US TSYS: Projected Rate Cut Pricing Near -75bp by Year End After Soft Jobs Data
- Treasuries look to finish broadly higher after key employ data showed less job gains than expected for August. The Fed enters communication blackout tonight.
- Payrolls surprised lower in August (22k vs BBG cons 75k) and the u/e rate was on the dovish side at a new recent high of 4.324% (cons 4.3% but with a skew to a 4.2% print) after 4.25%. The downward revisions were concentrated in May (-27k vs +6k in June), offering no offset to last month’s huge downward revisions.
- Rate have gradually pared gains in the second half (TYZ5 +16.5 at 113-11.5 vs. 113-21.5 high) as markets continued to digest the labor data. Projected rate cuts remained well off pre-data (*) levels: Sep'25 at -28bp (-24.7bp), Oct'25 at -47.3bp (-38.6bp), Dec'25 at -69.7bp (-59bp), Jan'26 at -83.5bp (-71.1bp).
- Chicago Fed President Goolsbee, a 2025 FOMC voter, tells Bloomberg TV that he is "undecided" on a rate cut at the Sep 17 FOMC, saying he wants "to get more information", playing down the signal from the recent nonfarm payrolls slowdown, due to a potentially softer labor force growth dynamics. He suggests one of the things he will be looking at in the meantime is the August inflation report out next week - and in particular, whether services inflation looks tame.
- The USD fell sharply in tandem with yields, putting the USD Index to new September lows and within range of first support into the late July lows of 97.109 and the bear trigger into the July 1st print at 96.377.
- Generally slow start to next week - focus on PPI and CPI net Wed-Thu respectively.
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AUDUSD TECHS: Consolidation Mode
- RES 4: 0.6700 76.4% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6688 High Nov 7 ‘24
- RES 2: 0.6677 0.764 proj of the Jun 23 - Jul 11 - 17 price swing
- RES 1: 0.6530/6625 High Jul 29 / 24 and the bull trigger
- PRICE: 0.6499 @ 16:13 BST Aug 6
- SUP 1: 0.6419 Low Aug 1
- SUP 2: 0.6373 Low Jun 23 and a bear trigger
- SUP 3: 0.6354 38.2% retracement of the Apr 9 - Jul 24 upleg
- SUP 4: 0.6323 Low Apr 16
AUDUSD rallied well off the week’s lowest levels last week on broad USD weakness. Last week, the pair traded through both the 20- and 50-day EMAs. This undermined the recent bullish theme and signals the likely start of a corrective cycle. Note that support 0.6455 the Jul 17 low, has also been cleared. The breach strengthens a bearish threat and signals scope for an extension towards 0.6373, the Jun 23 low. Key resistance has been defined at 0.6625 the Jul 24 high. It also represents the bull trigger.
US TSY FUTURES: BLOCK: Sep'25 10Y Ultra-Bond Buy
- +3,500 UXYU5 114-12, buy through 114-11.5 post time offer at 1512:00ET, DV01 $305,000.
- The 10Y ultra contract trades 114-11.5 last (-5.5)
BOC: Bank Of Canada 2026 Meeting Calendar Released
The Bank of Canada has released its 2026 interest rate decision schedule (link here, all rate announcements will be on Wednesdays at 0945ET):
- January 28 (with Monetary Policy Report)
- March 18
- April 29 (with Monetary Policy Report)
- June 10
- July 15 (with Monetary Policy Report)
- September 2
- October 28 (with Monetary Policy Report)
- December 9
Additionally the quarterly Business Outlook Survey and Canadian Survey of Consumer Expectations will be published on the following dates (all are Mondays at 1030ET):
- January 19
- April 20
- July 6
- October 19
