TARIFFS: Trump Administration Teases Withdrawing From USMCA Trade Agreement
US Trade Representative Jamieson Greer told Politico that President Donald Trump is “flirting with” pulling the US out of the United States-Mexico-Canada trade agreement. When asked about the possibility of withdrawing ahead of July’s mandatory review, Greer said, “that's always a scenario. [Trump] only wants [good deals]. The reason why we built a review period into USMCA was in case we needed to revise it, review it or exit it.”
- Trump told reporters yesterday, "We'll either let it expire, or we'll maybe work out another deal with Mexico and Canada.”
- Greer similarly floated negotiating separate bilateral trade deals with Ottawa and Mexico City, “Our relationship with the Canadian economy is totally different than our relationship with the Mexican economy… It actually doesn't make a ton of economic sense why we would marry those three together.”
- Greer’s comments came after a three-day public hearing at the USTR kicked off yesterday. The Globe and Mail notes that US agriculture, business and policy groups urged the Trump administration not to scrap the agreement: “Speaker after speaker called for an extension of the agreement, emphasizing how its free trade terms have allowed their sector to boost revenues...”
- The USTR must deliver its recommendation to Congress by January 2 on renewing the USMCA, or taking other action. If the administration withdraws, it would take place six months after submitting the decision.
- The comments are not unexpected. Ahead of yesterday's hearing, Canadian experts warned that the Trump administration would threaten to withdraw from the agreement to gain leverage ahead of the July review.
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SONIA OPTIONS: Call Condor seller
SFIZ5 96.15/96.25/96.35/96.45 c condor, sold at 4.5 in 5k.
STIR: Fed Rate Path Softens, Bowman Next Up In Early Remarks From Spain
- Fed Funds implied rates have more than unwound yesterday’s increase, dipping 1bp for Dec, 1.5bp for Mar and 3bp for June in steady moves through European hours.
- Broader risk-off plays a role with equity and crude oil futures under pressure, the latter with WTI -1.6%.
- Cumulative cuts from assumed 3.87% effective: 16.5bp Dec, 26bp Jan, 34.5bp Mar, 40.5bp Apr, 56bp Jun.
- SOFR futures are up to +0.03 on the day through M6-M7 contracts, with the terminal implied yield of 3.085% (H7) pulling back a touch off yesterday’s highest close since August.
- Today's sole Fedspeak comes from VC Supervision Bowman (voter), earlier than usual at 0635ET being in Spain. She will speak on supervision and mon pol but with no prepared text.
- Second only to Miran as the most dovish FOMC member, we expect similar rhetoric to pre-FOMC meeting remarks that bigger and faster cuts may be warranted with the possibility that the Fed has fallen behind the curve on weakening labor market conditions. She’s one of the 9 rate dots at 3.6% and we would guess one of the 5 who are either at 2.6% or 2.9% for 2026.
- Updating on latest notable Fedspeak, Gov. Cook in long-awaited remarks yesterday supported last week’s cut as “the downside risks to employment are greater than the upside risks to inflation”. Keeping rates “modestly restrictive” is “appropriate given that inflation remains somewhat above our 2 percent target."
US 10YR FUTURE TECHS: (Z5) Trading At Its Recent Lows
- RES 4: 114-02 High Oct 17 and the bull trigger
- RES 3: 113-29 High Oct 22
- RES 2: 113-18+ High Oct 28
- RES 1: 113-03 20-day EMA
- PRICE: 112-26 @ 10:41 GMT Nov 4
- SUP 1: 112-16 Low Oct 30
- SUP 2: 112-14 Low Oct 9
- SUP 3: 112-06 Low Sep 25 and a reversal trigger
- SUP 4: 111-30+ Trendline support drawn from the May 22 low
Recent weakness in Treasuries undermines a bullish theme. The move down has resulted in a breach of the 50-day EMA, at 112-26+, highlighting potential for a deeper retracement near-term. A continuation lower would open 112-06, the Sep 25 low and the next key support. The contract needs to trade above 113-18+, the Oct 28 high to signal a possible bullish reversal. Key resistance and the bull trigger is at 114-02, the Oct 17 high.
