TARIFFS: Trump Administration Teases Withdrawing From USMCA Trade Agreement

SFIZ5 96.15/96.25/96.35/96.45 c condor, sold at 4.5 in 5k.

• 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."

• 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.