FOREX: Shutdown Persists, But Market Taking in Stride
Oct-03 16:02
- Headed through the third session of US government shutdown and markets have been considerably more stable relative to the spells of volatility noted earlier in the week. The USD Index traded inside the weekly range throughout Friday trade, leaving markets of the view that a prolonged US government shutdown that limits government data releases will do very little to deter the Fed from proceeding with a second rate cut at their October rate decision.
- Outside of the US, JPY slipped against all others in G10. This keeps USD/JPY clear of the test of major support into the weekly lows of 146.59, a level that helped prop up price action earlier this week and contain any further USD weakness. Moves follow comments from BoJ's Ueda, who overnight steered clear of any renewed commitment to hiking rates in Japan. While this messaging was inline with prior BoJ communications, it contrasted with the better-than-expected Tankan manufacturing sentiment data out earlier in the week.
- Currency trade was generally more muted elsewhere, leaving major macro themes intact for now. GBP traded mixed, leaving the Autumn Budget as the next major macro risk for the UK. The front-end of the GBP vol curve provides a further signal for market concern over the Autumn Budget. The flatter front-end of the curve and the building premium for 2m implied vols shows markets building a risk premium into the event. 2m vols have posted the sharpest gains over the past week as they begin to capture the event on November 26th.
- US data again will not be released in the coming week, with the government shutdown likely to extend well over the weekend. There remains very little pressure on either side to concede and strike a near-term deal. Outside of the US, focus rests on the Canadian jobs market release, prelim US UMich sentiment data as well as rate decisions from the New Zealand, Poland, Thailand and Philippine central banks.
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US 10YR FUTURE TECHS: (Z5) Pullback Appears Corrective
Sep-03 15:59
- RES 4: 113-06 2.236 proj of the Jul 15 - 22 - 28 price swing
- RES 3: 113-00 Round number resistance
- RES 2: 112-28+ 2.000 proj of the Jul 15 - 22 - 28 price swing
- RES 1: 112-19/20+ High Sep 3 / Aug 28 / 29
- PRICE: 112-18 @ 16:58 BST Sep 3
- SUP 1: 111-31+ 20-day EMA
- SUP 2: 111-19 50-day EMA
- SUP 3: 111-13+ Low Aug 18 and a key support
- SUP 4: 110-25 Low Aug 1
The trend outlook in Treasury futures is bullish and the latest pullback appears corrective. Recent gains delivered a print above 112-15+, the Aug 5 high and a bull trigger. A breach of this hurdle confirms a resumption of the current bull cycle and signals scope for an extension towards the 113-00 handle. Moving average studies are in a bull-mode position, reinforcing a bull theme. First support to watch is 111-31+, the 20-day EMA.
SECURITY: Trump To Speak w/Zelenskyy And Euro Leaders After Ukraine Summit Thurs
Sep-03 15:57
The Elysee confirmed that French President Emmanuel Macron, Ukrainian President Volodymyr Zelenskyy and ‘several other heads of state’ will speak with President Donald Trump at 08:00 ET 13:00 BST tomorrow, after a meeting of the ‘Coalition of the Willing’ in Paris.
- Trump said alongside Polish President Karol Nawrocki in the Oval Office that roughly 10,000 US soldiers will remain deployed in Poland, adding that number could be increased "if they want".
- Zelenskyy confirmed a short time ago that he discussed a US backstop to security guarantees w/EU counterparts in Copenhagen today: “We have signals from the US of a possible backstop [and] the role of EU membership in this holistic system of security guarantees...”
- Trump reiterated to reporters yesterday that there will be “consequences” for Putin slow-walking a meeting with Zelenskyy. He added: “I had actually a very good meeting with [Putin] a couple of weeks ago. We'll see if anything comes out of it. If it doesn't, we'll take a different stance.”
- It is unlikely Putin's recent concessions on a meeting will be seen by the White House as sufficient progress. See SECURITY: Putin Offers To Meet Zelenskyy And Trump In Moscow
- Treasury Secretary Scott Bessent told Fox on Monday that “all options are on the table” for further sanctions on Russia, adding “we’ll be examining those very closely this week.”
- Bessent and White House officials said EU countries need to align with the US on halting Russian oil purchases, but have equivocated on pursuing a similar secondary oil tariff on China to the one imposed on India.
- US Ambassador to NATO, Matthew Whitaker, told Bloomberg yesterday that the US has refrained from imposing secondary sanctions on China because of ongoing trade negotiations.
EGB SYNDICATION: Lithuania Long 10 / 20-year LITHUN: Priced
Sep-03 15:53
Long 10-year:
- Reoffer: 99.698 to yield 3.662%
- Spread set at MS + 95bp (Guidance was MS+105bp area and revised to MS + 95-100bp (WPIR))
- Size: E1.0bln (in line with MNI estimate)
- Books closed in excess of E1.9bln (ex JLM interest)
- Maturity: 10 March 2036
- Coupon: 3.625%, Short first
- HR 100% vs 2.60% Aug-35 Bund. Spot ref 98.76 / + 91.9bp
- ISIN: XS3175946071
20-year:
- Spread set earlier at MS +140bp (guidance was MS+145bp area)
- Size: E750mln (MNI pencilled in E1bln)
- Books closed in excess of E1.6bln (ex JLM interest)
- Maturity: 10 September 2045
- Coupon: 4.25%
- HR 99% vs 2.50% July-44 Bund. Spot ref 90.23 / + 116.5bp
- ISIN: XS3175947046
For both:
- Bookrunners: Erste Group (B&D), HSBC and Societe Generale
- Settlement Date: 10 September 2025 (T+5)
- Timing: TOE: 16:24 BST /17:24 CET. FTT immediately.
From market source / MNI colour
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