MNI US OPEN - Treasuries Steepening Extends

EXECUTIVE SUMMARY

• Powell Leaning Toward September Cut - Blinder
• Wrong Look-Through Call Would Drain Fed Credibility - JH Paper
• China Stocks To Test Higher Levels, Drive Confidence 
• BOE’s Bailey Says UK Faces Challenge To Raise Potential Growth
• Germany Ifo Business Index Improves Again But Details Softer In August

Figure 1: US 5s30s Sets Fresh Recent Highs

NEWS

FED (MNI EXCLUSIVE): Powell Leaning Toward September Cut - Blinder
Federal Reserve Chair Jerome Powell suggested he's leaning toward resuming interest rate cuts at the September meeting, but he's hedging his bets on data and issuing a warning that the Fed won't be pushed around by political pressure, former Fed Vice Chair Alan Blinder told MNI.  

FED (MNI): Wrong Look-Through Call Would Drain Fed Credibility - JH Paper
The Federal Reserve would be taking a major risk to its credibility if it decided to "look through" price changes seen as temporary because they were caused by supply change disruptions, especially with the memory of recent high inflation still fresh in the minds of Americans, according to research presented Saturday to the Federal Reserve's annual economic symposium in Jackson Hole.

US (MNI): US Debt-To-GDP At 250% May Not Push Up Rates - JH Paper
The supply of U.S. debt over the next 75 years will eventually outstrip demand and force interest rates higher, though large fiscal adjustments could allow debt-to-GDP levels to increase sharply over time without pushing up interest rates, according to research presented Saturday to the Federal Reserve's annual economic symposium in Jackson Hole.

CHINA (MNI EXCLUSIVE): China Stocks To Test Higher Levels, Drive Confidence 
China’s A-share rally could further lift the Shanghai Composite and CSI 300 past decade highs, as loose liquidity, policy support and stronger risk appetite drive a broad revaluation of equity assets, advisors and analysts told MNI, noting a rising equity market will help improve consumer confidence and economic momentum.

ECB (MNI): Lagarde's Jackson Hole Speech Had Little In Way Of Near-Term Mon Pol Implications 
Lagarde noted that demographic changes are likely to see the working age population continue to shrink even if migration is on the higher side of estimates, that "labour hoarding could persist as a feature of the employment landscape" and that "these same forces could weigh on labour productivity" [...] "If lower job turnover continues to slow labour reallocation, it is likely to reduce the efficiency of job matching... In such a scenario, Europe might escape the unemployment hysteresis that plagued past cycles, but at the cost of a decline in productivity."

BOE (BBG): BOE’s Bailey Says UK Faces Challenge To Raise Potential Growth
Britain faces an “acute challenge” to raise its underlying rate of economic growth as long as participation in the workforce remains weak, Bank of England Governor Andrew Bailey said. Bailey told central bankers at the Federal Reserve’s Jackson Hole gathering in Wyoming that Britain’s labor market problem was no longer unemployment, but participation. Unless more Britons rejoin the workforce, there will have to be “much more emphasis on productivity growth” to boost the economy.

Other

MIDDLE EAST (RTRS): “Israeli strikes hit the Yemeni capital Sanaa on Sunday in retaliation for Houthi missiles fired towards Israel, with a Houthi health official saying the attack killed six people and wounded 86.” 

NEW ZEALAND (BBG): "New Zealand Prime Minister Christopher Luxon said he personally agrees that the Reserve Bank should have cut the Official Cash Rate by 50 basis points last week." 

JAPAN (BBG): "Japanese Prime Minister Shigeru Ishiba’s approval ratings surged in local media polls ahead of a verdict on last month’s election performance that could determine his future as leader. " 

DATA

GERMAN DATA: A Sixth Consecutive Improvement For Ifo Business Climate

The Germany Ifo business climate index increased for a sixth consecutive month in August as it takes it to the high of its range for the past eighteen months, but it still suggests little material upside to tepid German real GDP growth despite this. 

GERMAN DATA: Latest Ifo Improvement On Shaky Ground Looking By Sector

The details of the Ifo business climate by sector didn’t corroborate the minor increase in the overall index, seemingly implying a higher response rate from services-related firms in the August survey. We wonder if that's down to response rates in the holiday season. 

US TSYS: Bear Steeper As Cash Trading Resumes

• Treasuries trade bear steeper with cash trading back underway after UK closures for the bank holiday.
• Friday’s Powell-enhanced steepening has been further extended, with the front end still broadly consolidating the dovish shift on Powell (albeit quite comfortably off highs) whilst 30s extend losses.
• Cash yields are 1-3.7bp higher, led by 20s and 30s.
• Monitoring monetary policy implications from Powell, 2Y yields are currently at 3.707% vs a post-Powell low of 3.673% and ~3.78% pre-Powell.
• 5s30s at 114.6bps easily sets fresh ytd highs having peaked at 112.9bp on Friday.
• TYU5 trades at 112-01+ (-3) on cumulative volumes already at 375k but with more than half of that seemingly from quarterly roll activity.
• Friday’s post-Powell high of 112-08 didn’t test resistance at a bull trigger of 112-15+ (Aug 5 high). Support is seen at 111-12 (50-day EMA).
• Today’s data is focused on regional Fed surveys and housing whilst President Trump comments are watched more broadly, including a meeting with The President Of Korea at the White House from midday ET. Fedspeak from Logan and Williams comes much later in the session.
• Data: Chicago Fed nat activity Jul (0830ET), New home sales Jul (1000ET), Dallas Fed mfg Aug (1030ET), Building permits revisions Jul F
• Fedspeak: Logan speaks at Banxico panel (1515ET, text + Q&A), NY Fed’s Williams gives keynote remarks at Banxico conference (1915ET, text + Q&A)
• Bill issuance: US Tsy to sell $82bn 13-w and $73bn 26-w (1130ET)
• Politics: Trump signs executive orders (1000ET – Axios suggests on ending cashless bail), Trump in bilateral meeting with The President of Korea (1215ET)

EGBS: Sticking to Friday's pre-Powell range

• Bund futures drifted lower in pre-European trading before falling a further 10 ticks around 8:00BST this morning. This reversed all of the gains seen following Fed Chair Powell's Jackson Hole appearance. Lagarde's comments at the symposium had no real impact on short-term monetary policy.
• The moves in futures have seen 10-year Bund cash yields increase 3.4bp on the day with a slight steepening of the curve.
• The day's major data was the German IFO release which came in broadly in line with expectations (89.0 vs 88.8 consensus, 88.6 prior) but the details showed the uptick was on shaky ground while markets showed no reaction to the data release.
• Later today we will receive Belgian business confidence data. However, it is later in the week that the data calendar gets much busier with the most notable releases being French, Spanish, German and Italian flash HICP all due (as well as US GDP on Thursday and PCE on Friday).
• The EU-bond auction was well received and saw E5.525bln sold across the 3 lines on offer (against a maximum E6.0bln target) with each line showing the stop price above the pre-auction mid-price. The Belgian OLO auction saw the top of the target range successfully sold, too.
• Austria has announced it will hold a 7-year E3bln WNG syndicated transaction in the "near future" (we expect tomorrow). We had flagged the possibility of an Austrian syndication this week in the MNI EGB Issuance, Redemption and Cash Flow Matrix
• With the UK bank holiday today (closing UK fixed income and equity markets) volumes are expected to remain on the light side today.

EUROPE ISSUANCE UPDATE

Austria 7-year syndication announcement

• Austria has mandated BofA Securities, Deutsche Bank, Erste Group, HSBC, J.P. Morgan and Raiffeisen Bank International to lead manage its upcoming new 7-year E3bln WNG RAGB benchmark with a maturity date of 20 September 2032. The transaction is expected to be launched and priced in the near future (MNI expects tomorrow).
• We had flagged the possibility of an Austrian syndication this week in the MNI EGB Issuance, Redemption and Cash Flow Matrix and had been close with the maturity (we had expected a long 6-year rather than the 7-year announced).

EU-bond auction results

• E2.12bln of the 2.875% Dec-27 EU-bond. Avg yield 2.117% (bid-to-cover 1.31x).
• E1.951bln of the 3.375% Dec-35 EU-bond. Avg yield 3.119% (bid-to-cover 1.66x).
• E1.454bln of the 3.375% Oct-38 EU-bond. Avg yield 3.489% (bid-to-cover 1.25x).

Belgium auction results:

• E1.021bln of the 3.00% Jun-33 OLO. Avg yield 2.982% (bid-to-cover 1.80x).
• E933mln of the 2.85% Oct-34 OLO. Avg yield 3.177% (bid-to-cover 1.58x).
• E769mln of the 3.50% Jun-55 OLO. Avg yield 4.237% (bid-to-cover 1.70x).

FOREX: USD strongest G10 currency but moves limited on UK bank holiday

• The USD is the strongest G10 currency in European trading as North Americans start to get to their desks but moves have been rather limited on the whole.
• The BBDXY index is 0.14% higher on the day but still down over 0.6% relative to pre-Powell Jackson Hole levels. The Scandies are underperforming this morning.
• The main scheduled event of the day has passed without even as the German IFO was broadly in line with expectations.
• We will hear from the Fed's Logan but not until 20:15BST (and it is unclear whether she will speak on monetary policy).
• It will be the second half of the week that we will see the main economic releases of the week with the second estimate of US Q2 GDP due Thursday. Friday will be a very busy data day with Tokyo CPI and flash HICP releases from France, Spain, Italy and Germany as well as July PCE from the US and Q2 GDP from Canada.
• Outside of G10 FX, USDCNH has seen more notable moves with the USDCNY fixing at the lowest level since early November and our Asia team noting that CNH was also helped by China property related equities have been buoyed on headlines of easing Shanghai home buying curbs. See our technical analysts' views above as the cross approaches key support.

EQUITIES: Dominant Uptrend Remains Intact

In the equity space, the dominant uptrend in S&P E-Minis remains intact and Friday’s rally reinforces current conditions. Attention is on 6508.75, the Aug 15 high and the bull trigger. Clearance of this level would confirm a resumption of the uptrend and open 6523.63, a 1.764 projection of the May 23 - Jun 11 - 23 price swing. Support to watch lies at 6298.61, the 50-day EMA. The trend set-up in EUROSTOXX 50 futures is bullish and the contract traded to a fresh short-term cycle high last week. The recent print above the May and July highs strengthens a bull theme and opens 5575.00, the Mar 3 high (cont) and key resistance. Support to watch lies at 5370.47, the 50-day EMA.

COMMODITIES: Gold Medium-Term Trend Condition Remains Bullish

On the commodity front, the medium-term trend condition in Gold remains bullish - moving average studies are in a bull-mode position highlighting a dominant uptrend. The sideways direction that has been in place since the Apr peak appears to be a pause in the uptrend. A resumption of gains would open $3439.0, the Aug 23 high. On the downside, first key support to watch lies at $3268.2, the Jul 30 low. First support is $3311.6, the Aug 20 low. In the oil space, a bear cycle in WTI futures remains intact and recent short-term gains appear corrective - for now. A key support at $61.99, the Jun 30 low, has been breached, strengthening a bearish theme. A continuation lower would open $57.71, the May 30 low. Key short-term resistance has been defined at $69.36, the Jul 30 high. Clearance of this level would cancel a bear theme.

Date	GMT/Local	Impact	Country	Event
25/08/2025	1230/0830	*	CA	Quarterly financial statistics for enterprises
25/08/2025	1300/1500	**	BE	BNB Business Confidence
25/08/2025	1400/1000	***	US	New Home Sales
25/08/2025	1400/1000	***	US	New Home Sales
25/08/2025	1430/1030	**	US	Dallas Fed manufacturing survey
25/08/2025	1530/1130	*	US	US Treasury Auction Result for 13 Week Bill
25/08/2025	1530/1130	*	US	US Treasury Auction Result for 26 Week Bill
25/08/2025	1915/1515		US	Dallas Fed's Lorie Logan
26/08/2025	2301/0001	*	GB	BRC Monthly Shop Price Index
25/08/2025	2315/1915		US	New York Fed's John Williams
26/08/2025	0600/0800	**	SE	PPI
26/08/2025	0645/0845	**	FR	Consumer Sentiment
26/08/2025	-		GB	DMO to hold FQ3 consultations with investors / GEMMs
26/08/2025	1230/0830	**	US	Durable Goods New Orders
26/08/2025	1230/0830	**	US	Philadelphia Fed Nonmanufacturing Index
26/08/2025	1230/0830	**	US	Durable Goods New Orders
26/08/2025	1255/0855	**	US	Redbook Retail Sales Index
26/08/2025	1300/0900	**	US	S&P Case-Shiller Home Price Index
26/08/2025	1300/0900	**	US	FHFA Home Price Index
26/08/2025	1300/0900	**	US	FHFA Home Price Index
26/08/2025	1300/0900	**	US	FHFA Quarterly Price Index
26/08/2025	1300/0900	**	US	FHFA Quarterly Price Index
26/08/2025	1400/1000	***	US	Conference Board Consumer Confidence
26/08/2025	1400/1000	**	US	Richmond Fed Survey
26/08/2025	1400/1500		GB	BOE Mann at Banxico Conference (text release)
26/08/2025	1430/1030	**	US	Dallas Fed Services Survey
26/08/2025	1700/1300	*	US	US Treasury Auction Result for 2 Year Note
26/08/2025	1830/1430		CA	BOC Governor speech in Mexico City