MNI EUROPEAN OPEN: Aust Trade & Spending Data Below Forecasts
EXECUTIVE SUMMARY
- U.S. TO PROVIDE UKRAINE WITH INTELLIGENCE FOR MISSILE STRIKES DEEP INSIDE RUSSIA - WSJ
- US FACTORIES SUFFER UNTIL TRADE FOG LIFTS - ISM - MNI INTERVIEW
- GOOLSBEE SAYS LACK OF OFFICIAL DATA DURING SHUTDOWN HARD FOR FED - BBG
- AUSTRALIA HOUSEHOLD CONSUMPTION WEAKENS, ADDING TO RATE-CUT CASE - BBG
Fig 1: Australian Household Spend Weaker Than Forecast In August
Source: MNI - Market News/Bloomberg/Refinitiv.
EU
UKRAINE/US (WSJ): “The U.S. will provide Ukraine with intelligence for long-range missile strikes on Russia's energy infrastructure, American officials said, as the Trump administration weighs sending Kyiv powerful weapons that could put in range more targets within Russia.”
EU (BBC): “Danish Prime Minister Mette Frederiksen told reporters that "from a European perspective there is only one country... willing to threaten us and that is Russia, and therefore we need a very strong answer back".”
EU (POLITICO): “European Union leaders spent a day in the Danish capital discussing how to bolster the continent’s security. “We are worried — I am very worried — and now is the time here to take action,” Finland’s Prime Minister Petteri Orpo told POLITICO on the sidelines of the summit. It didn’t go quite according to plan, with a great deal of talk but few results.”
EU (POLITICO): “The EU's big three in the G7 — Germany, France and Italy — are urging Japan and the U.S. to use frozen Russian assets to help Ukraine, just as Europe is now seeking to do. The European Central Bank fears using Russian assets could undermine the global credibility of the euro — but that concern could be allayed if heavyweights such as Washington and Tokyo were to take similar action.”
GERMANY (POLITICO): “A German state official confirmed recent reports of drone sightings over critical infrastructure in northern Germany.”
RUSSIA (BBC): “French soldiers have boarded an oil tanker believed to be part of Russia's "shadow fleet", used to evade sanctions imposed because of the war in Ukraine.”
US
MANUFACTURING (MNI INTERVIEW): U.S. manufacturing is giving signs it will keep contracting and the longer trade uncertainty remains the greater the risk businesses start losing foreign orders, Institute for Supply Management manufacturing chair Susan Spence told MNI.
FED (MNI BRIEF): The Supreme Court said Wednesday Fed Governor Lisa Cook will be allowed to stay in her position until the high court hears oral argument in January, a victory for now for the official President Trump tried to fire in August.
FED (BBG): “Federal Reserve Bank of Chicago President Austan Goolsbee said a lack of official data while the US government is shut down will make it harder for central bankers to interpret the economy.”
GOVERNMENT (BBG): “White House Budget Director Russell Vought is planning to swiftly dismiss federal workers, a sign that Republicans will lean into hardball tactics to pressure Democrats to cave to end a government shutdown.”
JOBS DATA (MNI BRIEF): U.S. private sector employment fell 32,000 in September as the labor market continued its cooling trend from the start of the year, ADP chief economist Nela Richardson said Wednesday. An annual re-benchmarking of the data to the Labor Department's QCEW report reduced job growth by 43,000.
TRADE (POLITICO): “According to a White House official, the Trump administration has paused its plan to enact the duties as it attempts to negotiate agreements with pharmaceutical giants to avoid higher tariffs on their name-brand products — like the deal it announced with Pfizer Tuesday.”
OTHER
CANADA (MNI): Bank of Canada officials at their last meeting expressed caution about cutting interest rates further given elevated risks around inflation and growth during the U.S. trade war.
CANADA (MNI INTERVIEW): Canada will develop mines before the heavy crude oil pipeline and carbon capture project promoted by Alberta's premier because critical minerals show more reliable global demand while carbon storage requires "massive" subsidies, top former government adviser Rachel Samson told MNI.
MIDDLE EAST (BBG): “Arab and Muslim national leaders are pushing Hamas to accept the Gaza plan unveiled by US President Donald Trump this week, saying the need to end the fighting surpasses concern about the finer details.”
SOUTH KOREA/US (RTRS): “South Korean Foreign Minister Cho Hyun said his country and the United States had reached a rough agreement on security in tandem with ongoing tariff negotiations, Yonhap news agency reported.”
AUSTRALIA (BBG): Australia’s household spending came in weaker than expected in August, adding to the case for the Reserve Bank to resume policy easing as soon as next month.
CHINA
US/CHINA (BBG): “US President Donald Trump said he would confront Chinese President Xi Jinping over Beijing’s refusal to purchase American soybeans, a growing area of tension between the world’s two largest economies.”
MARKET DATA
AUSTRALIA AUG. TRADE SURPLUS A$1.825B; EST. A$6.200B; JUL. A$6612M
AUSTRALIA AUG. EXPORTS -7.8% M/M; JUL +2.5%
AUSTRALIA AUG. IMPORTS +3.2% M/M; JUL. -2.4%
AUSTRALIA AUG. HOUSEHOLD SPENDING +0.1% M/M; EST. +0.3%; JUL. +0.4%
AUSTRALIA AUG. HOUSEHOLD SPENDING +5.0% Y/Y; EST. +5.2%; JUL. +5.3%
JAPAN SEPT. MONETARY BASE -6.2% Y/Y; AUG. -4.1%
JAPAN END-SEPT. MONETARY BASE OUTSTANDING Y623.33T; AUG. Y645.6T
SOUTH KOREA SEPT. CONSUMER PRICES +0.5% M/M; EST. +0.5%; AUG. -0.1%
SOUTH KOREA SEPT. CONSUMER PRICES +2.1% Y/Y; EST. +2.0%; AUG. +1.7%
SOUTH KOREA SEPT. CPI EX FOOD & ENERGY +2% Y/Y; EST. +2.0%: AUG. +1.3%
SOUTH KOREA AUG. CURRENT ACCOUNT SURPLUS $9.15B; JUL. $10.78B
SOUTH KOREA AUG. GOODS TRADE SURPLUS $9.398B; JUL. $10.27B
MARKETS
US TSY: Futures Little Changed After Giving Up Early Gains
TYZ5 is dealing at 112-27+, +0-00+ from closing levels in today's Asia-Pac session.
- Cash bonds are slightly cheaper across benchmarks, with a flattening bias, after reversing earlier modest gains.
- Yesterday, US tsys finished 2-7bps richer, with a steeper curve.
- The ADP release for September was weak, showing the biggest private payrolls drop (-32k) since March 2023 and before that, June 2020. And the prior 54k was revised down to -3k, so the first back-to-back drops since the pandemic. This was a significant miss for private payrolls versus +51k expected.
- Thursday's scheduled economic data has been largely delayed/suspended due to the shutdown - weekly jobless/continuing claims, as well as Factory New Orders, will not be released.
JGBS: Early Gains Given Up After Poor 10Y Auction
JGB futures are slightly weaker, -2 compared to settlement levels, after giving up substantial gains following today’s poor 10-year auction.
- The 10-year JGB auction delivered weak results, with the low price failing to meet expectations at 100.49, according to the Bloomberg dealer poll. Moreover, the cover ratio decreased to 3.3356x from 3.9156x, and the tail lengthened to 0.19 from 0.06.
- Earlier, data showed that offshore investors were meaningful sellers of Japanese bonds last week. Net selling of local bonds by offshore investors was at nearly -2trln. This was the largest weekly outflow since September last year. That said, trend flows for this segment in recent months are fairly indifferent from a cumulative standpoint.
- Cash US tsys are slightly cheaper across benchmarks, with a flattening bias, after reversing earlier modest gains.
- Cash JGBs are slightly richer across benchmarks out to the 7-year, but flat to 2bps cheaper beyond. The benchmark 10-year yield is 0.8bp higher at 1.660%, hovering just below its cyclical high.
- The swap curve has twist-steepened, with rates 1bp lower to 2bps higher.
- Tomorrow, the local calendar will see Labour Market and S&P Global Composite & Services PMI data alongside a speech by BOJ Governor Ueda. BOJ Deputy Governor Uchida’s speech is due later today (1535 JT).
AUSSIE BONDS: Modestly Stronger, Consumption Weaker Than Expected
ACGBs (YM +3.5 & XM +3.0) are stronger, hovering just below session bests.
- August household consumption was weaker than expected rising 0.1% m/m with the annual rate slowing to 5.0% from 5.3% but still above the series average. The RBA noted in September that private consumption was stronger than it expected as financial conditions have eased and real incomes are higher.
- Australia’s non-rural goods exports fell 2.5% m/m and 7.4% y/y in August with coal and metal values falling in the month but ores posting a small increase. In addition, overall shipments to Asia were soft with key commodities contracting to Japan and South Korea.
- Cash US tsys are slightly mixed in today's Asia-Pac session.
- Cash ACGBs are 3-4bps richer with the AU-US 10-year yield differential at +23bps.
- The bills strip is +1 to +4 across contracts, with a flattening bias.
- RBA-dated OIS pricing is showing a 25bp rate cut in October as a 42% probability, with a cumulative 14bps of easing priced by year-end.
- Tomorrow, the local calendar will see S&P Global Composite & Services PMIs.
- The AOFM plans to sell A$1000mn of the 1.25% 21 May 2032 bond on Friday.
BONDS: NZGBS: Closed With A Modest Bull-Flattener
NNZGBs closed showing a modest bull-flattener, with benchmark yields flat to 2bps lower.
- Today’s weekly supply saw solid demand metrics, with cover ratios ranging from 3.67x (May-30) to 3.85x (May-35).
- NZGB 10-year’s relative performance in the $-bloc was mixed on the day, with the NZ-US yield differential 2bps wider but the NZ-AU 1bp tighter.
- Cash US tsys are slightly cheaper across benchmarks, with a flattening bias, after reversing earlier modest gains.
- Thursday's scheduled economic data largely delayed/suspended due to the shutdown - weekly jobless/continuing claims as well as Factory New Orders will not be released.
- Swap rates closed flat to 2bps lower.
- RBNZ dated OIS pricing closed little changed across meetings. 33bps of easing is priced for October, with a cumulative 62bps by November 2025.
- Tomorrow, the local calendar will be empty. The next release will be ANZ Commodity Prices on Monday.
FOREX: Majors Steady, AUD/NZD Off Recent Highs
The major USD indices are little changed in the first part of Thursday dealing. We were last near 1200.25 for the BBDXY index. Outside of NZD, which has continued to track a little stronger, G10 FX moves are less than 0.10% at this stage. Cross asset sentiment is relatively steady, with US Tsy yields last a little higher, but gains are less than 1bps. The equity tone has been positive, particularly for tech sensitive plays.
- We did have some Australian data, which was below expectations. The trade surplus fell sharply in August, as exports faltered. Household spending was also below forecast, albeit modestly. AUD/USD is little changed though holding above 0.6615 at this stage (session lows were at 0.6602).
- Some further profit taking in AUD/NZD longs may have been in play, with the cross back to 1.1344 before stabilizing (last 1.1350/55). Still, we are above the 20-day EMA support point still (1.1260), while AU-NZ 2yr swap spreads have barely budged off recent highs and have correlated strongly with the recent move higher in the cross. Hence, we may need to see weakness in such spreads for further AUD/NZD downside.
- For NZD/USD we got to 0.5836, continuing the recent recovery, but sit back at 0.5825/30 in latest dealings.
- USD/JPY probed under 147.00 but had no follow through. Wednesday lows were 146.59. Later on we here from BoJ Deputy Governor Uchida. Focus is likely to rest on hiking hints (if any are given) in light of this week's resilient Tankan survey result (which has been a key BoJ watch point for gauging tariff fallout).
- BoJ hike odds for the Oct meeting are little changed over the week, with the market pricing in around 14bps of tightening.
- EUR/USD was last unchanged at 1.1730.
- Looking ahead, the Fed’s Logan & Goolsbee and ECBs’s de Guindos & Montagner speak. Private sector US data will still be released which today includes September Challenger job cuts. Swiss September CPI, French August budget balance and euro area August unemployment rate also print.
ASIA STOCKS: Chip Deal Gives Tech Stocks a Boost
News of OPENAI's agreement with Korea's Samsung Electronics and SK Hynix Inc to supply chips to the companies Stargate project has seen shares in both surge today. Samsung is up 4.6% and SK Hynix up 10.5% driving the KOSPI higher. This dragged the sector higher throughout the region with Japanese chip related stocks benefiting, helping it snap a four day losing streak.
- A four days of falls, the NIKKEI is up today by +0.77%.
- The KOSPI is up +2.95%, reaching a new all time high of 3,557.
- The TAIEX joined in the tech led rally, rising +1.6%
- The FTSE Malay KLCI is up +0.72% for its biggest 1-day gain in three weeks.
- The Jakarta Composite is up +0.25% after two days of losses, yet remains down for the week.
- The NIFTY 50 finished yesterday marginally down yet has rebounded today to be up +0.92% for it's biggest one day gain since the middle of August.
OIL: : Crude Stabilises Ahead Of OPEC As Geopolitical Developments Return
Oil prices fell sharply this week ahead of the 5 October OPEC meeting to decide November’s production target. They appear to have stabilised during today’s APAC session with WTI up 0.5% to $62.12/bbl after a high of $62.54 which followed a WSJ report that the US would give Ukraine intelligence to support its strikes on Russian energy infrastructure and also encouraged NATO to do the same. Brent reached $66.15/bbl but is now around $65.70/bbl also to be 0.5% higher. The US dollar is flat.
- Bloomberg reported that following the G7 finance ministers meeting an agreement on substantial additional sanctions on Russia’s means to finance its war in Ukraine is close. The group has also decided on more assistance for Ukraine.
- OPEC is expected to continue to unwind previous output reductions when it meets this weekend. It increased the October target by 137kbd and at least that amount is likely in November. This comes in addition to the resumption of flows from Iraqi Kurdistan to Turkey which had been halted since March 2023.
- Later the Fed’s Logan & Goolsbee and ECBs’s de Guindos & Montagner speak. Private sector US data will still be released which today includes September Challenger job cuts. Swiss September CPI, French August budget balance and euro area August unemployment rate also print.
Gold Range Trading As Monitoring The Data Available, US Job Cuts Later
Today gold continued to range trade which it began during Wednesday’s US session. Earlier it fell to $3853.03/oz before approaching $3870. It is currently little changed at $3865.7 with the US dollar and yields also steady. Another vote to try and resolve the US debt ceiling issue failed yesterday and developments continue to be watched closely. Related safe-haven flows drove bullion to a series of record highs.
- US September payrolls won’t be released on Friday due to the government shutdown but with ADP employment falling 32k and August revised down to -3k, it appears that the labour market remained soft last month. The market now has a full 25bp rate cut priced in for the October FOMC meeting with almost another one in December, which is supportive of gold.
- Silver has also moved in a narrow range initially falling to $46.974 before reaching $47.527. It is currently down 0.2% to $47.24, just below initial resistance at $47.251.
- Equities are stronger with the S&P e-mini up 0.1%, Nikkei +0.7% and KOSPI +3.0%. Oil prices are up with WTI +0.5% to $62.10/bbl. Copper is 0.6% higher.
- Later the Fed’s Logan & Goolsbee and ECBs’s de Guindos & Montagner speak. Private sector US data will still be released which today includes September Challenger job cuts. Swiss September CPI, French August budget balance and euro area August unemployment rate also print.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 02/10/2025 | 0630/0830 | *** |  CH | CPI |
| 02/10/2025 | 0830/0930 |  GB | Decision Maker Panel data | |
| 02/10/2025 | 0900/1100 | ** |  EU | EZ Unemployment |
| 02/10/2025 | 0900/1000 | ** | GB | Gilt Outright Auction Result |
| 02/10/2025 | 1230/0830 | *** |  US | Jobless Claims |
| 02/10/2025 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 02/10/2025 | 1400/1000 | ** | US | Factory New Orders |
| 02/10/2025 | 1400/1000 | ** | US | Factory New Orders |
| 02/10/2025 | 1430/1030 | ** | US | Natural Gas Stocks |
| 02/10/2025 | 1430/1030 | US | Dallas Fed's Lorie Logan | |
| 02/10/2025 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 02/10/2025 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 02/10/2025 | 1700/1900 | EU | ECB de Guindos Fireside Chat at ESADE Madrid | |
| 02/10/2025 | 1725/1325 |  CA | BOC Deputy Mendes speaks at Western University | |
| 03/10/2025 | 2300/0900 | * |  AU | S&P Global Final Australia Services PMI |
| 03/10/2025 | 2300/0900 | ** | AU | S&P Global Final Australia Composite PMI |
| 03/10/2025 | 2330/0830 | * |  JP | Labor Force Survey |
| 03/10/2025 | 0030/0930 | ** | JP | S&P Global Final Japan Services PMI |
| 03/10/2025 | 0030/0930 | ** | JP | S&P Global Final Japan Composite PMI |
| 03/10/2025 | 0645/0845 | * |  FR | Industrial Production |
| 03/10/2025 | 0700/0300 | * |  TR | Turkey CPI |
| 03/10/2025 | 0715/0915 | ** |  ES | S&P Global Services PMI (f) |
| 03/10/2025 | 0715/0915 | ** | ES | S&P Global Composite PMI (final) |
| 03/10/2025 | 0745/0945 | ** |  IT | S&P Global Services PMI (f) |
| 03/10/2025 | 0745/0945 | ** | IT | S&P Global Composite PMI (final) |
| 03/10/2025 | 0750/0950 | ** | FR | S&P Global Services PMI (f) |
| 03/10/2025 | 0750/0950 | ** | FR | S&P Global Composite PMI (final) |
| 03/10/2025 | 0755/0955 | ** |  DE | S&P Global Services PMI (f) |
| 03/10/2025 | 0755/0955 | ** | DE | S&P Global Composite PMI (final) |
| 03/10/2025 | 0800/1000 | * | IT | Retail Sales |
| 03/10/2025 | 0800/1000 | ** | EU | S&P Global Services PMI (f) |
| 03/10/2025 | 0800/1000 | ** | EU | S&P Global Composite PMI (final) |
| 03/10/2025 | 0830/0930 | ** | GB | S&P Global Services PMI (Final) |
| 03/10/2025 | 0830/0930 | *** | GB | S&P Global/ CIPS UK Final Composite PMI |
| 03/10/2025 | 0900/1100 | ** | EU | EZ PPI |
| 03/10/2025 | 0940/1140 | EU | ECB Lagarde Speech At Knot Farewell Symposium | |
| 03/10/2025 | 1000/0600 | US | NY Fed's John Williams | |
| 03/10/2025 | 1230/0830 | *** | US | Employment Report |
| 03/10/2025 | 1230/0830 | *** | US | Employment Report |
| 03/10/2025 | 1230/0830 | *** | US | Employment Report |
| 03/10/2025 | 1230/0830 | *** | US | Employment Report |
| 03/10/2025 | 1230/0830 | *** | US | Employment Report |
| 03/10/2025 | 1230/0830 | *** | US | Employment Report |
| 03/10/2025 | 1320/1420 | GB | BOE Bailey Keynote At Knot Farewell Symposium | |
| 03/10/2025 | 1345/0945 | *** | US | S&P Global Services Index (final) |
| 03/10/2025 | 1345/0945 | *** | US | S&P Global US Final Composite PMI |
| 03/10/2025 | 1350/1550 | EU | ECB Schnabel In Panel At Knot Farewell Symposium |
