MNI ASIA OPEN: Tsys Rebound, SLR Proposal Eases Lrg Bank Rules

EXECUTIVE SUMMARY

• MNI FED: SLR Proposal Would Ease Rules For Large Banks
• MNI US DATA: Mortgage Applications Mixed For Purchases vs Refis
• MNI INFLATION: 1Y Inflation Expectations Trend Lower Whilst 1Y1Y Steady
• MNI US DATA: New Home Sales Drop Adds To Evidence Of Housing Market Deterioration

US

MNI FED: SLR Proposal Would Ease Rules For Large Banks

MNI's Policy Team summarizes the SLR issue and the proposal in the bullet points below (the Fed Board memo with the proposal is in this PDF). "The eSLR requires the biggest banks to hold capital against relatively safe assets as a backstop to risk-based capital requirements. As reserves and Treasury holdings in the banking system have skyrocketed over the past decade, the SLR has had the unintended consequence of disincentivizing dealers from engaging in Treasury market making.

MNI FED: Barr, Kugler Oppose SLR Reform As It Stands, But Swap Spreads Widen

Ahead of the Federal Reserve Board's open meeting at 2pm ET on "Proposed revisions to the Board’s supplementary leverage ratio [SLR] standards", two of the seven Board members - Governors Kugler and Barr - have expressed opposition to the proposed changes to the SLR rule. Swap spreads have moved only modestly wider (-55.7bp to -55.0bp) in Treasuries' favor on the release however. While unanimity on the Fed board is not required to move forward with the reform, overall the released proposal appears to be in line with details (see the next note) that were previously flagged (Bloomberg sources).

MNI FED: Boston's Collins Still Eyes Cuts Resuming This Year

Boston Fed's Collins (2025 FOMC Voter, leans dovish) sounds as patient as before on rate cuts in a speech Wednesday (link). She continues to see rate cuts later this year from the currently "modestly restrictive" stance but like the vast majority of her colleagues, she highlights prevailing uncertainty and wants to see more data before coming to that conclusion. 

NEWS

MNI NATO: Trump Speaks On Defence Spending & Middle East After NATO Summit

US President Donald Trump delivering his presser at the end of the NATO summit in The Hague. Livestream here. Calls the meeting a "highly successful summit", "highly productive", touts "major progress" and says "tremendous things have been accomplished" at the summit. 

MNI SECURITY: Trump Speaks On NATO & Iran-Israel Ceasefire

Speaking at the NATO summit, US President Donald Trump says, "We're with them all the way" when asked by reporters about the US' commitment to Article 5 (the collective defence clause. Adds that "NATO will be very strong". NATO Secretary General Mark Rutte praises Trump on getting NATO countries to increase defence spending, says that "Today we will decide to go to 5% [of GDP]," adding "This is about Europeans and Canadians paying more, not American taxpayers." 

MNI NATO: Leaders Meet To Sign Off On 5% Spending Commitment

NATO leaders are delivering doorstep comments ahead of the main session of the alliance's summit in The Hague later this morning. Secretary General Mark Rutte is due to speak alongside US President Donald Trump shortly, followed by the welcoming ceremony and 'family photo' shortly. 

MNI IRAN: FM Spox-Nuclear Sites "Badly Damaged" In US Strikes

John Gambrell at AP posts on X: "Iran's Foreign Ministry spokesperson says its nuclear installations 'badly damaged' by American strikes." The scale of the damage to Iran's nuclear sites, notably its uranium enrichment centres at Natanz, Fordow, and Isfahan, have been the subject of significant speculation. A NYT report earlier today suggested that the damage to the sites would only set Iran's nuclear programme back months rather than years. 

Bloomberg: NATO Leaders Endorse Historic Plan to Boost Defense Spending

NATO leaders agreed to increase defense spending to 5% of GDP and renewed their commitment to mutual defense in an historic move that comes at the time of an increasingly belligerent Russia.

MNI FRANCE: Bayrou Will Avoid Censure For Now As Far-Right Bides Its Time

The gov't of PM Francois Bayrou is safe from a censure motion set to be put forward by the centre-left Socialist Party (PS) after the far-right Rassemblement National (RN, National Rally) confirmed that it would not vote alongside the parties of the left to remove the PM and his cabinet. 

US TSYS

MNI US TSYS: Treasury Curves Twist Steeper, Fed SLR Proposal Eases Bank Rules

• Treasury futures gradually climbed off midmorning lows after the bell, curves twisting steeper (2s10s +4.186 at 50.911) after the Fed SLR proposal to ease rules for large banks.
• Projected rate cut pricing gains slightly vs. early morning levels (*): Jul'25 at -6.2bp (-5.2bp), Sep'25 at -27.1bp (-25.8bp), Oct'25 at -42.7bp (-41.2bp), Dec'25 at -60.9bp (-59.7bp).
• Near the top end of a narrow session range, the Tsy Sep'25 10Y contract trades +2 at 111-23 (111-11.5L / 111-24H), volume just over 1.1M, 10Y yield -.0078 at 4.2867%. Key resistance remains above the intraday high of 111-24 at 111-30/31.5 (76.4% of May 1-22 downleg / 1.0% 10-dma envelope.)
• New home sales fell to an 18-month low in May, with the 13.7% M/M drop to 623k (seasonally-adjusted, annual rate) adding to evidence that overall US housing market activity is deteriorating.
• Cross asset: stocks flat to mixed (SPX eminis +1.75 at 6148.0; DJIA -101.5 at 42987.5, Nasdaq +48.77 at 19961.30), crude firmer after two day rout (WTI +.75 at 65.12), Gold firmer (+10.34 at 3334.01). After clinging to near steady at midday, the dollar index withdrew in the second half, nearing the prior session's 1W low (BBDXY -2.29 at 1199.24). Despite yesterday’s pullback, EURJPY has recovered strongly on Wednesday, rising 0.55% and back above 169.25.
• Heavy data tomorrow: weekly claims, GDP, Personal Consumption, Pending Home Sales, followed by several scheduled Fed speakers.

OVERNIGHT DATA

MNI US DATA: New Home Sales Drop Adds To Evidence Of Housing Market Deterioration

New home sales fell to an 18-month low in May, with the 13.7% M/M drop to 623k (seasonally-adjusted, annual rate) adding to evidence that overall US housing market activity is deteriorating. Sales weakened across 3 of 4 US regions, dropping 21% M/M in the South (which makes up more than half of national sales).

• Median prices - which aren't seasonally-adjusted - fell 2% Y/Y and have declined on that basis in 10 of the last 12 months. To put into perspective on a multi-year horizon, median prices were $407k in May 2025, compared to $429k in May 2022 and $316k in May 2020 (early pandemic).

MNI INFLATION: 1Y Inflation Expectations Trend Lower Whilst 1Y1Y Steady

• US 1Y market inflation expectations have been below levels just before US Liberation Day tariff announcements of Apr 2 for most of June although are trending lower. However, at 3.05%, these 1Y CPI inflation swaps are only back to late March levels and hold a large portion of the widening vs 1Y1Y expectations since President Trump’s inauguration.

MNI US DATA: Mortgage Applications Mixed For Purchases vs Refis

MBA composite mortgage applications were little changed last week when accounting for usual volatility, although extended a recent patch of weakness for new purchases relative to refinancing activity.  

• Mortgage applications increased 1.1% (sa) last week after -2.6% and 12.5%.
• Unusually, new purchase applications underperformed refis for a fourth straight week, dipping -0.4% (after -3.0% and 10.3%) vs a 3.0% increase for refis (after -2.1% and 15.6%).
• That said, new purchases are still at 64% of 2019 averages vs refis at 41% for broader context.
• The 30Y conforming rate increased 4bp after a 9bp decline, with mixed implications for spreads considering average 10Y swap rates dipped 4bps last week vs no change the week prior.
• It left a 30Y mortgage rate to 10Y spread of 302bp, close to its recent average having eased after widening to 315bps in late April following tariff-driven uncertainty.
• That’s still wider than the 285bp averaged in Q1 in a net tightening in conditions, which could be reflecting some more pessimistic looking housing data more broadly. 

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 114.31 points (-0.27%) at 42978.74
S&P E-Mini Future down 2.25 points (-0.04%) at 6144
Nasdaq up 49.2 points (0.2%) at 19960.91
US 10-Yr yield is down 0.6 bps at 4.2886%
US Sep 10-Yr futures are up 1.5/32 at 111-22.5
EURUSD up 0.0053 (0.46%) at 1.1662
USDJPY up 0.23 (0.16%) at 145.17
WTI Crude Oil (front-month) up $0.89 (1.38%) at $65.25
Gold is up $12.08 (0.36%) at $3335.84

European bourses closing levels:
EuroStoxx 50 down 45.06 points (-0.85%) at 5252.01
FTSE 100 down 40.24 points (-0.46%) at 8718.75
German DAX down 143.25 points (-0.61%) at 23498.33
French CAC 40 down 57.83 points (-0.76%) at 7558.16

US TREASURY FUTURES CLOSE

3M10Y -1.832, -0.764 (L: -3.038 / H: 3.296)
2Y10Y +4.477, 51.202 (L: 46.56 / H: 52.14)
2Y30Y +5.165, 105.755 (L: 100.311 / H: 106.844)
5Y30Y +2.382, 99.087 (L: 96.21 / H: 99.838)
Current futures levels:
Sep 2-Yr futures up 0.625/32 at 103-29.5 (L: 103-26.5 / H: 103-29.875)
Sep 5-Yr futures up 1.75/32 at 108-24.5 (L: 108-16.75 / H: 108-25.5)
Sep 10-Yr futures up 1.5/32 at 111-22.5 (L: 111-11.5 / H: 111-24)
Sep 30-Yr futures down 3/32 at 114-20 (L: 114-01 / H: 115-00)
Sep Ultra futures down 3/32 at 117-31 (L: 117-04 / H: 118-13)

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

• RES 4: 112-23   High May 1 and key resistance
• RES 3: 112-04+ High May 2
• RES 2: 111-30/31+ 76.4% of May 1-22 downleg / 1.0% 10-dma env
• RES 1: 111-24   Intraday high
• PRICE:‌‌ 111-12 @ 1020 ET Jun 25
• SUP 1: 110-23   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 are holding on to this week’s gains. Price has traded above 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 and has opened 111-30, a Fibonacci retracement. Clearance of 111-30 would strengthen current conditions. Initial pivot support to watch lies at 110-23, the 50-day EMA. A clear breach of this EMA would signal a potential reversal.

SOFR FUTURES CLOSE

Sep 25 +0.030 at 95.985
Dec 25 +0.030 at 96.280
Mar 26 +0.025 at 96.520
Jun 26 +0.015 at 96.730
Red Pack (Sep 26-Jun 27) steady to +0.005
Green Pack (Sep 27-Jun 28) +0.005 to +0.005
Blue Pack (Sep 28-Jun 29) +0.010 to +0.010
Gold Pack (Sep 29-Jun 30) +0.010 to +0.015

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

• Secured Overnight Financing Rate (SOFR): 4.30% (+0.01), volume: $2.733T
• Broad General Collateral Rate (BGCR): 4.28% (+0.01), volume: $1.088T
• Tri-Party General Collateral Rate (TCR): 4.28% (+0.01), volume: $1.066T
• (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: $293B

FED Reverse Repo Operation

RRP usage rises to $210.879B this afternoon from $187.367B yesterday, total number of counterparties at 35. 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: Corporate Bond Update: $3B Peru, $3B Honda Launched

Waiting for Czechoslovak Grp to launch:

• Date $MM Issuer (Priced *, Launch #)
• 06/25 $3B #Republic of Peru $1.6B +10Y +125, $1.4B 30Y +140
• 06/25 $3B #Honda $700M 3Y +70, $1.3B 5Y +85, $1B 10Y +105
• 06/25 $3B #CaixaBank $1B each: 4NC3 +90, 6NC5 +105, 11NC10 +130
  06/25 $1.25B #Welltower $600M 5Y +67, $650M 10Y +87
• 06/25 $1.25B *Swedish Export Cr 2Y SOFR+35
• 06/25 $1B #Cheniere Energy +10Y +128
• 06/25 $750M *Resolution Life 10Y 6.75%
• 06/25 $1B Czechoslovak Grp 5.5NC2 6.5%a (dual currency w/ E1B)

MNI BONDS: EGBs-GILTS CASH CLOSE: Twist Steepening After Early Rally Fades

European curves lightly twist steepened Wednesday.

• Yields looked headed lower in early trade, with no clear headline driver though seemingly continuing the bullish global bond move from Tuesday's close.
• The rally lost steam however, and yields steadily edged higher throughout the session from around 9am London time.
• Various factors contributing to the reversal included a soft 15Y Gilt auction as well as some fiscal headlines surrounding European countries increasing defence spending amid the NATO summit, and related US threats to increase tariffs on Spain.
• Gilts outperformed Bunds, with twist steepening in both the UK and German curves.
• Periphery/semi-core EGB performance was mixed, with OATs leading gains.
• Thursday's schedule includes appearances by BOE's Bailey and Breeden and ECB's Schnabel, Guidos and Lagarde, along with German GfK consumer confidence and UK CPI data.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.8bps at 1.843%, 5-Yr is up 1.1bps at 2.142%, 10-Yr is up 2.2bps at 2.565%, and 30-Yr is up 2.6bps at 3.052%.
• UK: The 2-Yr yield is down 1.6bps at 3.856%, 5-Yr is down 1.2bps at 3.979%, 10-Yr is up 0.8bps at 4.481%, and 30-Yr is up 2.3bps at 5.231%.
• Italian BTP spread down 0.6bps at 91.3bps / French OAT down 1.6bps at 69.6bps 

MNI FOREX: JPY Weakness Stands Out in Relatively Subdued Session

• After clinging to near steady at midday, the dollar index withdrew in the second half, nearing the prior session's 1W low (BBDXY -2.29 at 1199.24).
• Despite yesterday’s pullback, EURJPY has recovered strongly on Wednesday, rising 0.55% and back above 169.25. The rally from the June lows totals ~4%, with Monday’s cycle highs immediately coming back into focus at 169.71. Price action continues to erode the steep declines seen in July last year, bolstering the technically bullish theme. Scope is seen for a climb towards 170.47, a key Fibonacci retracement point.
• Australian monthly CPI came in lower-than-expected, potentially calling into question the RBA's next decision on rates. Despite this, AUDUSD has firmed off the lows and is holding the bulk of the recovery off Monday's 0.6373. This price actions favours this week's weakness as a false break below the bottom-end of the multi-month trend channel, and a reversion higher here would make 0.6552, the June 16 high and bull trigger, the primary upside target.
• USDCHF remains just above cycle lows printed yesterday at 0.8035 after the solid franc outperformance posted from the beginning of the week. Having initially benefited from haven flows on the exchange of fire between Israel and Iran, the CHF has held the rally, keeping a test of 0.8000 on the cards.
• The US data calendar is busier on Thursday, with the 3rd read of Q1 GDP, jobless claims and durable goods figures scheduled. Focus will then turn to Friday’s May PCE report.

THURSDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
26/06/2025	0600/0800	*	DE	GFK Consumer Climate
26/06/2025	0700/0900	**	SE	Economic Tendency Indicator
26/06/2025	0830/0930		GB	BOE Breeden On UK Competetiveness Panel
26/06/2025	0945/1145		EU	ECB De Guindos At Deutsch Bank Forum 2025
26/06/2025	0945/1045		GB	BOE Greene Chairs Panel On MonPol Communication
26/06/2025	1000/1100	**	GB	CBI Distributive Trades
26/06/2025	1100/1300		EU	ECB Schnabel At 'Wirtschaftsrat der CDU' Finanzmarktklausur
26/06/2025	1100/1200		GB	BOE Bailey Keynote Speech At BCC Conference
26/06/2025	1230/0830	***	US	Jobless Claims
26/06/2025	1230/0830	**	US	WASDE Weekly Import/Export
26/06/2025	1230/0830	*	CA	Payroll employment
26/06/2025	1230/0830	**	US	Durable Goods New Orders
26/06/2025	1230/0830	***	US	GDP
26/06/2025	1230/0830	**	US	Advance Trade, Advance Business Inventories
26/06/2025	1230/0830	**	US	Durable Goods New Orders
26/06/2025	1245/0845		US	Richmond Fed's Tom Barkin
26/06/2025	1300/0900		US	Cleveland Fed's Beth Hammack
26/06/2025	1400/1000	**	US	NAR Pending Home Sales
26/06/2025	1430/1030	**	US	Natural Gas Stocks
26/06/2025	1430/1530		GB	BOE Lombardelli Chairs Panel On Communicating Uncertainty
26/06/2025	1500/1100	**	US	Kansas City Fed Manufacturing Index
26/06/2025	1530/1130	*	US	US Bill 08 Week Treasury Auction Result
26/06/2025	1530/1130	**	US	US Bill 04 Week Treasury Auction Result
26/06/2025	1700/1300	**	US	US Treasury Auction Result for 7 Year Note
26/06/2025	1700/1300	*	US	US Treasury Auction Result for Cash Management Bill
26/06/2025	1715/1315		US	Fed Governor Michael Barr
26/06/2025	1830/2030		EU	ECB Lagarde Opening Speech at Münchner Opernfestspiele
26/06/2025	1900/1500	***	MX	Mexico Interest Rate
27/06/2025	2330/0830	*	JP	Labor Force Survey
27/06/2025	2330/0830	**	JP	Tokyo CPI
27/06/2025	2350/0850	*	JP	Retail Sales (p)