- MNI US ECONOMY: Brainard: Extending Tax Cuts Without Paying For Them Is Not Acceptable
- MNI US: Harris Makes Final Bid For Teamsters Endorsement
- MNI US: Speaker Johnson Faces Uphill Battle Getting Funding Plan Through Divided GOP
- MNI US DATA: Healthy New Orders Drive Surprise Improvement In Empire Mfg
US
US ECONOMY (MNI): Brainard: Extending Tax Cuts Without Paying For Them Is Not Acceptable
Wires carrying comments from Director of the White House National Economic Council President, Lael Brainard, speaking on the economy at an event hosted by the Council on Foreign Relations.
- Per Reuters, Brainard said: "Inflationary expectations have proved to be much more strongly anchored today than they were in the 1970s." Brainard said the US economy could be "in a really good place" in 6-12 months if the right choices are made. Brainard said, "markets are projecting lower mortgage, car loan rates, which will help sustain recovery," [but] "need to have more bipartisan cooperation in congress on efforts such as creating more affordable housing."
NEWS
US (MNI): Harris Makes Final Bid For Teamsters Endorsement
Vice President Kamala Harris will hold a roundtable meeting with Teamsters boss Sean O’Brien today to try to secure a late endorsement from the 1.3 million-member-strong union. The Teamsters traditionally endorse the Democratic candidate at some point following the two party conventions, but O'Brien has oscillated between Democrats and Republicans, recognising that many rank-and-file union members hold a favourable view of former President Donald Trump.
US (MNI): Harris-Trump Debate Does Little To Move The Dial On Presidential Race
The first presidential debate between Vice President Kamala Harris and former President Donald Trump appears to have had limited impact on the race for the White House. An ABC News/Ipsos survey found that the debate firmed up support for Harris but has done little to, "move the needle in terms of trust on the issues, ratings of the candidates' personal attributes or vote preferences in the 2024 election." ABC adds: "The benefit for Harris occurred almost exclusively in her base, potentially helping her turnout efforts."
US (MNI): Speaker Johnson Faces Uphill Battle Getting Funding Plan Through Divided GOP
With nine scheduled Congressional workdays until a government shutdown, House Republican leadership appears no closer to alighting on a short-term government funding plan that can pass the lower chamber.
EU COMMISSION (MNI): Macron Proposes Foreign Min Sejourne As French Commissioner:
The Elysee Palace has confirmed that French President Emmanuel Macron has proposed Stephane Sejourne, caretaker foreign minister and General Secretary of Macron's Renaissance party, to be France's European Commissioner.
IRAN (MNI): Pres. Denies Sending Weapons To Russia In First Press Conference In Office:
President Masoud Pezeshkian is holding his first major press conference since taking office in late July, speaking to domestic and international journalists on a number of issues. During the presser Pezeshkian claimed that "Israel attempted to drag us into war by assassinating Ismail Haniyeh in Tehran," going on to say that "...we exercised restraint and reserve the right to respond in a manner and time of our choosing".
INTERNATIONAL TRADE (MNI): Okonjo-Iweala To Seek Another Term Leading WTO:
Ngozi Okonjo-Iweala, Director General of the World Trade Organisation (WTO) has confirmed to Reuters that she will seek a second four-year term at the head of the group. Her current term expires on 31 August 2025.
OVERNIGHT DATA
US DATA (MNI): Healthy New Orders Drive Surprise Improvement In Empire Mfg
The Empire manufacturing survey was stronger than expected in September as it bounced to 11.5 (cons -4.0) from -4.7, for its highest since Apr 2022, although its volatility counts against it when trying to assess very latest trends. Nevertheless, the six-months ahead measure also increased from 22.9 to 30.6, pushing above the 30.1 in June for its highest since Mar 2022.
- New orders at 9.4 after -7.9 saw their first positive reading in twelve months, and whilst the number of employees series was still negative at -5.7, the average workweek index increased sharply from -17.8 to 2.9 for its highest since Nov 2022.
MARKETS SNAPSHOT
- Key market levels of markets in late NY trade:
- DJIA up 218.91 points (0.53%) at 41611.6
- S&P E-Mini Future up 5.5 points (0.1%) at 5696.5
- Nasdaq down 102.3 points (-0.6%) at 17581.5
- US 10-Yr yield is down 2.6 bps at 3.6251%
- US Dec 10-Yr futures are up 3/32 at 115-16.5
- EURUSD up 0.0049 (0.44%) at 1.1124
- USDJPY down 0.03 (-0.02%) at 140.82
- WTI Crude Oil (front-month) up $1.78 (2.59%) at $70.43
- Gold is up $4.23 (0.16%) at $2581.94
- European bourses closing levels:
- EuroStoxx 50 down 16.36 points (-0.34%) at 4827.63
- FTSE 100 up 5.35 points (0.06%) at 8278.44
- German DAX down 66.29 points (-0.35%) at 18633.11
- French CAC 40 down 15.81 points (-0.21%) at 7449.44
US TREASURY FUTURES CLOSE
- 3M10Y -1.003, -125.134 (L: -126.874 / H: -119.619)
- 2Y10Y -0.722, 5.962 (L: 5.567 / H: 9.809)
- 2Y30Y -1.873, 37.418 (L: 37.038 / H: 42.77)
- 5Y30Y -2.253, 52.574 (L: 52.401 / H: 56.449)
- Current futures levels:
- Dec 2-Yr futures up 0.5/32 at 104-13.75 (L: 104-12.625 / H: 104-15.75)
- Dec 5-Yr futures up 0.75/32 at 110-22 (L: 110-18.75 / H: 110-25.75)
- Dec 10-Yr futures up 3/32 at 115-16.5 (L: 115-09.5 / H: 115-19.5)
- Dec 30-Yr futures up 12/32 at 127-3 (L: 126-16 / H: 127-08)
- Dec Ultra futures up 26/32 at 137-17 (L: 136-16 / H: 137-22)
US 10YR FUTURE TECHS: (Z4) Holding On To Its Recent Gains
- RES 4: 116-07 1.764 proj of the Aug 8 - 21 - Sep 3
- RES 3: 116-00 Round number resistance
- RES 2: 115-31 1.618 proj of the Aug 8 - 21 - Sep 3
- RES 1: 115-23+ High Sep 11
- PRICE: 115-17+ @ 1540 ET Sep 16
- SUP 1: 114-27+/16 Low Sep 10 / 20-day EMA
- SUP 2: 114-00+ Low Sep 4
- SUP 3: 113-12 Low Sep 3
- SUP 4: 113-06+ 50-day EMA
Treasuries maintain a bullish theme and the contract is holding on to its latest gains. Last Wednesday’s push higher resulted in a print above key resistance and the bull trigger at 115-19, the Aug 5 high. The move higher confirms a resumption of the uptrend and paves the way for a climb towards the 116.00 handle. Moving average studies remain in a bull-mode position, highlighting a clear medium-term uptrend. Firm support is seen at 114-16, the 20-day EMA.
SOFR FUTURES CLOSE
- Sep 24 +0.030 at 95.175
- Dec 24 +0.035 at 960
- Mar 25 +0.045 at 96.670
- Jun 25 +0.025 at 970
- Red Pack (Sep 25-Jun 26) -0.02 to +0.005
- Green Pack (Sep 26-Jun 27) -0.015 to -0.005
- Blue Pack (Sep 27-Jun 28) -0.005 to +0.010
- Gold Pack (Sep 28-Jun 29) +0.010 to +0.020
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M -0.06844 to 5.01429 (-0.02711 total last wk)
- 3M -0.07781 to 4.86337 (-0.01346 total last wk)
- 6M -0.09743 to 4.48149 (-0.01307 total last wk)
- 12M -0.10352 to 3.88833 (-0.06175 total last wk)
- Secured Overnight Financing Rate (SOFR): 5.33% (+0.00), volume: $2.232T
- Broad General Collateral Rate (BGCR): 5.32% (+0.01), volume: $810B
- Tri-Party General Collateral Rate (TGCR): 5.32% (+0.01), volume: $779B
- (rate, volume levels reflect prior session)
- Daily Effective Fed Funds Rate: 5.33% (+0.00), volume: $105B
- Daily Overnight Bank Funding Rate: 5.33% (+0.00), volume: $257B
FED Reverse Repo Operation
NY Federal Reserve/MNI
RRP usage falls to new 3+ year low at $239.386B from $284.951B last Friday. Compares to last Wednesday, September 11 multi-year low of $279.215B (early May 2021 levels). Number of counterparties falls to new low of 44 from 62 on Friday.
PIPELINE US$ Corporate Debt Roundup
$9.7B to Price Monday
- Date $MM Issuer (Priced *, Launch #)
- 9/16 $3.7B #Novartis $1B 5Y +45, $850M 7Y +57, $1.1B 10Y +67, $750M 30Y +77
- 9/16 $2B #Labcorp $650M +5Y +95, $500M +7Y +110, $850M 10Y +120
- 9/16 $1B Royal Caribbean 7NC3 5.75%
- 9/16 $900M *AtlaGas 30NC10 7.2%
- 9/16 $800M #GA Global Funding Trust 3Y +100
- 9/16 $750M *Canadian National 10Y +78
- 9/16 $550M #CSX +30Y +97
BONDS: EGBs-GILTS CASH CLOSE: Yields Edge Lower With Fed And BoE Eyed
Bund and Gilt yields fell Monday for the 9th day in 10, ahead of the Federal Reserve and BoE decisions later in the week.
- After starting the day on the front foot, after speculation of an outsized 50bp cut by the Fed this Wednesday rose further over the weekend, trade turned mixed in the European morning session.
- Various countervailing factors included a rebound in oil prices dampening core FI gains, with continued dovish Fed repricing and an equity pullback underpinning early. Yields resolved lower in the last couple of hours of European cash trade.
- ECB Chief Economist Lane elicited minimal market reaction with his commentary reinforcing a "meeting-by-meeting and data-dependent" approach to rate-setting.
- Bunds outperformed Gilts, with some light bull steepening through most of the UK and German curves.
- Periphery EGB spreads were mixed, with BTPs outperforming albeit gains were marginal.
- German September ZEW is the highlight Tuesday morning. Outside of the Fed, UK developments are at the fore this week, with CPI Wednesday and the BoE decision Thursday.
Closing Yields / 10-Yr Periphery EGB Spreads To Germany
- Germany: The 2-Yr yield is down 2.8bps at 2.183%, 5-Yr is down 2.5bps at 1.995%, 10-Yr is down 2.6bps at 2.122%, and 30-Yr is down 3.1bps at 2.4%.
- UK: The 2-Yr yield is down 1.2bps at 3.788%, 5-Yr is down 0.8bps at 3.614%, 10-Yr is down 0.9bps at 3.759%, and 30-Yr is down 0.9bps at 4.35%.
- Italian BTP spread down 0.6bps at 135.6bps / Spanish up 0.4bps at 79.5bps
FOREX: USD Index Edges Back Towards Cycle Lows as Fed Decision Awaited
- Markets continued to assign a greater probability to the Fed cutting rates by 50bp in September and as such, the USD index has fallen 0.35% on Monday. Price action edges the index towards the prior cycle lows at 100.51. The broad consolidation for major equity benchmarks has kept the likes of GBP, AUD and NZD the main beneficiaries in G10 (all up over 0.5%), whereas the likes of CAD and JPY are relatively underperforming ahead of the APAC crossover.
- Another volatile session for the JPY has culminated with the currency at broadly unchanged levels against the dollar, which fails to tell the full story on Monday. The Yen was initially most firmly affected by the fed re-pricing, prompting USDJPY to fall as low as 139.58, the lowest level since July 2023.
- However, downside momentum rapidly lost steam on Monday, with moves sub-140.00 appearing to be well supported for now. Stronger-than-expected US Empire State manufacturing assisted the early US bounce and spot has moved steadily higher in the aftermath. At typing, we are roughly 15 pips from the overnight highs at 140.93, an area that may see some further bailing from fresh short positions.
- Price action may have been assisted by the lower volumes owing to both China and Japan being out for national holidays, especially given Fed pricing has remained unchanged since the US crossover and major equity benchmarks are little changed.
- EURUSD finds itself back above 1.11 and price action is narrowing the gap to key short-term resistance at 1.1155, the Sep 6 high. Clearance of this level would cancel a recent bearish theme and highlight scope for a stronger recovery towards 1.1202, the Aug 26 high and a bull trigger.
- In emerging markets, the Brazilian real outperforms ahead of the BCB’s expected rate hike Wednesday, whereas budget debates in Colombia comparatively weighs on COP.
- German ZEW, Canada CPI and US retail sales highlight the data calendar on Tuesday, ahead of key central bank decisions later in the week.
TUESDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 17/09/2024 | 0900/1100 | *** |  DE | ZEW Current Conditions Index |
| 17/09/2024 | 0900/1100 | *** | DE | ZEW Current Expectations Index |
| 17/09/2024 | 0900/1000 | ** |  GB | Gilt Outright Auction Result |
| 17/09/2024 | 1215/0815 | ** |  CA | CMHC Housing Starts |
| 17/09/2024 | 1230/0830 | *** | CA | CPI |
| 17/09/2024 | 1230/0830 | *** |  US | Retail Sales |
| 17/09/2024 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 17/09/2024 | 1300/1500 |  EU | ECB's Elderson in supervisory effectiveness panel | |
| 17/09/2024 | 1315/0915 | *** | US | Industrial Production |
| 17/09/2024 | 1400/1000 | * | US | Business Inventories |
| 17/09/2024 | 1400/1000 | ** | US | NAHB Home Builder Index |
| 17/09/2024 | 1530/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 17/09/2024 | 1700/1300 | ** | US | US Treasury Auction Result for 20 Year Bond |
| 17/09/2024 | 2200/1800 | CA | BOC Sr Deputy Rogers fireside chat on women in finance. |