EXECUTIVE SUMMARY
- MNI US LABOR MARKET: MNI US Payrolls Preview: Test For Fading Rate Cut Expectations
- MNI FED: Harker Warns Against Acting With Haste
- MNI US DATA: Challenger Net Hiring Almost In Balance In 2024
US
MNI FED: Harker Warns Against Acting With Haste
Philly Fed's Harker echoes a similar tone to that from yesterday’s FOMC minutes, seeing rates moving lower but not in rush. The remarks don't have a notable impact on Fed pricing, with a next 25bp cut still seen in June. His role would see him vote on the FOMC in 2026 but he's set to retire this June.
- "I still see us on a downward policy rate path. Looking at everything before me now, I am not about to walk off this path or turn around. But the exact speed I continue to go along this path will be fully dependent upon the incoming data"
- “"It’s just taking a little longer to get back to target than initially anticipated. And our overall goal is to make sure that we help ease out the bumps and keep ourselves traveling in as smooth a lane as possible. That means remaining data dependent, keeping our eyes open, and not acting with haste."
- The growing severity of bird flu is a new upside risk to inflation: "Here at home, we await potential policy changes which may have an economic impact. And dare I mention the impact that, say, a bird flu outbreak, on top of everything else, could have on food prices"
- The full remarks from his speech titled "Right Now, It’s Putting One Foot in Front of the Other" can be found here.
MNI US LABOR MARKET: MNI US Payrolls Preview: Test For Fading Rate Cut Expectations
We've just published our preview of Friday's employment report (PDF HERE): Nonfarm payrolls growth is seen at circa 160k in December as some recent distortions from hurricanes and strikes are increasingly in the rear-view mirror, and with a relatively narrow range to analyst estimates. The initial response rate to the establishment payroll survey increased notably back last month but we don’t rule out further large two-month downward revisions.
- The unemployment rate is broadly seen holding at 4.2%, although at an unrounded 4.246% in November it wouldn’t surprise if it rounded to 4.3%. A ‘high’ 4.3% would still be notable, though, for a fresh recent high.
- This release will also see annual seasonal adjustment factor revisions for the household survey. They’re typically modest but we nevertheless watch them for any changes in recent trends.
- These revisions only affect the household survey, i.e. not payrolls figures from the establishment survey, although the latter will have more significant annual revisions in next month’s release.
- The next 25bp cut from the FOMC is only just fully priced for the June meeting whilst the USD index is at recent highs with the real exchange rate particularly elevated on a historical basis. We feel market sensitivity would be greatest in event of a report with broad dovish implications.
NEWS
MNI SECURITY: Austin Touts New UKR Package, Meloni Expects Trump To Remain Engaged
US Defense Secretary Lloyd Austin has announced, at the final meeting of the Ukraine Contact Group at the Ramstein air base in Germany, the US will provide Ukraine with another 'Presidential Drawdown Authority' package, “valued at approximately $500 million,” including air defense munitions and equipment to support Ukraine's F-16 fleet.
MNI FRANCE: Socialist Leader-Discussions w/Gov't On Budget 'Moving Forward'
First secretary of the opposition centre-left Socialist Party (PS) Olivier Faure has told TF1 that talks are advancing with the gov't of PM Francois Bayrou on finalising a state budget for 2025. Following meetings on 8 Jan Faure said “It’s moving forward...We’re seeking paths toward a compromise even if it’s hard to find.” The PS met with gov't officials alongside two other opposition groups, the environmentalist Greens and the left-wing Communist Party. Faure: “There has to be a budget at some point, and that’s what we’re seeking. But we’re looking to do it in the best conditions for the French people.”
MNI ITALY: PM Offers No Sign Of Salvini Moving To Interior Ministry
PM Giorgia Meloni is answering questions at her end-of-year press conference that was delayed from end-2024. The lengthy conference has covered a broad range of issues. Asked about the prospect of a Cabinet reshuffle, Meloni says she does not like to use the term. Specifically asked on Deputy PM and Transport Minister Matteo Salvini, leader of the right-wing populist League, saying in late 2024 that he would ask the PM about a move back to the interior ministry Meloni says "Salvini would be an excellent Interior Minister but [Matteo] Piantedosi is also an excellent Interior Minister".
MNI US TSYS: Rate Sale Falters in Leadup to December Employment Data
- Treasury futures looked to finish Thursday's shortened session mildly higher, off early highs as longs squared ahead of Friday's headline December employment and UofM sentiment data.
- Nonfarm payrolls growth is seen at circa 160k in December as some recent distortions from hurricanes and strikes are increasingly in the rear-view mirror, and with a relatively narrow range to analyst estimates. The unemployment rate is broadly seen holding at 4.2%, although at an unrounded 4.246% in November it wouldn’t surprise if it rounded to 4.3%. A ‘high’ 4.3% would still be notable, though, for a fresh recent high.
- Challenger job cut announcements continued their recent run of Y/Y increases in December, and were at the high end of recent Decembers, but don't show any signs of a sharp increase. Challenger job cuts increased 11% Y/Y to 38.8k in December, rounding out a year that saw Y/Y job cut announcements stabilize/fall a touch in 1H24 before climbing again in 2H24.
OVERNIGHT DATA
MNI US DATA: Challenger Net Hiring Almost In Balance In 2024
Challenger job cut announcements continued their recent run of Y/Y increases in December, and were at the high end of recent Decembers, but don't show any signs of a sharp increase. Challenger job cuts increased 11% Y/Y to 38.8k in December, rounding out a year that saw Y/Y job cut announcements stabilize/fall a touch in 1H24 before climbing again in 2H24.
- Hiring announcements meanwhile jumped to 8k but Y/Y figures can be misleading outside of the key Sep/Oct window for the series.
- The annual figures give a better indication of broad trend for both. Job cuts increased 5.5% in 2024 as they more modestly extended the almost doubling in cut announcements seen in 2023. The 761k cut announcements in 2024 was the highest since the pandemic and before that 2009.
- Hiring announcements meanwhile broadly stabilized in 2024 after prior declines, inching 1% lower to 770k for its lowest since 2015.
- The net of hiring announcements and job cuts narrowed to just 8.6k in 2024 having shifted broadly to balance after 1.4m in 2021, 1.1m in 2022 and 58k in 2023. It was last negative in 2011.
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
S&P E-Mini Future down 14.5 points (-0.24%) at 5944.75
US 10-Yr yield is down 0.2 bps at 4.6872%
US Mar 10-Yr futures are up 2.5/32 at 108-7
EURUSD down 0.0017 (-0.16%) at 1.0301
USDJPY down 0.27 (-0.17%) at 158.08
WTI Crude Oil (front-month) up $0.8 (1.09%) at $74.12
Gold is up $8.41 (0.32%) at $2670.42
European bourses closing levels:
EuroStoxx 50 up 21.52 points (0.43%) at 5017.91
FTSE 100 up 68.66 points (0.83%) at 8319.69
German DAX down 12.84 points (-0.06%) at 20317.1
French CAC 40 up 37.86 points (0.51%) at 7490.28
US TREASURY FUTURES CLOSE
3M10Y +0.17, 37.389 (L: 32.909 / H: 38.056)
2Y10Y +1.688, 41.911 (L: 38.057 / H: 42.324)
2Y30Y +1.878, 66.276 (L: 61.546 / H: 66.382)
5Y30Y +0.498, 47.274 (L: 44.672 / H: 47.522)
Current futures levels:
Mar 2-Yr futures up 1.625/32 at 102-25 (L: 102-23.5 / H: 102-25.75)
Mar 5-Yr futures up 2/32 at 106-2.5 (L: 106-01 / H: 106-06)
Mar 10-Yr futures up 2.5/32 at 108-7 (L: 108-05 / H: 108-14)
Mar 30-Yr futures up 5/32 at 112-4 (L: 111-30 / H: 112-22)
Mar Ultra futures up 9/32 at 116-10 (L: 116-00 / H: 117-04)
MNI US 10YR FUTURE TECHS: (H5) Bearish Trend Sequence
- RES 4: 111-20+ High 6 and the bull trigger
- RES 3: 110-25 High Dec 12
- RES 2: 110-01+ 50-day EMA
- RES 1: 109-01+/06 20-day EMA / High Dec 31
- PRICE: 108-08 @ 11:18 GMT Jan 09
- SUP 1: 107-28+ Low Jan 8
- SUP 2: 107-21+ Low May 29 ‘24 (cont)
- SUP 3: 107-19+ 1.618 proj of the Oct 1 - 14 - 16 price swing
- SUP 4: 107-04 Low Apr 25 ‘24 and a key support
The trend condition in Treasury futures is unchanged and remains bearish. This week’s fresh cycle low confirms a resumption of the downtrend. Price has traded through the 108-00 handle exposing 107-19+ next, a Fibonacci projection. Note too that moving average studies remain in a bear-mode position highlighting a dominant downtrend. Key short-term resistance is seen at 109-01+, the 20-day EMA.
SOFR FUTURES CLOSE
Mar 25 +0.010 at 95.80
Jun 25 +0.025 at 95.935
Sep 25 +0.035 at 96.015
Dec 25 +0.035 at 96.050
Red Pack (Mar 26-Dec 26) +0.035 to +0.045
Green Pack (Mar 27-Dec 27) +0.025 to +0.030
Blue Pack (Mar 28-Dec 28) +0.020 to +0.020
Gold Pack (Mar 29-Dec 29) +0.015 to +0.020
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M +0.00444 to 4.30208 (-0.01335/ wk)
- 3M -0.00009 to 4.28894 (-0.00475/wk)
- 6M -0.00736 to 4.25060 (+0.00865/wk)
- 12M -0.01731 to 4.19237 (+0.02766/wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.29% (+0.02), volume: $2.313T
- Broad General Collateral Rate (BGCR): 4.27% (+0.01), volume: $818B
- Tri-Party General Collateral Rate (TGCR): 4.27% (+0.01), volume: $798B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $105B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $293B
FED Reverse Repo Operation
RRP usage continues to recede, $168.225B this afternoon from $185.144 Wednesday. Compares to $98.356B on Friday, December 20 - the lowest level since mid-April 2021. The number of counterparties rises to 52 from 48.
MNI PIPELINE: Corporate Bond Issuance Roundup
$4.5B to price on Thursday's shortened session, pushes total for the week to new record high of $130.5B
- Date $MM Issuer (Priced *, Launch #)
- 01/09 $2B *AIIB WNG 5Y +44
- 01/09 $1.5B *NWB 5Y SOFR+48
- 01/09 $500M *DBJ 10Y SOFR+73a
- 01/09 $500M *Isbank PerpNC5.5 9.125%
- 01/09 $Benchmark Hyundai Capital 3Y investor calls
MNI EGBS: Recovery In Bund Futures Capped By Overnight Highs
Overnight highs capped the late-morning recovery in Bund futures today, but RXH5 remains on course for a fifth consecutive downward session. Currently -23 ticks today at 131.49, a bearish technical theme in Bund futures remains in tact. Clearance of today’s low (131.32) would expose 131.28, the November 14 low on a continuation chart.
- 10-year Bund yields have consolidated above 2.500%, over 50bps above levels seen at the start of December.
- Regional headline flow has been relatively light today, with supply once again the main point of interest.
- Both the Spanish and French auctions passed smoothly. Spain sold E6.222bln of nominals (the top half of its E5.5-6.5bln target) while France sold E12.997bln of LT OATs (top of the target range and the largest auction since March).
- Today’s E4bln 10-year PGB syndication saw books close in excess of E25bln. The 10-year PGB/Bund spread has narrowed ~2bps since the syndication priced, now 0.5bps tighter today at 43bps.
- Tomorrow’s regional calendar includes industrial production data from France and Spain, with Italian retail sales also due. Broader macro focus will be on the US labour market report.
MNI FOREX: GBP Weakness Extends, USD Index Steady Ahead of NFP
- The focus for G10 currency markets on Thursday has been the weaker GBP, with early moves prompting GBPUSD to print the lowest level since November 2023 at 1.2239. Despite moves stabilising, Cable remains weaker on the session, consolidating around the 2024 lows at 1.2300 as we approach the APAC crossover. The likes of GBPJPY (-0.75%) and EURGBP (+0.35%) are adjusting in tandem, highlighting the renewed Uk fiscal worries continue to permeate financial markets.
- EURGBP extended its recovery, printing a two-month high above 0.8400. Recall on Wednesday, we had a firm break above 50-day EMA resistance, which intersected at 0.8311. Today’s continued strength undermines the recent bearish theme and suggests scope for a stronger short-term recovery, targeting 0.8448, the Oct 31 high and reversal trigger.
- The USD index has remained steady, and will likely have been impacted by lower volumes due to the US Federal holiday and the close proximity to the US non-farm payrolls report tomorrow.
- As such, EURUSD (-0.17%) has spent the session oscillating around 1.0300, while AUDUSD (-0.32%) price action has remained contained below the 0.6200 mark. The pair did print a fresh cycle low of 0.6172, after we had retail sales slightly below expectations. Market pricing for an RBA cut at the Feb meeting is just over 70%, supported after yesterday's slower core CPI print and retail sales figures today.
- All focus on tomorrow’s US employment data, while Canadian jobs figures will also cross.
FRIDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 10/01/2025 | 0645/0745 | ** |  CH | Unemployment |
| 10/01/2025 | 0700/0800 | *** |  NO | CPI Norway |
| 10/01/2025 | 0700/0800 | ** |  SE | Private Sector Production m/m |
| 10/01/2025 | 0745/0845 | * |  FR | Industrial Production |
| 10/01/2025 | 0745/0845 | ** | FR | Consumer Spending |
| 10/01/2025 | 0800/0900 | ** |  ES | Industrial Production |
| 10/01/2025 | 0900/1000 | * |  IT | Retail Sales |
| 10/01/2025 | 1330/0830 | * |  CA | Building Permits |
| 10/01/2025 | 1330/0830 | *** | CA | Labour Force Survey |
| 10/01/2025 | 1330/0830 | *** |  US | Employment Report |
| 10/01/2025 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 10/01/2025 | 1500/1000 | ** | US | U. Mich. Survey of Consumers |
| 10/01/2025 | 1700/1200 | *** | US | USDA Crop Estimates - WASDE |
| 10/01/2025 | 1700/1200 | ** | US | USDA GrainStock - NASS |
| 10/01/2025 | 1700/1200 | *** | US | USDA Winter Wheat |
| 10/01/2025 | 1900/1400 | ** | US | Treasury Budget |