MEXICO: Weakness In Manufacturing Expected to Weigh on IP In October

• On the commodity front, the downleg in Gold since Oct 20 appears to have been a correction and has allowed an overbought condition to unwind. Recent gains suggest the correction is over. Price remains above a key support at the 50-day EMA, at $3899.3. Clearance of this EMA would signal scope for a deeper retracement. Initial resistance is at $4161.4, the Oct 22 high. A stronger recovery would refocus attention on $4381.5, the Oct 20 high and bull trigger.
• The pullback in WTI futures since Oct 24, appears to be a flag formation - a bullish continuation pattern. This suggests that an upward corrective cycle is intact for now. Price has recently traded through the 50-day EMA, at $60.85, signalling scope for a stronger recovery. Note too that resistance at $62.34, the Oct 8 high, has been pierced. A clear move through it would expose key resistance at $65.77, Sep 26 high. The bear trigger is $55.96, the Oct 20 low.

• Cash Treasuries have modestly pared sizeable gains seen with the Asia open after yesterday’s cash closure for Veterans Day, catching up with a rally in futures on soft weekly ADP employment data.
• Today sees focus on Tsy Sec Bessent speaking at the 2025 Treasury Market Conference, balance sheet discussions from Fed speakers and 10Y supply.
• Tomorrow could then greater focus on potential timing of official data releases that have been delayed under the government shutdown. See the MNI Re-Opening Guide here.
• Cash yields are 1-3.5bp lower since Monday’s close, with declines led by 5s.
• TYZ5 trades at 112-28+, holding only a mild easing away from yesterday’s high of 113-02 on light overnight volumes of 225k.
• That high marked another test of key near-term resistance having also hit 113-02 on Nov 5 & 7, after which lies 113-18+ (Oct 28 high). A bear threat is still present at 112-06 (Sep 25 low) before which lies 112-09+ (Nov 5 high) and other support levels.
• Data: MBA mortgage applications (0700ET)
• Fedspeak: Williams (0920ET), Paulson (1000ET), Waller (1020ET), Bostic (1215ET), Miran (1230ET), SOMA Manager Perli (1550ET), Collins (1600ET) – see FED bullet
• US Tsy Sec Bessent speaks at 2025 Treasury Market Conference (1045ET)
• Coupon issuance: US Tsy $42B 10Y Note - 91282CPJ4 (1300ET). The first auction of the week, a 3Y, stopped through by 1bp and saw healthy demand whlist last month’s 10Y tailed by 0.5bp with the bid-to-cover falling from 2.65 to 2.45.
• Bill issuance: US Tsy $69B 17W bill auction (1130ET)
• Politics: White House Press Sec Leavitt conference (1300ET), Trump hosts private dinner (1930ET)

It is a rare occasion when Prime Minister's Questions is a market moving or relevant event, with the last instance coming in July when images of Chancellor of the Exchequer Rachel Reeves in an emotional state in the House of Commons, amid speculation over her position, sparked a notable selloff in UK assets. Today's session (starting at the top of the hour, livestream here) could garner more interest given the political and media furore over the past 12 hours following a series of briefings from Downing Street figures regarding the possibility of leadership challenges against PM Sir Keir Starmer from prominent centrists in cabinet: Health Secretary Wes Streeting or Home Secrerary Shabana Mahmood. 

• The subsequent counter-briefings and internal political infighting within Downing St and the wider centre-left Labour party has only added to perceptions of chaos and instability at the heart of gov't.
• A cover story from The New Statesman (seen as the political journal of record for the centre-left in the UK) claims that "In today’s Labour Party, there is constant, fevered discussion about the prospect of a leadership challenge in May (after the local, Scottish and Welsh elections) or in the aftermath of the Budget, about the possible contenders and the exact mechanism by which it would be done."
• Polls from multiple outlets showing Labour falling to third, or even fouth place nationwide. The poor polling is also specific to Starmer. A satisfation survey from Ipsos shows Starmer with the worst approval ratings of any prime minister since it began taking surveys in 1977.
• This comes in terms of worst net rating (-66, nearest comparison John Major in Aug 1994 and Rishi Sunak in Apr 2024, both -59), the worst 'satisfied' rating (13%, nearest Rishi Sunak Apr 2024 and Liz Truss Oct 2022, both 16%), and 'dissatisfied' rating (79%, nearest Margaret Thatcher Mar 1990 and John Major Aug 1994, both 76%). 

Chart 1. Leader Satisfaction, Worst Rating for Each PM, %

Source: Ipsos