MNI ASIA OPEN: US Captures Venezuela's Maduro, Transition Plan

EXECUTIVE SUMMARY

• MNI BRIEF: Fed's Paulson Sees Modest Rate Cuts Later In Year
• New York Times: Trump Says U.S. Will ‘Run’ Venezuela After Capture of Maduro
• MNI US-JAPAN: Takaichi: Confirmed Close Cooperation & US Visit In Trump Call
• MNI US DATA: Rise In Manufacturing PMI Activity (And Prices) Moderated At Year-End

US

MNI BRIEF: Fed's Paulson Sees Modest Rate Cuts Later In Year

The Federal Reserve could ease monetary policy modestly later in the year if inflation moderates and the labor market stabilizes as expected, Philadelphia Fed President Anna Paulson said Saturday. She expressed "cautious optimism" on inflation and said she wants "greater clarity on what is pushing growth up and employment down and whether these trends will continue," in remarks prepared for the Allied Social Science Associations Annual Meeting in Philadelphia. 

NEWS

New York Times: U.S. Captures Venezuelan Leader, Trump Says - President Trump announced that U.S. forces had carried out “a large scale strike against Venezuela” and were flying President Nicolás Maduro and his wife out of the country.

New York Times: Trump Says U.S. Will ‘Run’ Venezuela After Capture of Maduro - President Trump announced that U.S. forces had carried out “a large scale strike against Venezuela” and were bringing President Nicolás Maduro and his wife to New York.

MNI US-JAPAN: Takaichi: Confirmed Close Cooperation & US Visit In Trump Call

Japanese PM Sanae Takaichi posts on X following a phone call with US President Donald Trump: "We confirmed the close cooperation between Japan and the United States under the current international situation. At President Trump's invitation, we also concurred to coordinate in detail to realize my visit to the United States this spring. The call was extremely meaningful as we reaffirmed the close coordination of the Japan-U.S. Alliance at the beginning of the new year. I look forward to working with President Trump to make 2026 a year in which we carve out a new chapter in the history of the Japan-U.S. Alliance."

MNI MIDEAST: Prospect Of Southern Secession Risks Regional Power Struggle In Yemen

Yemen-based journalist Ali Al-Sakani posts on X: "STC-affiliated TV said: “Stay tuned for an important announcement tonight.” Expected that STC head Aidarous Al-Zubaidi may announce the secession of southern Yemen from the north." A formal announcement of secession would mark a notable escalation in tensions between the Saudi-backed Yemeni gov't under the Presidential Leadership Council (PLC), and the Southern Transitional Council (STC), which is supported by the UAE. 

The Times: Trump says US ‘locked and loaded’ to help Iran protesters if regime shoots - President Trump said he was ready to step in if Iran cracks down on protests sweeping the country, warning that the US was “locked and loaded and ready to go”.

US TSYS

MNI US TSYS: Tsys Find Lower Footing at Start of 2026, Focus on Next Week's NFP

• Treasuries look to finish the first full session of 2026 weaker - near late session lows Friday on rather decent volumes: TYH6 currently -7 at 112-07 vs. 112-04.5 low on just over 1.1M contracts; 10Y yield at 4.1848% (+.0178) vs. 4.1946% high.
• Curves bear steepened (2s10s +1.955 at 70.941, 5s30s +.893 at 112.555) as projected rate cut pricing steady to mildly firmer vs. early morning levels (*): Jan'26 steady at -3.7bp, Mar'26 at -13.7bp (-12.8bp), Apr'26 at -19.2bp (-18.7bp), Jun'26 steady at -33.2bp.
• Limited data today: The final December S&P Global Manufacturing PMI was unchanged from the flash reading of 51.8, confirming a 5-month low for the index (52.2 Nov). In turn, the details of the report confirmed the flash data in portraying a broad-based softening amid overall growth in manufacturing.
• Focus on the first two full weeks of the year see nonfarm payrolls (next Friday) and CPI reports (Jan 13) for December with those two key reports back on their original schedules having been prioritized by the BLS. Private sector reports meanwhile are highlighted by ISM manufacturing and services reports Jan 5 and 7.
• No scheduled Fed speakers today - while Philadelphia Fed President Anna Paulson answers questions at a AEA conference tomorrow at 1015ET, MN Fed Kashkari speaks to the same conference on Sunday at 1250.

OVERNIGHT DATA

MNI US DATA: Rise In Manufacturing PMI Activity (And Prices) Moderated At Year-End

The final December S&P Global Manufacturing PMI was unchanged from the flash reading of 51.8, confirming a 5-month low for the index (52.2 Nov). In turn, the details of the report confirmed the flash data in portraying a broad-based softening amid overall growth in manufacturing (S&P Global describes it as "a sustained, albeit slower, improvement in US manufacturing sector operating conditions") with inflation remaining elevated but diminishing from the acute pressures seen earlier in the year. Notably, job creation was portrayed as solid amid optimism over conditions in 2026.

• Some highlights from the report: On activity: "Weaker growth emanated from a contraction in new order intakes....Exports were also a source of demand weakness, falling for the seventh successive month....A reduction in demand led to weaker output gains in December, the softest in three months...production increased sufficiently for firms to continued adding to their stocks of finished goods for the fifth month in a row...Work outstanding declined for the fourth month in a row during December, partly due to an expansion in labor capacity."

MNI CANADA DATA: Another Soft PMI Points To Continued Soft Manufacturing Activity

The S&P Global Manufacturing PMI for Canada was relatively steady in December at 48.6 vs 48.4 in November (no consensus), consistent with recent other indicators pointing to flat growth in the 4th quarter. This was the 11th consecutive month below 50.0, consistent with chronic softening activity in a sector beleaguered by the US-Canada trade conflict.

• Per the report: "The performance of Canada’s manufacturing economy worsened again at the end of 2025. Output and new orders fell as tariffs and broad market uncertainty continued to weigh on the sector. Supply-side delays were again apparent, whilst the survey’s price indices picked up since November. Job losses were also reported, whilst confidence in the outlook remained historically subdued."

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA up 289.81 points (0.6%) at 48354.83
S&P E-Mini Future up 7.75 points (0.11%) at 6902
Nasdaq up 5.1 points (0%) at 23258.24
US 10-Yr yield is up 2 bps at 4.1867%
US Mar 10-Yr futures are down 7.5/32 at 112-6.5
EURUSD down 0.0024 (-0.2%) at 1.1721
USDJPY up 0.13 (0.08%) at 156.88
WTI Crude Oil (front-month) down $0.15 (-0.26%) at $57.27
Gold is up $8.04 (0.19%) at $4328.53

European bourses closing levels:
EuroStoxx 50 up 58.97 points (1.02%) at 5850.38
FTSE 100 up 19.76 points (0.2%) at 9951.14
German DAX up 48.93 points (0.2%) at 24539.34
French CAC 40 up 45.71 points (0.56%) at 8195.21

US TREASURY FUTURES CLOSE

Curve update:
3M10Y +3.631, 56.402 (L: 51.515 / H: 57.19)
2Y10Y +1.946, 70.932 (L: 68.022 / H: 71.138)
2Y30Y +2.018, 138.663 (L: 136.216 / H: 139.382)
5Y30Y +0.822, 112.484 (L: 111.962 / H: 114)
Current futures levels:
Mar 2-Yr futures down 0.75/32 at 104-11.875 (L: 104-11.125 / H: 104-12.75)
Mar 5-Yr futures down 4.5/32 at 109-5.25 (L: 109-04 / H: 109-09.5)
Mar 10-Yr futures down 7.5/32 at 112-6.5 (L: 112-04.5 / H: 112-14.5)
Mar 30-Yr futures down 18/32 at 115-1 (L: 114-28 / H: 115-18)
Mar Ultra futures down 22/32 at 117-10 (L: 117-01 / H: 118-00) 

MNI US 10YR FUTURE TECHS: (H6) Trading Above Support For Now

• RES 4: 113-09   76.4% retracement of the Nov 25 - Dec 10 bear leg
• RES 3: 113-07   High Dec 3
• RES 2: 113-00+ 61.8% of Nov 25 - Dec 10 leg
• RES 1: 112-31   High Dec 18
• PRICE:‌‌ 112-22+ @ 11:02 GMT Dec 30
• SUP 1: 112-01+/111-29 Low Dec 23 / 10 and the bear trigger
• SUP 2: 111-19   1.236 proj of the Oct 17 - Nov 5 - 25 price swing
• SUP 3: 111-11   1.382 proj of the Oct 17 - Nov 5 - 25 price swing
• SUP 4: 111-00   Round number support 

Treasuries continue to trade above key support at 111-29, the Dec 10 low and a bear trigger. The trend theme remains bearish and a break of 111-29 would confirm a resumption of the bear cycle. This would open 111-19, a Fibonacci projection. Key short-term resistance has been defined at 112-31, the Dec 18 high, where a break would undermine a bear theme and signal scope for a stronger recovery instead.

SOFR FUTURES CLOSE

Current White pack (Mar 26-Dec 26):
Mar 26 +0.005 at 96.490
Jun 26 steady00 at 96.690
Sep 26 steady00 at 96.845
Dec 26 steady00 at 96.890
Red Pack (Mar 27-Dec 27) -0.025 to -0.005
Green Pack (Mar 28-Dec 28) -0.035 to -0.025
Blue Pack (Mar 29-Dec 29) -0.04 to -0.035
Gold Pack (Mar 30-Dec 30) -0.035 to -0.035

REFERENCE RATES
​​​​​​​
US TSYS: Repo Reference Rates

• Secured Overnight Financing Rate (SOFR): 3.87% (+0.16), volume: $3.485T
• Broad General Collateral Rate (BGCR): 3.82% (+0.13), volume: $1.299T
• Tri-Party General Collateral Rate (TCR): 3.82% (+0.13), volume: $1.255T
• (rate, volume levels reflect prior session)

STIR: FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 3.64% (+0.00), volume: $74B
• Daily Overnight Bank Funding Rate: 3.65% (+0.01), volume: $123B 

FED Reverse Repo Operation

RRP usage retreats back to $5.667B with 7 counterparties this afternoon after surging to $105.933B last Thursday's end of 2025. Compares to December 12 low of $0.838B (lowest level since mid-March 2021); this years highest excess liquidity measure: $460.731B on June 30.

MNI BONDS: EGBs-GILTS CASH CLOSE: Yields Close At/Near Highs In Soft Start To 2026

Bund and Gilt yields rose to start the 2026 trading year, with periphery EGBs underperforming overall.

• Yields gapped higher in the return from the New Year's cash trading holiday, with the move in Gilts appearing more pronounced by their slight descent in December 31st's abbreviated session (in which EGBs did not trade).
• Yields would fall to session lows in late morning London time on a day light in impactful data and macro headlines, but round-tripped higher as the day progressed. Gilt yields closed above their opening highs, with the 10Y closing at the highest intraday levels since Dec 22.
• While 10Y Bund yields finished off their opening levels, the 2.900% close was the highest since October 2023.
• Data was uneventful from a market perspective: UK and Eurozone PMIs were revised downward in December's final reports, while Eurozone household and NFC lending growth ticked up to the fastest since May 2023 in November.
• The UK and German curves bear steepened on the day, with BTPs leading periphery EGB underperformance.
• No major sovereign credit rating reviews scheduled for after hours on Friday.
• Next week's schedule is highlighted by flash December inflation readings: France and Germany release data on Tuesday, with the Netherlands, Italy and the Eurozone due on Wednesday. MNI's preview is here. 

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 1.7bps at 2.139%, 5-Yr is up 2.8bps at 2.476%, 10-Yr is up 4.5bps at 2.9%, and 30-Yr is up 6.4bps at 3.541%.
• UK: The 2-Yr yield is up 2.8bp at 3.720%, 5-Yr is up 3.3bps at 3.961%, 10-Yr is up 5.8bps at 4.537%, and 30-Yr is up 6.5bps at 5.273%.
• Italian BTP spread up 1.7bps at 71.3bps / French OAT spread up 0.5bps at 71bps

MNI FOREX: Equity Volatility & Fix Related Flows Help Contain FX Ranges

• Early strength for broad dollar indices on Friday was short-lived, with volatility in equity markets and potential fix-related flows helping to stall any topside momentum for the greenback and contain G10 FX ranges. Furthermore, limited appetite following the holiday period and ahead of the weekend close sees the USD index tracking close to unchanged levels to start the year.
• The most notable early mover was the Australian dollar, benefitting from the initial risk on tone for equities. This translated into AUDUSD rising over half a percent to regain the 0.6700 handle, keeping bullish conditions firmly intact for the pair. Despite the subsequent reversal lower for major US benchmarks, AUD remains at the top of the G10 leaderboard, bolstering the likelihood of another test of the recent cycle highs at 0.6728.
• Conversely, the Euro is a relative underperformer, printing as low as 1.1713 following downward revisions in the Eurozone December Manufacturing PMI. Attempts above the 1.1800 handle across December have proved short-lived, and today’s breach of the 20-day EMA at 1.1724 will be closely monitored. A clear break would signal scope for a deeper retracement, allowing an overbought condition to unwind.
• GBPUSD had the most notable bounce leading into the WMR fix, rising from session lows of 1.3434 to briefly print above 1.35. Note that GBPUSD moving average studies have recently crossed and are in a bull-mode position, highlighting a dominant uptrend.
• In EM, both MXN and ZAR have remained resilient through the equity turnaround, both rising ~0.65% on the session. For USDMXN, a move below 17.88 has placed spot at the lowest level since July 2024.
• Fed's Paulson and Kashkari are scheduled to speak over the weekend, both under elevated scrutiny as they newly come into rotation of FOMC voters this year. Lots of attention remains on the upcoming announcement of the new Fed Chair, while Monday’s data focus turns to US ISM manufacturing.

MONDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
05/01/2026	0700/0200	*	TR	Turkey CPI
05/01/2026	0730/0830	**	CH	Retail Sales
05/01/2026	0930/0930	**	GB	BOE M4
05/01/2026	0930/0930	**	GB	BOE Lending to Individuals
05/01/2026	1330/0830	**	US	WASDE Weekly Import/Export
05/01/2026	1500/1000	***	US	ISM Manufacturing Index
05/01/2026	1630/1130	*	US	US Treasury Auction Result for 26 Week Bill
05/01/2026	1630/1130	*	US	US Treasury Auction Result for 13 Week Bill
06/01/2026	2200/0900	*	AU	S&P Global Final Australia Services PMI
06/01/2026	2200/0900	**	AU	S&P Global Final Australia Composite PMI
06/01/2026	0001/0001	*	GB	BRC Monthly Shop Price Index