JPY: USDJPY Led Through Overnight Lows on Surge in Core Treasuries

Long end swap spreads continue to lead the move as yesterday’s widening is extended on.

• A reminder that comments from Fed Chair Powell, pointing to potential end to QT in the coming months, drove Tuesday’s widening.
• 5- & 10-Year swap spreads move to fresh multi-month highs but still trade below pre-Liberation Day levels that prevailed in early April.
• Meanwhile, 30-Year spreads trade close to their March closing high (-73.5bp).
• J.P.Morgan recommended unwinding 3-year swap spread wideners following the comments from Fed Chair Powell.
• They noted that “term funding premium is now below our estimate of fair value. We turn neutral on swap spreads”.

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• President Donald Trump will hold a press conference with FBI Director Kash Patel at 15:00 ET 20:00 BST and host a “Ballroom Dinner,” at 19:30 ET 00:30 BST
• At 14:15 ET 19:15 BST, the Senate will vote a ninth time on the House-passed government funding bill. Senate Majority Leader John Thune (R-SD) is deploying a new strategy to ramp-up pressure on Democrats. US troops will receive paychecks today, but funds are unlikely to extend to the next military payday on October 31.
• Fed Chair Jerome Powell warned labour market risks are a more immediate concern than tariff-driven inflation.
• JPMorgan Chase's investment strategy reflects the private sector's endorsement of Trump's agenda.
• Trump suggested the US could halt purchases of Chinese cooking oil in retaliation for Beijing’s withdrawal from US soybean exports.
• Trump threatened Spain with tariffs for failing to hit NATO spending targets.
• Trump’s upcoming National Security Strategy is expected to focus on the Western Hemisphere.
• NATO defence ministers meet today in Brussels amid speculation that Trump could sell Tomahawk missiles to Ukraine.
• Trump warned the US could disarm Hamas "violently" as the Gaza peace plan faces its first significant test.
• Trump said an economic assistance package for Argentina is contingent on President Javier Milei 'winning' Oct. 26 legislative elections.
• The US military killed another six alleged drug traffickers off the coast of Venezuela.
• Poll of the Day: US voters “resoundingly” support Trump’s Gaza peace plan.

Full Article: US DAILY BRIEF

• MNI: CANADIAN AUG MANUFACTURING SALES -1.0% MOM
• CANADA AUG FACTORY INVENTORIES +0.3%; INVENTORY-SALES RATIO 1.75