EXECUTIVE SUMMARY
- MNI BRIEF: US Hiring Booms In Dec, Jobless Rate Falls To 4.1%
- MNI US: Senate Hearing For Trump's Treasury Sec Nominee Bessent Teed Up For Jan 16
- MNI CANADA: BBG-Canada Could Aim To Go 'Dollar For Dollar' w/US On Tariffs
- MNI US DATA: AHE Growth One Slightly Weaker Area, But Only If You Squint
- MNI US DATA: Surprisingly Sturdy Payrolls Growth, No Offset From Revisions
US
MNI BRIEF: US Hiring Booms In Dec, Jobless Rate Falls To 4.1%
U.S. employers added 256,000 jobs in December and the unemployment rate unexpectedly fell a tenth to 4.1%, dampening market hopes for further interest rate cuts from the Federal Reserve this year. The figure topped the range of Wall Street expectations which centered around 155,000 and the unemployment rate staying put. October and November payrolls were revised down by just 8,000, further bolstering the strong report.
- The U.S. dollar surged and Treasury yields jumped following the data. Employment trended up in health care (46,000), government (33,000) and social assistance (23,000), while retail trade (43,000) reversed losses from a month earlier, the Bureau of Labor Statistics said Friday. Average hourly earnings added 0.3%, down a tenth from November, and was 3.9% higher than a year earlier. The unemployment rate was the lowest since June. The FOMC last month projected the jobless rate to end the year at 4.2% and rise to 4.3% by the end of 2025.
NEWS
MNI US: House GOP Meeting Exposes Tension In Approach To Revenue For Reconciliation
Punchbowl News reports that a House Republican Study Committee lunch this week revealed tensions within the House GOP over how to raise revenue to pay the huge upcoming reconciliation package, with some participants responding negatively to a mistakenly proposed corporate tax rate hike. According to Punchbowl, Budget Committee Chair Jodey Arrington (R-TX), “accidentally” presented a series of slides to the group that proposed raising the 21% corporate tax rate.
MNI US: Senate Hearing For Trump's Treasury Sec Nominee Bessent Teed Up For Jan 16
The Senate Finance Committee is expected to hold a confirmation hearing for President-elect Donald Trump’s Treasury Secretary nominee, Scott Bessent, on January 16. The hearing will be followed by an executive session where lawmakers may discharge Bessent's nomination for full Senate confirmation. Betting markets see few obstacles to Bessent’s path to Trump’s Cabinet, with Polymarket showing an implied probability of 95% that Bessent passes Senate confirmation.
MNI US-RUSSIA: Kremlin 'Welcomes' Prospect Of Trump-Putin Talks
Reuters reporting comments from Kremlin spox Dmitry Peskov. In response to US President-elect Donald Trump's remarks on 9 Jan that "[Putin] wants to meet and we are setting it up," Peskov says that President Vladimir Putin "has repeatedly said that he is open to contacts with Trump," but that there are no details on a possible meeting yet. Says a "mutual desire to talk and solve problems is needed along with political will," and that Russia "welcomes Trump's stated desire to solve problems through talks." Peskov says "it looks like there will be developments on a possible Trump-Putin meeting once Trump takes office on 20 Jan." Peskov: "Russia's negotiating stance on Ukraine is well known."
MNI CANADA: BBG-Canada Could Aim To Go 'Dollar For Dollar' w/US On Tariffs
Bloomberg reports that Canada is "drawing up plans for extensive tariffs against US products if Donald Trump follows through on his threat to put 25% levies on Canadian goods, according to people familiar with the matter." An earlier report from AP suggested that certain US goods including orange juice, lavatories, and some steel products could face retaliatory tariffs in the event of US action. However, the Bloomberg article claims that outgoing PM Justin Trudeau's gov't "is also preparing to go much further if necessary, said the officials, speaking on condition they not be identified. One list being circulated internally includes nearly every product the US exports to Canada, said one government official, with the general aim of going “dollar for dollar” on tariffs."
MNI CANADA: CBC-Foreign Min Joly Will Not Run For LPC Leadership: Source
CBC reports that according to an unnamed source, Foreign Minister Mélanie Joly will not seek the leadership of the centre-left Liberal Party of Canada (LPC). The article claims Joly is set to make an announcement later today. If she confirms her non-participation she will be the second senior cabinet member to do so this week after Finance Minister Dominic LeBlanc claimed he would not run and instead was focused on dealing with the impact of US tariffs.
MNI TURKEY: Foreign Min-Turkey Has No Intention Of Taking Over Any Part Of Syria
Reuters reports comments from Foreign Minister Hakan Fidan's end-of-year press conference. Says that one of the key priorities for Turkey in 2025 will be 'ridding Syria of terrorists'. Fidan "does not believe there will be issues with the US in counter-terrorism in Syria in the coming period, Washington knows Turkey's position". The US and Turkey supported different anti-Assad militias before the erstwhile Syrian president's ouster, creating tension between the NATO allies.
MNI US TSYS: Strong Jobs & Unemployment Rate Dip Dashes Rate Cut Hopes
- Treasuries gapped lower after Friday morning's larger than expected December non-farm and private payroll gains while unemployment dipped slightly.
- The 256k in December leaves a strong recent trend, with 255k in Sep, an average of 128k for those two months (initially 132k) before surprisingly reaccelerating again. Unemployment rate: 4.086% in Dec after very small downward revisions in the prior two months, with 4.23% in Nov (initially 4.246%) and 4.14% in Oct (initially 4.15%).
- The Dec'24 10Y contract traded down to 107-12 low (-27) well through technical support of 107-19.5 (1.618 proj of the Oct 1 - 14 - 16 price swing) next level: 107-04 (Low Apr 25 ‘24 and a key support). Curves bear flattened but finished off lows, 2s10s -3.937 at 38.383 vs. 36.572 low, 5s30s -9.612 at 37.484. 10Y yield taps 4.7860 - highest since May 2022.
- Futures retreated towards post data lows late in the session while projected rate cuts through mid-2025 have retreated since this morning's data, current vs. morning levels* as follows: Jan'25 at -0.7bp (-1.7bp), Mar'25 -6.3bp (-10.1bp), May'25 -10.5bp (-15.9bp), Jun'25 -18.2bp (-25.6bp), Jul'25 -20.2bp (25.5bp).
- Next week brings CPI and PPI inflation measures on Wednesday and Thursday respectively, the scheduled Fed speaker docket rather muted with the Fed Blackout next Friday.
OVERNIGHT DATA
MNI US DATA: Surprisingly Sturdy Payrolls Growth, No Offset From Revisions
Payrolls two-month revisions were also very small, at just -8k, and don’t alter the pattern of a sharp hit from storms and strikes in Oct before a bounce in Nov (43k in Oct before 212k in Nov).
- The 256k in December leaves a strong recent trend, with 255k in Sep, an average of 128k for those two months (initially 132k) before surprisingly reaccelerating again.
- Revisions are even smaller for the private sector at just -1k (slightly less sharp hit in Oct, slightly less large recovery in Nov) and paints a similar picture to overall nonfarm, with 222k in Sep, 96k averaged in Oct-Nov and then ramping up to 223k in Dec.
MNI US DATA: AHE Growth One Slightly Weaker Area, But Only If You Squint
- The AHE data offered the only somewhat softer than expected aspect of the report, and even then only when getting into the details with non-supervisory growth of 0.2% M/M.
- The small miss in the overall AHE Y/Y listed below was a) helped by rounding and b) mainly came from a downward revision to back in October.
- Total AHE:
- M/M (SA): 0.281% in Dec (cons 0.3) from 0.367% in Nov (initial 0.366%)
- Y/Y (SA): 3.931% in Dec (cons 4.0) from 3.973% in Nov
- AHE Non-Supervisory:
- M/M (SA): 0.196% in Dec from 0.295% in Nov (initial 0.295%)
- Y/Y (SA): 3.761% in Dec from 3.875% in Nov
MNI US DATA: U.Mich Inflation Expectations Surge, 5-10Y Highest Since 2008
U.Mich consumer inflation expectations surprisingly jumped in the preliminary January report. Being a preliminary report it can still be revised but it’s nevertheless a notable shift higher with the long-term measure seeing a particularly sharp increase to its highest since 2008. The below includes snippets from the press release.
- 1Y ahead: 3.3% (cons 2.8%) in Jan after 2.8% in Dec.
- "The current reading is the highest since May 2024 and is above the 2.3-3.0% range seen in the two years prior to the pandemic.”
- 5-10Y ahead: 3.3% (cons 3.0) in Jan after 3.0% in Dec.
- “This is only the third time in the last four years that long-run expectations have exhibited such a large one-month change.”
- “For both the short and long run, inflation expectations rose across multiple demographic groups, with particularly strong increases among lower-income consumers and Independents."
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA down 699.55 points (-1.64%) at 41934.29
S&P E-Mini Future down 92 points (-1.54%) at 5866.5
Nasdaq down 313.5 points (-1.6%) at 19163.89
US 10-Yr yield is up 8.6 bps at 4.7757%
US Mar 10-Yr futures are down 27/32 at 107-12
EURUSD down 0.0062 (-0.6%) at 1.0238
USDJPY down 0.3 (-0.19%) at 157.84
WTI Crude Oil (front-month) up $2.65 (3.59%) at $76.57
Gold is up $21.97 (0.82%) at $2689.20
European bourses closing levels:
EuroStoxx 50 down 40.65 points (-0.81%) at 4977.26
FTSE 100 down 71.2 points (-0.86%) at 8248.49
German DAX down 102.31 points (-0.5%) at 20214.79
French CAC 40 down 59.24 points (-0.79%) at 7431.04
US TREASURY FUTURES CLOSE
3M10Y +7.502, 45.041 (L: 34.149 / H: 46.123)
2Y10Y -4.142, 38.178 (L: 36.572 / H: 42.397)
2Y30Y -8.959, 57.317 (L: 55.912 / H: 66.618)
5Y30Y -9.719, 37.377 (L: 36.636 / H: 49.568)
Current futures levels:
Mar 2-Yr futures down 8.5/32 at 102-16.5 (L: 102-16.25 / H: 102-25.75)
Mar 5-Yr futures down 19.75/32 at 105-14.75 (L: 105-14.5 / H: 106-04)
Mar 10-Yr futures down 27/32 at 107-12 (L: 107-11.5 / H: 108-09)
Mar 30-Yr futures down 31/32 at 111-5 (L: 110-28 / H: 112-07)
Mar Ultra futures down 26/32 at 115-16 (L: 114-25 / H: 116-13)
MNI US 10YR FUTURE TECHS: (H5) Fresh Cycle Low
- RES 4: 111-20+ High 6 and the bull trigger
- RES 3: 110-25 High Dec 12
- RES 2: 109-31+ 50-day EMA
- RES 1: 108-31/06 20-day EMA / High Dec 31
- PRICE: 107-17 @ 1400 ET Jan 10
- SUP 1: 107-12 Intraday low
- SUP 2: 107-04 Low Apr 25 ‘24 and a key support
- SUP 3: 107-00 Round number support
- SUP 4: 106-11 2.00 proj of the Oct 1 - 14 - 16 price swing
The trend condition in Treasury futures is unchanged and remains bearish. Today’s strong sell-off has confirmed a resumption of the downtrend. Price has traded through the 108-00 handle exposing 107-04 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 -0.055 at 95.745
Jun 25 -0.105 at 95.830
Sep 25 -0.140 at 95.875
Dec 25 -0.165 at 95.885
Red Pack (Mar 26-Dec 26) -0.195 to -0.185
Green Pack (Mar 27-Dec 27) -0.18 to -0.16
Blue Pack (Mar 28-Dec 28) -0.145 to -0.12
Gold Pack (Mar 29-Dec 29) -0.11 to -0.085
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M +0.00046 to 4.30254 (-0.01289/ wk)
- 3M -0.00193 to 4.28701 (-0.00668/wk)
- 6M -0.00602 to 4.24458 (+0.00263/wk)
- 12M -0.01404 to 4.17833 (+0.01362/wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.30% (+0.01), volume: $2.211T
- Broad General Collateral Rate (BGCR): 4.28% (+0.01), volume: $829B
- Tri-Party General Collateral Rate (TGCR): 4.28% (+0.01), volume: $805B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $104B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $296B
FED Reverse Repo Operation
RRP usage bounces to $178.800B this afternoon from $168.225B on Thursday. Compares to $98.356B on Friday, December 20 - the lowest level since mid-April 2021. The number of counterparties slips back to 48 from 52.
PIPELINE: Corporate issuance summary: Record high of $130.55B total on week as backlog of December issuance rushed to secure funding this week.
- Date $MM Issuer (Priced *, Launch #)
- $4.5B Priced Thursday
- 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%
MNI FOREX: USD Index Consolidates 0.5% Gains Post NFP, JPY Outperforms
- Following the stellar US jobs report, the greenback surged prompting the ICE dollar index to print a fresh cycle high of 109.97. While there was some intra-day volatility following the data release, the DXY looks set to post 0.5% gains on the session and confirm another positive weekly advance of around 0.75%.
- Most G10 currencies have fallen as a result, with the likes of EUR and GBP printing cycle lows against the dollar in the process. EURUSD sank to 1.0215 before partially recovering but once again, it is sterling that stands out, with cable briefly printing below 1.22.
- Weakness for equities have played their part here, and similar weakness for AUDUSD and NZDUSD is notable, extending multi-year lows below 0.62 and 0.56 respectively. CAD moderately outperforms following a similar impressive domestic employment report.
- Standing out has been the Japanese Yen, which has outperformed significantly in the weak equity environment. Overbought conditions and intervention zone risks prompted an entire reversal of the post-data USDJPY rally. Spot reached as high as 158.87 in the direct aftermath but then slipped over 1%, picking up momentum through the Wed/Thu lows to print an intra-day low of 157.23.
- This dynamic has prompted strong losses for the likes of GBPJPY, which extends its weakening trend amid the growing fiscal risks in the UK. The first major target on the downside would be 190.60 for the cross.
- More immune to the equity sentiment, USDCHF continues to print fresh cycle highs above 0.9150, narrowing the gap to 0.9224/44, key medium-term targets for the pair.
- China trade data crosses Monday and the focus for global markets will be centred around UK/US CPI scheduled on Wednesday.
MONDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 13/01/2025 | - | *** |  CN | Trade |
| 13/01/2025 | - | *** | CN | Money Supply |
| 13/01/2025 | - | *** | CN | Social Financing |
| 13/01/2025 | - | *** | CN | New Loans |
| 13/01/2025 | 1600/1100 | ** |  US | NY Fed Survey of Consumer Expectations |
| 13/01/2025 | 1630/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 13/01/2025 | 1630/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 14/01/2025 | 0500/1400 |  JP | Economy Watchers Survey |