US: President Trump's State Of The Union Address Underway Shortly 1/2
President Donald Trump is shortly due to deliver his “State of the Union Address” to Congress. Trump told reporters yesterday, “It is going to be a long speech.” At nearly 100 minutes, Trump’s (non-SOTU) address last year was the longest ever. LIVESTREAM
- The importance of the SOTU should not be understated. As Politico notes, “over 30 million viewers are expected to tune in live tonight, close to one-in-three expected midterm voters.”
- The speech comes amid faltering approval ratings and will go ahead despite a DHS shutdown. A Republican pollster said, “He is currently at his lowest point in the second term. The single most important variable in midterm elections is the president’s job approval.”
- The speech is likely to hit many of Trump's favoured talking points. He is likely to tout his prescription drug initiative, the strength of the economy, the trajectory of US stock markets, the importance of his trade agenda, the boon from Big Beautiful Bill tax cuts, and the success he has achieved in securing investment pledges. He is also certain to tout the success of his immigration and border security policies, despite bipartisan backlash to hardline federal enforcement tactics.
- Trump is also likely to use the speech to criticise political opponents, including Democrats and unreliable Republicans – many of whom will be in attendance. He may also criticise Supreme Court justices for ruling against his tariff agenda.
- In recent speeches, Trump has described ‘affordability’ as a “Democrat hoax”. Republicans will be hoping for a more nuanced message this evening.
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US TSYS: JGBs Lead UST Futures Higher Again
US futures opened stronger following the strength of JGBs into the close Friday and this momentum continued today. With JGB futures up strongly and the JGB10-Yr down -3bps, US bond futures are up across all maturities with the 10-Yr at 111-26+, up of +04+ from the open.
Cash yields are lower by -0.2bps to -0.8bps with the long end the best performers.
- The 2-Yr is at 3.594% down -0.2bps
- The 5-Yr is at 3.821% down -0.5bps
- The 10-Yr is at 4.219% down -0.8bps
- The 30-Yr is at 4.820% down -0.7bps.
The impact from JGBs may be foreign to some investors, unused to seeing inflation in the Japanese economy. With inflation looking entrenched in Japan and the potential for further fiscal spend, the usually low correlation between JGBs and USTs has changed, with USTs reacting to the JGB move.
In a week where US yields often trade sideways ahead of FOMC, this week eyes could be turned to TOKYO ahead of the FED decision.
CHINA: Central Bank Withdraws CNY7.8bn via OMO
Having showed signs of stabilizing mid week last week, repo rates rose into the end of the week, yet despite this Monday saw a modest withdrawal of liquidity via the PBOC. The maturity schedule for the week ahead is in excess of CNY1tn
- The PBOC issued CNY150.5bn of 7-day reverse repo at 1.4% during this morning's operations.
- Today's maturities CNY158.3bn.
- Net liquidity withdrawal CNY7.8bn.
- The PBOC monitors and maintains liquidity in the interbank system through the issuance of reverse repo.
- The CFETS Pledged Repo Deposit Institutions 7 Day Weighted is at 1.52%, from prior close of 1.49%.
- The China overnight interbank repo rate is at 1.54%, from the prior close of 1.41%.
- The China 7-day interbank repo rate is at 1.60%, from the prior close of 1.49%.
MNI: CHINA PBOC CONDUCTS CNY150.5 BLN VIA 7-DAY REVERSE REPO MON
- CHINA PBOC CONDUCTS CNY150.5 BLN VIA 7-DAY REVERSE REPO MON
