MNI ASIA OPEN: Yr End Rate Cuts Cool After Fed Remains on Hold

EXECUTIVE SUMMARY

• MNI BRIEF: Fed's Powell: No Decisions Yet On Sept. Cut
• MNI FED: Powell - Dissents Were Part Of A Good Meeting
• MNI FED: Statement Updates Nod to Moderation In Domestic Demand
• MNI BOC: Holds 2.75% Rate, May Cut If Inflation And Growth Slow Amid Tariffs
• MNI US TSYS/SUPPLY: Treasury Ups Buybacks Roughly As Expected, Tweaks Frequencies
• MNI US DATA: Pending Home Sales Maintain Bleak Housing Market Outlook
• MNI US DATA: ADP Surprises Stronger, With Improvements Across Most Sectors

US

MNI BRIEF: Fed's Powell: No Decisions Yet On Sept. Cut

Federal Reserve Chair Jerome Powell said Wednesday the FOMC has not yet made a decision on what it will do at its next policy meeting in September, adding that current policy is appropriate and there is lots of data between now and then. "We have made no decisions about September," Powell said in response to questions from reporters. "We see our current policy stance as appropriate to guard against inflation risks," Powell said. "There's also downside risk to at the labor market, in coming months we will receive a good amount of data that will help inform our assessment of the balance of risks and the appropriate setting of the federal funds rate."

MNI FED: Statement Updates Nod to Moderation In Domestic Demand

As we'd suggested, the new statement cleans up the language in the first two paragraphs a little, with a slightly dovish twist. It maintains the language around the "swings in net exports", but makes note of growth in economic activity having "moderated in the first half of the year" (versus the prior mention of "has continued to expand at a solid pace"). That's potentially a nod to softer domestic demand amid the swings in headline GDP. We expect this to be addressed by Powell in his press conference at 2:30pm.

MNI FED: Powell - Dissents Were Part Of A Good Meeting

Asked about today's dissents, Powell says it was "a good meeting" with participants putting "their positions out there". " "The majority of the Committee was of the view that inflation is a bit above target, maximum employment is at target. That calls for modestly restrictive, in my way of thinking, modestly restrictive stance right now."

NEWS

MNI BOC: Holds 2.75% Rate, May Cut If Inflation And Growth Slow Amid Tariffs

Bank of Canada holds 2.75% rate for third time in a row as expected by all economists. BOC decision says could cut "if a weakening economy puts further downward pressure on inflation and the upward price pressures from the trade disruptions are contained." At the prior meeting the Governor's press statement said could cut if the economy weakens and "cost pressures on inflation are contained." 

• BOC says Canada economy showing some resilience even amid US tariffs. Due to trade uncertainty the Bank gave three economic scenarios-- current tariffs, escalation and de-escalation. Current tariff scenario shows Q2 annualized GDP will be -1.5%, and Q3 +1%. Core inflation in Q3 and Q4 seen at 3.1%.

MNI US-RUSSIA: Republican Leader Thune Says Senate Ready To Act On Russia Sanctions

Senate Majority Leader John Thune (R-SD) told Fox News that the Senate is "prepared to move on the Russia sanctions bill if required", after President Donald Trump threatened new penalties on Russia within 10 days, if Moscow fails to take steps towards securing a ceasefire with Ukraine. 

MNI RUSSIA: Kremlin-Russia Has 'Immunity' To US Sanctions

Reuters reports comments from Kremlin spox Dmitry Peskov. Regarding US President Donald Trump's threat of secondary sanctions on Russia if it does not agree to a ceasefire in Ukraine by 8 Aug, Peskov says "We continue to note all Trump statements on sanctions", adding "Russia has been under a huge number of sanctions for a long time, [the country] has immunity."  

MNI UKRAINE: Polish PM: 'Many Signs Suggesting War Will Be Halted In Near Future'

Delivering a speech at the Air Force Institute of Technology on modernisation of the armed forces alongside the Deputy Defence Minister, PM Donald Tusk includes a comment that has garnered some attention. Says that "There is a big chance... there are many signs suggesting that the Russo-Ukrainian war will be at least halted in the nearest future. But it doesn't change our situation in any way. Poland has to be ready to defend itself, regardless of the situation on the Russo-Ukrainian front."

MNI EU: Commission-18 Countries Apply For EUR127bln In Defence Loans Under SAFE

The European Commission has confirmed that an initial 18 member states have applied for a combined EUR127bln in loans to fund military procurement as part of the Security Action for Europe (SAFE) Defence Instrument. Belgium, Bulgaria, Czechia, Estonia, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Hungary, Poland, Portugal, Romania, Slovakia and Finland have all applied under the scheme, with applications running to 30 November. 

MNI US-CHINA: FM Calls For More Comms & Consultation In Meeting w/US Business Group

(MNI) London - China's Ministry of Foreign Affairs has released a statement following Foreign Minister Wang Yi's meeting with a delegation from the board of directors of the US-China Business Council in Beijing. Wang stated that the "world is currently in a turbulent era, and China-US relations are both affected by the international turmoil and profoundly impacting the evolution of global trends." 

US TSYS

MNI US TSYS: Fed Holds Steady, No Decision on Next Meeting

• Treasury futures are near late session lows, curves bear flattening as projected rate cuts into year end continue to cool after Chairman Powell said the FOMC has not yet made a decision on what it will do at its next policy meeting in September, adding that current policy is appropriate and there is lots of data between now and then.
• Projected rate cut pricing retreated vs. this morning/pre-data (*) levels: Sep'25 at -11.8bp (-16.9bp), Oct'25 at -21.4bp (-29.1bp), Dec'25 at -37.1bp (-46.6bp), Jan'26 at -45.6bp (--55.6bp). Year end projection well off early July level of appr -65.0bp.
• Treasury futures had pared losses after the FOMC kept rate steady as Fed Govs Waller & Bowman dissented in favor of a 25bp cut. "The majority of the Committee was of the view that inflation is a bit above target, maximum employment is at target" Powell said. "That calls for modestly restrictive, in my way of thinking, modestly restrictive stance right now."
• Futures extended well past this morning's ADP/GDP/Core-PCE lows: Sep'25 10Y futures currently trades -10 at 111-01.5 vs. 110-30.5 low (111-14.5 high). Key support is 110-08+, the Jul 14 and 16 low. Clearance of this level would reinstate a bearish theme. First support is at 110-19+, the Jul 24 low. Curves shift to flatter: 2s10s -1.814 at 43.131, 5s30s -1.397 at 94.131.
• Cross asset: Stocks retreating (SPX eminis -20.0 at 6386.0), Gold weaker at 3271.82, Bbg US$ index remains well bid: 1218.99 (+9.01).

MNI US TSYS/SUPPLY: Treasury Ups Buybacks Roughly As Expected, Tweaks Frequencies

 The major development in today's Refunding announcement is on buybacks, as widely expected. " Treasury believes it is appropriate to: (1) double the frequency of long-end nominal coupon liquidity support buybacks, (2) make a technical adjustment to the TIPS buyback buckets, (3) increase the size of cash management buybacks, and (4) allow a limited number of additional counterparties to directly access buyback operations. " The new quarterly buyback schedule is here.

OVERNIGHT DATA

MNI US DATA: ADP Surprises Stronger, With Improvements Across Most Sectors

ADP private employment was stronger than expected in July, increasing 104k (cons 76k) after an upward revised but still unusually weak -23k (initial -33k) in June. Service-providing jobs increased 74k and goods-producing jobs increased 31k.

• Within services, there were sequential improvements almost across the board with exception for the education & health which continues to strangely weak compared to its BLS payrolls counterpart.

MNI US DATA: Pending Home Sales Maintain Bleak Housing Market Outlook

Pending home sales disappointed in June as they dipped -0.8% M/M (cons 0.2) after 1.8% M/M in May. It follows a volatile period with -6.3% M/M in April after 5.5% M/M in March, but one that hasn’t materially changed what has been a broad flat-lining in sales at low levels since late 2013. Indeed, the latest index level of 72.0 compares to the series low (going back to 2001) of 70.6 in January.

MNI US DATA: Private Demand Softens Again In Q2 Flash But Could Have Been Worse

Real GDP was stronger than expected in the Q2 advance release, rising 2.97% annualized vs Bloomberg consensus of 2.6%, although it was close to the 2.90% upgrade in yesterday’s final Atlanta Fed GDPNow entry. The 1.2% averaged in 1H25 compares with 2.5% in 2024.

• Private domestic final purchases (PDFP), a measure Powell frequently acknowledges, moderated further to 1.2% annualized (its weakest since 4Q22) from 1.9% in Q1. The 1.6% averaged in 1H25 compares with 3.0% in 2024. 

MARKETS SNAPSHOT

Key market levels of markets in late NY trade:
DJIA down 171.71 points (-0.38%) at 44461.28
S&P E-Mini Future down 7.75 points (-0.12%) at 6398.25
Nasdaq up 31.4 points (0.1%) at 21129.67
US 10-Yr yield is up 4.4 bps at 4.364%
US Sep 10-Yr futures are down 10/32 at 111-1.5
EURUSD down 0.0123 (-1.07%) at 1.1424
USDJPY up 0.93 (0.63%) at 149.39
WTI Crude Oil (front-month) up $1.14 (1.65%) at $70.36
Gold is down $54.68 (-1.64%) at $3271.69

European bourses closing levels:
EuroStoxx 50 up 13.98 points (0.26%) at 5393.18
FTSE 100 up 0.62 points (0.01%) at 9136.94
German DAX up 44.85 points (0.19%) at 24262.22
French CAC 40 up 4.6 points (0.06%) at 7861.96

US TREASURY FUTURES CLOSE

3M10Y +4.159, 1.338 (L: -3.34 / H: 3.05)
2Y10Y -2.193, 42.752 (L: 41.925 / H: 47.338)
2Y30Y -2.909, 95.631 (L: 94.707 / H: 102.499)
5Y30Y -2.087, 93.441 (L: 92.672 / H: 97.862)
Current futures levels:
Sep 2-Yr futures down 3.875/32 at 103-17 (L: 103-16.25 / H: 103-21.5)
Sep 5-Yr futures down 7.75/32 at 108-6.5 (L: 108-04.75 / H: 108-16)
Sep 10-Yr futures down 10/32 at 111-1.5 (L: 110-30.5 / H: 111-14.5)
Sep 30-Yr futures down 14/32 at 114-3 (L: 113-25 / H: 114-25)
Sep Ultra futures down 13/32 at 117-5 (L: 116-23 / H: 117-30)

MNI US 10YR FUTURE TECHS: (U5) Fades on Fed

• 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 & Jul 30
• PRICE:‌‌ 110-31+ @ 20:21 BST Jul 30
• 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 traded higher Tuesday, but faltered into the Wednesday close on the Fed decision. Recent gains resulted in a break of the 20-day EMA, strengthening the recovery that began mid-July. Note too that resistance at 111-13+, the 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 is 110-08+, the Jul 14 and 16 low. Clearance of this level would reinstate a bearish theme. First support is at 110-19+, the Jul 24 low.   

SOFR FUTURES CLOSE

Sep 25 -0.065 at 95.780
Dec 25 -0.085 at 96.015
Mar 26 -0.095 at 96.230
Jun 26 -0.085 at 96.470
Red Pack (Sep 26-Jun 27) -0.07 to -0.045
Green Pack (Sep 27-Jun 28) -0.035 to -0.03
Blue Pack (Sep 28-Jun 29) -0.035 to -0.03
Gold Pack (Sep 29-Jun 30) -0.03 to -0.03

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

• Secured Overnight Financing Rate (SOFR): 4.36% (+0.00), volume: $2.754T
• Broad General Collateral Rate (BGCR): 4.34% (-0.01), volume: $1.137T
• Tri-Party General Collateral Rate (TCR): 4.34% (-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: $112B
• Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $264B

FED Reverse Repo Operation

RRP usage retreats to $155.481B this afternoon from $171.018B yesterday, total number of counterparties at 27. 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.

PIPELINE

Corporate bond issuance on hold Wednesday after $4.25B Priced Tuesday, $24.09B/wk 
Date $MM Issuer (Priced *, Launch #)
07/29 $2B *NextEra Energy 2Y +63
07/29 $1.5B *Sherwin Williams $500M each: 3Y +47, 5Y +62, 10Y +82
07/29 $750M *EW Scripps 5NC2 9.875%

MNI BONDS: EGBs-GILTS CASH CLOSE: Flatter Curves Amid Heightened Data Flow

European curves flattened Wednesday.

• Early trade was constructive for EGBs and Gilts, stemming from the prior session's late strength in US Treasuries.
• A solid long-end Gilt tender and potentially some month-end dynamics also assisted. 10Y Gilt yields briefly hit their lowest intraday level since Jul 22; for Bunds Jul 24.
• Above-expected US data including private payrolls and GDP triggered a selloff in Treasuries that weighed across the Atlantic, seeing yields finish off their lows.
• Earlier, a slew of Eurozone data didn't really move the needle for markets: Euro Q2 GDP and July consumer confidence were slightly stronger than expected, while Spanish flash July inflation was slightly above-consensus and Belgian HICP decelerated. The ECB's forward looking wage tracker points to a continued decline in negotiation wage growth in Q1 2026.
• The German curve twist flattened, with the UK's bull flattening. Periphery/semi-core EGB spreads were mixed.
• The Federal Reserve decision will be a focus overnight, with Thursday bringing French, Italian, and German flash July inflation data (MNI's preview is here).

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 1.2bps at 1.954%, 5-Yr is up 0.3bps at 2.296%, 10-Yr is down 0.2bps at 2.706%, and 30-Yr is unchanged at 3.204%.
• UK: The 2-Yr yield is down 1.8bps at 3.876%, 5-Yr is down 2.6bps at 4.041%, 10-Yr is down 3bps at 4.603%, and 30-Yr is down 2.5bps at 5.416%.
• Italian BTP spread up 0.4bps at 81.4bps / French OAT down 0.3bps at 65.3bps  

MNI FOREX: Fed Tips Greenback into Rally Mode, Clearing Key Levels

• After a shakier start to the European session, the USD soon recovered through NY hours, with strong GDP and ADP Employment Change numbers shortly followed by a resolutely patient outlook from the Fed Chair Powell following the Fed rate decision. Resultantly, the USD Index made light work of resistance into the mid-June highs, testing the 100-dma to the upside for the first time since October 2024.
• Powell's patient approach on policy came despite renewed pressure from the White House to cut interest rates, as he stressed that the FOMC see modestly restrictive policy as "appropriate", despite two dissents at the meeting (Bowman and Waller). The chair also talked down any decisions about the September meeting - stressing that the FOMC is still a ways from seeing where things settle down. As a result, rates pricing through year-end and into the second half of 2026 tightened, helping underpin the dollar rally.
• Markets remained content to sell the EUR through phases of USD strength, resulting in EUR/USD showing well through the late-June lows. This week’s bearish price action has resulted in a move through key support at the 50-day EMA, at 1.1560 - which highlights a stronger reversal and opens 1.1431, a Fibonacci retracement.
• Soft Australian CPI data remained a weight for AUD throughout the day - AUD/JPY is again testing Y96.00, while AUD/USD has shown through the bottom-end of the up-trend channel drawn through the April-July range.
• With the Fed decision now cleared for markets, focus shifts to China's manufacturing and non-manufacturing PMI prints for July, regional German inflation metrics and the Bank of Japan rate decision.
• The BoJ is widely expected to keep its policy rate unchanged at 0.5% for a fourth consecutive meeting, amid signs of easing trade-related uncertainty since its June meeting. Markets will pay close attention to Governor Ueda’s tone during the post-meeting press conference. Ueda has maintained a cautious stance since May, but if the forecasts and risk assessments are revised higher, there’s a high likelihood his tone may shift.

THURSDAY DATA CALENDAR

Date	GMT/Local	Impact	Country	Event
31/07/2025	0600/0800	**	DE	Import/Export Prices
31/07/2025	0630/0830	**	CH	Retail Sales
31/07/2025	0645/0845	***	FR	HICP (p)
31/07/2025	0645/0845	**	FR	PPI
31/07/2025	0755/0955	**	DE	Unemployment
31/07/2025	0800/1000	***	DE	Bavaria CPI
31/07/2025	0800/1000	***	DE	North Rhine Westphalia CPI
31/07/2025	0800/1000	***	DE	Baden Wuerttemberg CPI
31/07/2025	0900/1100	**	EU	Unemployment
31/07/2025	0900/1100	***	IT	HICP (p)
31/07/2025	1000/1200	**	IT	PPI
31/07/2025	1200/1400	***	DE	HICP (p)
31/07/2025	1230/0830	***	US	Jobless Claims
31/07/2025	1230/0830	**	US	WASDE Weekly Import/Export
31/07/2025	1230/0830	*	CA	Payroll employment
31/07/2025	1230/0830	***	US	Personal Income and Consumption
31/07/2025	1230/0830	***	US	Employment Cost Index
31/07/2025	1230/0830	***	CA	Gross Domestic Product by Industry
31/07/2025	1342/0942	***	US	MNI Chicago PMI
31/07/2025	1430/1030	**	US	Natural Gas Stocks
31/07/2025	1530/1130	**	US	US Bill 04 Week Treasury Auction Result
31/07/2025	1530/1130	*	US	US Bill 08 Week Treasury Auction Result
01/08/2025	2300/0900	**	AU	S&P Global Manufacturing PMI (f)
01/08/2025	2330/0830	*	JP	Labor Force Survey
01/08/2025	0030/0930	**	JP	S&P Global Final Japan Manufacturing PMI
01/08/2025	0130/1130	*	AU	Producer price index q/q
01/08/2025	0145/0945	**	CN	S&P Global Final China Manufacturing PMI