MNI ASIA OPEN: Tsy Yields Rise, Mixed Data, ECB Holds Steady

EXECUTIVE SUMMARY

• MNI JAPAN: Ishiba Restates Intention To Stay; Bettors Say 76% Chance PM Out In '25
• MNI US DATA: Poor New Home Sales Add To Evidence Of Weakening Housing Market
• MNI US DATA: A Mixed Bag For July Flash PMIs, Tariffs Increasingly Passed Through
• MNI US DATA: Weekly Claims Increasingly Consistent With Low Firing, Low Hiring

MNI ECB WATCH: ECB Holds, Keeps Meeting-By-Meeting Approach

The European Central Bank as expected held its benchmark deposit at 2% on Thursday for the first time after seventh consecutive cuts, with President Christine Lagarde indicating that the ECB will keep its meeting-by-meeting approach as uncertainty remains higher given trade and geopolitical tensions.

• The decision to keep policy unchanged was unanimous, Lagarde told a news conference after the deposit rate was held at 2%. “You could argue that we are on hold. We are in this wait and watch our situation,” she said, adding that it was still hard to assess the trade outlook despite reports of a deal near between the U.S. and the U.S. based around a 15% tariff on European exports.

NEWS

MNI TARIFFS: Guardian: 50% Tariff On Steel Still Included In EU-US Agreement

Latest on EU-US trade from The Guardian: "The latest proposal for a trade agreement between the EU and the US does not include a removal or reduction of the punitive 50% tariff Donald Trump imposed on steel imports, it has emerged. It is a big setback for the industry in the EU which last month warned it faced being wiped out by the 50% rate, high energy costs and cheap Chinese competition."

MNI SECURITY: Pentagon Suspends Participation In Think Tank And Research Events

Politico reports that the Pentagon "has suspended participation in all think tank and research events until further notice... A major shift in engagement from the country’s largest federal agency." Politico notes: "The move would sideline the Pentagon from national security dialogues that it has used for decades to advance its policy and explain the department’s rationale."

MNI US-EU: Lutnick: The EU Really Wants To Make A Deal

US Commerce Secretary Howard Lutnick speaking on CNBC says that the EU "really wants to make a deal" but that "the EU attacks our great tech companies every day. We're trying to beat that back"  Lutnick: "The South Koreans very much want to make a deal....You can hear the expletives out of Korea when they heard about the Japan deal...The South Koreans are going to be in our office every day."

MNI US-EU: Commission Spox-No Countermeasures Pre Aug 1, Prepared For All Scenarios

Reuters reports comments from European Commission spox Olof Gill regarding US-EU tariff talks. Nothing new in terms of talks, says that "the EU continues to engage intensively with the US on tariffs...Our focus is on finding a negotiated outcome with the US...We believe such an outcome is within reach."

MNI THAILAND: Acting PM-Fighting Has To Stop Before Negotiations w/Cambodia

Reuters reports comments from Acting Prime Minister Phumtham Wechayachai regarding the escalation in military skirmishes between Thai and Cambodian forces. Says that "Cambodia fired heavy weapons into Thailand without specific targets so civilians were killed." Acting PM: "There has been no declaration of war." Acting PM: "The conflict with Cambodia has not spread to more provinces." 

MNI JAPAN: Ishiba Restates Intention To Stay; Bettors Say 76% Chance PM Out In '25

Prime Minister Shigeru Ishiba again today indicated his intention to remain in office following the defeat of the governing coalition in the 20 July House of Councillors election. Speaking to reporters after a meeting with Economic Revitalisation Minister (and lead trade negotiator with the US) Ryosei Akazawa, Ishiba stated, "I would like to continue to do my utmost to dispel the concerns of domestic business operators and those working in related industries." 

US TSYS

MNI US TSYS: Yields Gain After Mixed Data, New Home Sales Dip

• Treasuries added to the midweek decline Thursday, retreating after lower-than-expected initial claims reading (to a 14-week low 217k vs. 226k expected, 221k prior unrevised), the dataset continuing to ease back from the multi-month high registered in June.
• Dip in New Home Sale (627k SAAR vs. 650k expected, 623k prior) & mixed S&P PMIs: Manufacturing lower than expected while Services and Composite are higher than expected spurred midmorning short covering that evaporated in the second half.
• After the bell, Sep 10Y Tsy futures trade -7 at 110-25.5 vs. 110-19.5 low. Key support remains intact at 110-08+, the Jul 14 and 16 low. A move through this support would reinstate a bearish theme.
• The ECB held its benchmark rate steady at 2% for the first time after seventh consecutive cuts, Pres Lagarde indicating that the ECB will keep its meeting-by-meeting approach as geopol & trade uncertainty remains.
• The US dollar index trades on a slightly firmer footing Thursday, and was supported at the margin by the lower-than-expected jobless claims data and a firm July services PMI, BBDXY +1.66 at 1194.75.
• Looking to Friday's data, Durable Goods Orders and Cap Goods Orders Nondef Ex Air expected at 0830ET, Kansas City Fed Services Activity at 1100ET.

OVERNIGHT DATA

MNI US DATA: Weekly Claims Increasingly Consistent With Low Firing, Low Hiring

Initial jobless claims unexpectedly fell in the Jul 19 week, to a 14-week low 217k (226k expected, 221k prior unrevised). That's the 6th consecutive decline in initial claims since the recent peak of 250k in the first week of June, and brings the 4-week average down to 225k (230k prior), a 13-week low. Continuing claims in the Jul 12 week were basically right on consensus however at 1,955k (1,954k expected, 1,951k prior rev 1,956k), keeping the level in its 4-week range of 5k (1,951-1,956k). 

MNI US DATA: A Mixed Bag For July Flash PMIs, Tariffs Increasingly Passed Through

The S&P Global US PMIs were mixed in the flash July release, with manufacturing surprising with its lowest since December and back in contractionary territory whilst services surprisingly increased to the highest since December. Tariffs were reported as being “increasingly passed through to consumers”, with prices charged inflation for goods & services among the highest over the past three years. 

• Manufacturing: 49.5 (cons 52.7) in July prelim after 52.9 in June
• Services: 55.2 (cons 53.0) in July prelim after 52.9 in June
• Composite: 54.6 (cons 52.8) in July prelim after 52.9 in June

MNI US DATA: Poor New Home Sales Add To Evidence Of Weakening Housing Market

New home sales ticked up slightly in June but by much less than anticipated at 627k SAAR (650k expected, 623k prior). That's a weak rebound from May's reading which was the 3rd lowest since 2022. There were multiple signs that the housing market continues to worsen. The 511k units for sale implied 9.8 months of supply available at the current pace of sales, highest since September 2022.

MNI CANADA DATA: Expected Retail Sales Recovery Adds To BOC Hold Case

Canadian retail sales were as weak as expected in May - but the early estimate for June sales showed surprising strength. May's data showed sales falling 1.1% M/M, exactly in line with StatCan's advance estimate made a month earlier (-1.0% Bloomberg consensus, 0.4% prior rev from 0.3%), with ex-auto -0.2% (-0.3% expected, -0.3% prior).

MARKAETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 250.42 points (-0.56%) at 44760.1
S&P E-Mini Future up 13.75 points (0.22%) at 6410
Nasdaq up 74.5 points (0.4%) at 21094.42
US 10-Yr yield is up 3.6 bps at 4.4156%
US Sep 10-Yr futures are down 7.5/32 at 110-25
EURUSD down 0.0005 (-0.04%) at 1.1766
USDJPY up 0.4 (0.27%) at 146.91
#VALUE!
Gold is down $15.41 (-0.45%) at $3371.88

European bourses closing levels:
EuroStoxx 50 up 10.95 points (0.2%) at 5355.2
FTSE 100 up 76.88 points (0.85%) at 9138.37
German DAX up 55.11 points (0.23%) at 24295.93
French CAC 40 down 32.15 points (-0.41%) at 7818.28

US TREASURY FUTURES CLOSE

3M10Y +3.382, 6.035 (L: 2.075 / H: 8.691)
2Y10Y -0.67, 49.091 (L: 47.535 / H: 51.338)
2Y30Y -1.784, 103.474 (L: 101.534 / H: 106.973)
5Y30Y -1.581, 98.466 (L: 97.124 / H: 101.433)
Current futures levels:
Sep 2-Yr futures down 2.625/32 at 103-18.5 (L: 103-18 / H: 103-21.25)
Sep 5-Yr futures down 5.75/32 at 108-4.5 (L: 108-02 / H: 108-11)
Sep 10-Yr futures down 7.5/32 at 110-25 (L: 110-19.5 / H: 111-02)
Sep 30-Yr futures down 7/32 at 113-4 (L: 112-21 / H: 113-17)
Sep Ultra futures down 6/32 at 115-25 (L: 115-08 / H: 116-09)

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

• 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:‌‌ 110-28.5 @ 1330 ET Jul 24
• SUP 1: 110-24/08+ Low Jul 21 / 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

Recent gains in Treasury futures resulted in a break of the 20-day EMA, strengthening the recovery. Note too that resistance at 111-13+, the Jul 10 high, has been pierced. A clear break of this hurdle would highlight a stronger reversal. This would open 111-28, the Jul 3 high. While prices have retraced from their highs , key support remains intact at 110-08+, the Jul 14 and 16 low. A move through this support would reinstate a bearish theme.

SOFR FUTURES CLOSE

Sep 25 -0.010 at 95.825
Dec 25 -0.030 at 96.065
Mar 26 -0.050 at 96.290
Jun 26 -0.060 at 96.520
Red Pack (Sep 26-Jun 27) -0.06 to -0.055
Green Pack (Sep 27-Jun 28) -0.045 to -0.045
Blue Pack (Sep 28-Jun 29) -0.045 to -0.035
Gold Pack (Sep 29-Jun 30) -0.04 to -0.03

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

• Secured Overnight Financing Rate (SOFR): 4.28% (+0.00), volume: $2.659T
• Broad General Collateral Rate (BGCR): 4.27% (+0.00), volume: $1.110T
• Tri-Party General Collateral Rate (TCR): 4.27% (+0.00), volume: $1.088T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $115B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $283B

FED Reverse Repo Operation

RRP usage retreats to $132.186B this afternoon from $196.374B yesterday, total number of counterparties at 28. 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.

US SOFR/TREASURY OPTION SUMMARY

MNI PIPELINE: Corporate Bond Roundup: $1B Synchrony 2Pt Launched

• Date $MM Issuer (Priced *, Launch #)
• 07/24 $1B #Synchrony 4NC3 +115, $500M 11NC10 +160
• 07/24 $400M *China Securities Int 3Y SOFR+60

MNI BONDS: EGBs-GILTS CASH CLOSE: "On Hold" ECB Drives German Bear Flattening

EGBs underperformed global counterparts Thursday after a more hawkish-than-expected communication from the ECB meeting.

• Along with the fully expected rate hold, President Lagarde didn't do much to encourage expectations of further rate cuts. She said "you could argue that we are on hold" and that the ECB is "in a good place now to hold" pending incoming data and developments.
• The usual Bloomberg/Reuters ECB sources reports after the meeting pointed to a high bar for a September cut.
• Solid US jobless claims data also weighed, with Treasury weakness spilling over.
• In European data, flash Eurozone PMI data was a little better than expected, with manufacturing in line and services above-consensus, while UK PMI data was mixed (manufacturing beat slightly, but services missed).
• The hawkish repricing of near-term ECB policy resulted in the German curve bear flattening sharply, with UK yields lower across the curve but the short- and long-end outperforming.
• Periphery EGBs underperformed, with10Y Italian and Greek spreads to Bunds rising 2-3bp.
• Friday's schedule includes UK retail sales and the German IFO survey.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 8.8bps at 1.932%, 5-Yr is up 8.7bps at 2.281%, 10-Yr is up 6.3bps at 2.702%, and 30-Yr is up 1.9bps at 3.192%.
• UK: The 2-Yr yield is down 1.9bps at 3.862%, 5-Yr is down 1.2bps at 4.032%, 10-Yr is down 1.3bps at 4.622%, and 30-Yr is down 2.2bps at 5.46%.
• Italian BTP spread up 2.5bps at 84.8bps / French OAT up 0.3bps at 67bps  

MNI FOREX: EURGBP Rises Above 0.8700, Approaches 2025 Highs

• Currency markets have had a lacklustre tone on Thursday, with a lack of meaningful macro developments potentially underpinning a subdued summer tone. With that said, the ECB holding interest rates and sounding notably constructive on euro area growth combined with poorer-than-expected UK PMI data have elevated EURGBP to a fresh 3-month high above the 0.8700 handle.
• EURGBP price action built momentum after breaking above a cluster of daily highs across July, just below the 0.8700 mark, placing the focus on key resistance at 0.8738, the Apr 11 high. Above here, 0.8781 would be the next chart point of note, the 2.236 projection of the Mar 3 - 11 - 28 price swing. Sterling has been the standout underperformer in G10, prompting GBPUSD to trade back below 1.3550, currently down 0.2% on the session at 1.3510 as we approach the APAC crossover.
• The US dollar index trades on a slightly firmer footing Thursday, and was supported at the margin by the lower-than-expected jobless claims data and a firm July services PMI. This has particularly helped USDJPY to extend its intra-day bounce to over 100 pips. It is worth noting that overnight, USDJPY’s low at 145.85 broadly matched the pair’s 50-day EMA, which will have likely been influential in the subsequent bounce. Overall, a technical bull cycle in USDJPY does remain in place, with the recent phase of weakness appearing to be a corrective retracement from recent highs. A sustained break of the 50-day is needed to highlight a stronger bearish reversal.
• This more stable backdrop for the dollar has prompted AUDUSD to edge lower from the cycle highs printed earlier in the session at 0.6625. Constructive domestic data and comments from RBA Governor Bullock helped propel AUDUSD above key resistance and the 0.66 handle to register fresh 8-month highs. Above here, resistance is scant until 0.6688, the Nov 07 high, printed shortly after the US election last year.
• Tokyo CPI kicks off Friday’s economic calendar, before UK retail sales, German IFO and US durable goods.

FRIDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
25/07/2025	0600/0800	**	SE	PPI
25/07/2025	0600/0800	**	SE	Unemployment
25/07/2025	0600/0700	***	GB	Retail Sales
25/07/2025	0645/0845	**	FR	Consumer Sentiment
25/07/2025	0800/1000	**	EU	M3
25/07/2025	0800/1000	**	IT	ISTAT Consumer Confidence
25/07/2025	0800/1000	**	IT	ISTAT Business Confidence
25/07/2025	0800/1000	***	DE	IFO Business Climate Index
25/07/2025	1230/0830	**	US	Durable Goods New Orders
25/07/2025	1230/0830	**	US	Durable Goods New Orders
25/07/2025	1300/1500	**	BE	BNB Business Confidence
25/07/2025	1500/1100		CA	Finance Dept monthly Fiscal Monitor (expected)
25/07/2025	1700/1300	**	US	Baker Hughes Rig Count Overview - Weekly
25/07/2025	1700/1300	**	US	Baker Hughes Rig Count Overview - Weekly