772B on Wednesday, April 16 -- lowest level since April 2021 - compares to yesterday's (July 1) $460.731B highest usage since December 31.

MNI PIPELINE: Corporate Bond Roundup: $45.7B Total Priced on Week

• 07/11 No new US$ Corporate bond issuance Friday, $45.7B total on the week
• Date $MM Issuer (Priced *, Launch #)
  • $5.85B Priced Thursday
  • 07/10 $3B *Nissan Motor $1B 5Y 7.5%, $750M 7Y 7.75%, $1.25B 10Y 8.125% (upsized from $2.25B)
  • 07/10 $1.5B *World Bank 2030 Tap SOFR+43 (upsized from $500M)
  • 07/10 $750 *Aviation Capital Group 5Y +107
  • 07/10 $600M *Pacific Life 7Y +75

MNI BONDS: EGBs-GILTS CASH CLOSE: Week Closes With Notable Bear Steepening

Weakness across core FI Friday cemented a bear steepening move for the week as a whole. 

• For yet another session this week, there were few overt macro / headline drivers of weakness, with the broader theme of fiscal concerns continuing to weigh on Bunds and Gilts alike.
• After the US overnight announced 35% tariffs on Canada, there was expectation of the EU rate being revealed Friday, though market participants appeared to largely shrug this off.
• Gilts saw little market reaction to softer-than-expected May GDP data, with upward revisions dulling any dovish impulse.
• ECB's Schnabel was typically hawkish, noting that the bar for another cut is very high.
• Both the German and UK curves bear steepened. 10Y Bund saw its highest daily close since March 31, with 30Y since 2011.
• For the week as a whole, both the UK and German curves bear steepened: for the UK, 2Y +0.4bp, 10Y +6.8bp; Germany underperformed: 2Y +8.4bp, 10Y +11.8bp.
• Fitch is scheduled to review Germany's rating after Friday's close (AAA; Outlook Stable). Next week's European calendar highlights are UK-centric, with CPI and labour market data and BOE's Bailey delivering the Mansion House speech. 

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 1bps at 1.9%, 5-Yr is up 1.5bps at 2.288%, 10-Yr is up 2bps at 2.725%, and 30-Yr is up 2.4bps at 3.227%.
• UK: The 2-Yr yield is unchanged at 3.856%, 5-Yr is up 1.7bps at 4.043%, 10-Yr is up 2.7bps at 4.622%, and 30-Yr is up 2.7bps at 5.433%.
• Italian BTP spread down 0.8bps at 84.6bps / French OAT down 0.6bps at 68.8bps  

MNI FOREX: USDCAD Completes Round Trip Following Stellar Employment Report

• The USD index is rising once again on Friday, extending its cautious recovery from last week’s cycle lows to ~1.5%. Although off its best levels, the DXY is threatening a close above 20-day EMA resistance which would mark a bullish development.
• The Canadian dollar has been a focus in G10 today following President Trump’s latest letter to Prime Minister Mark Carney and the announcement that Canada will face a 35% tariff on exports to the United States starting August 1. This prompted a rapid spike for USDCAD during APAC hours, from levels around 1.3655 to an intra-day peak of 1.3731.
• However, a reversal lower was then accelerated following a positive set of June employment data in Canada. Despite the composition of job gains being heavily tilted towards part-time, the lower-than-expected unemployment rate (6.9% vs 7.1% expected) has seen a notable repricing of July easing expectations, which worked in favour of the Canadian dollar.
• As such, USDCAD eroded the entirety of the Trump letter rally from overnight to print a fresh session low by 1 pip at 1.3652. On the downside, sights remain on key support at 1.3540, the Jun 16 low. Clearance of this level would resume the technical downtrend.
• GBP remains weaker following this morning's second consecutive month of negative growth in May, with fiscal concerns also remaining a headwind for the pound. For GBPUSD, spot broke to fresh weekly lows below the 1.35 handle, to then test key 50-day EMA support which intersects today at 1.3481. Below here, a key trendline drawn from the January lows comes in just above the 1.34 mark.
• Higher core yields today also worked in favour of USDJPY (+0.75%), which extends the week’s advance to 2% as we approach the close. The latest bullish wave has seen the pair narrow the gap to 148.03, the Jun 23 high.
• Chinese trade and activity data are early data highlights next week, while US CPI dominates the global calendar.

MONDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
14/07/2025	0600/0800	***	SE	Final Inflation Report
14/07/2025	-	***	CN	Trade
14/07/2025	-	***	CN	Money Supply
14/07/2025	-	***	CN	New Loans
14/07/2025	-	***	CN	Social Financing
14/07/2025	1230/0830	**	CA	Wholesale Trade
14/07/2025	1500/1700		EU	ECB Cipollone At EU Parliament
14/07/2025	1530/1130	*	US	US Treasury Auction Result for 26 Week Bill
14/07/2025	1530/1130	*	US	US Treasury Auction Result for 13 Week Bill
15/07/2025	2301/0001	*	GB	BRC-KPMG Shop Sales Monitor
15/07/2025	0200/1000	***	CN	GDP
15/07/2025	0200/1000	***	CN	Fixed-Asset Investment
15/07/2025	0200/1000	***	CN	Retail Sales
15/07/2025	0200/1000	***	CN	Industrial Output
15/07/2025	0200/1000	**	CN	Surveyed Unemployment Rate M/M