EXECUTIVE SUMMARY
- MNI FED: MNI FOMC Minutes Preview – September 2024
- MNI BRIEF: Fed's Bostic - Economy Moving Ever Closer to Target
- MNI FED: Bostic Sees An Economy That’s Close To Target And Moving Closer
- MNI US: Voters View Harris As Candidate Of Change For First Time, NYT/Siena College
- MNI US DATA: NFIB Price Components Consolidate Prior Moderation
US
MNI FED: MNI FOMC Minutes Preview – September 2024:
MNI's preview of the September Minutes (out Wednesday at 1400ET) includes what to watch for upon release; MNI's FOMC Hawk-Dove Spectrum; and key highlights of FOMC participant commentary since the September meeting. PDF here
MNI BRIEF: Fed's Bostic - Economy Moving Ever Closer to Target
U.S. inflation is falling toward 2% and the labor market remains strong, meaning the Federal Reserve is "ever closer" to achieving its dual mandate goals, Atlanta Fed President Raphael Bostic said Tuesday. "The unemployment rate is not spiraling out of control. The last jobs report showed it starting to fall again," he said. "We're seeing an economy that's close to our targets and moving ever closer as we move forward."
MNI FED: Bostic Sees An Economy That’s Close To Target And Moving Closer
Atlanta Fed’s Bostic (’24) didn’t sound overly hawkish in his first post-payrolls comments: "The unemployment rate is not spiraling out of control. The last jobs report showed it starting to fall again," he said. "We're seeing an economy that's close to our targets and moving ever closer as we move forward." After climbing roughly 1 percentage point over the past year, unemployment could continue to tick higher based on historical experiences, he said. "To the extent that that were to happen, that would be a considerable concern."
NEWS
MNI US: Voters View Harris As Candidate Of Change For First Time, NYT/Siena College
A new set of New York Times/Siena College pollshas shown that voters now consider Harris the candidate representing change for the first time. The poll’s topline national number shows Harris leading Trump 49% to 46%, largely in line with the horse-race polling average for the past few weeks.
- The shift in voter perceptions over change is a major boost for Harris, which suggests her campaign has successfully managed Harris' exposure to her status as an incumbent of an unpopular administration.
- The Times notes: “But Mr. Trump has some clear advantages. He is leading among male voters by 11 points; he won them against Mr. Biden by two points in 2020. And 42 percent of respondents said Mr. Trump’s policies had helped them personally, compared with 22 percent who said the same about Mr. Biden’s policies.”
- The Times adds: “More voters said they trusted Mr. Trump than Ms. Harris to manage what continues to be the top area of concern: the economy. (Abortion and immigration were a distant second place.) The economic mood in the nation remains glum — 75 percent of respondents said the economy was in fair or poor condition, the same as last month.”
Figure 1: Voting Intention, Likely Voters
Source: New York Times/Siena College
MNI POLITICAL RISK - Florida Braces For Hurricane Milton
Political campaigning continues today amid the looming landfall of another potentially catastrophic hurricane on the Southeast coast. With analysts projecting tens of billions of dollars of damage from Hurricane Milton, the storm is likely to intensify calls for Congress to return to Washington, D.C. for an emergency session to inject FEMA with fresh funding.
MNI SECURITY: Hezbollah Strikes Defiant Tone Amid Intensifying Conflict In Lebanon
Wires carrying comments from Hezbollah Deputy Chief Naim Qassam, striking a defiant tone despite an expansion of Israel's war in Lebanon. This morning the IDF announced the killing of another high-ranking Hezbollah official, Sohil Hossein Hosseini, in Beirut and deployed a fourth ground division across the border, likely taking the number of IDF troops in Lebanon to over 15,000.
MNI SECURITY: Netayahu: Hezbollah Is Weaker Than It Has Been For Many Years
White House Deputy Press Secretary Emilie Simons told reporters a short time ago that Israel's efforts to destroy Hezbollah infrastructure is "in line with their rights", when asked about the US reaction to comments from Hezbollah deputy leader Naim Qassem today indicating that the group may support a truce with Israel without preconditions on a ceasefire in Gaza.
MNI US TSYS: Curves Twist Steeper Ahead September FOMC Minutes, Inflation Data
- Treasuries are trading mixed after the bell, curves steeper with short end rates outperforming after much better selling since Friday's larger than expected September jobs gain and dip in the unemployment rate. The 2s10s curve is currently +2.810 at 5.639 - compared to just above 20.0 last week after briefly inverting early Monday.
- Post-jobs consolidation has stalled as markets await tomorrow's September FOMC minutes followed by CPI and PPI on Thursday and Friday respectively.
- While the vast majority of participants have since commented that they supported the half-point cut, the meeting decision brought the first dissent from a Fed governor (Bowman) since 2005, and it will be interesting to get a gauge of how many non-voting members also opposed the outsized rate reduction.
- Consensus sees core CPI at 0.2% M/M in September, although there is sizeable skew toward a higher outcome and our survey of unrounded estimates sees an average 0.26% M/M. That’s only slightly softer than the surprisingly solid 0.28% M/M in August, but the drivers should differ.
OVERNIGHT DATA
MNI: US AUG TRADE GAP -$70.4B VS JUL -$78.9B
MNI US DATA: NFIB Price Components Consolidate Prior Moderation
- The NFIB small business optimism index increased by a little less than expected in September, to 91.5 (cons 92.0) after 91.2 in Aug.
- The press release notes this is the 33rd consecutive month below the 50-year average of 98.
- Ahead of upcoming inflation releases, the price components saw little material change.
- The net share of firms that increased prices over the past three months lifted back to 22% (+2pps). It remains at one of its lowest since late 2020/early 2021 but is above the 13% averaged in 2019.
- The net share that plan of increasing prices over the next three months held steady at 25% for a second month. The 24% in July was the lowest since Apr 2023 and before that late 2020 but is still a little higher than the 21% averaged in 2019. It offers only modest further downside bias to median PCE inflation of 3.2% Y/Y.
- Recall that the NFIB hiring report last week showed flat to loosening labor market conditions. See here.
MNI: US REDBOOK: OCT STORE SALES +5.3% V YR AGO MO
MARKETS SNAPSHOT
Key market levels of markets in late NY trade:
DJIA up 143.48 points (0.34%) at 42094
S&P E-Mini Future up 55.75 points (0.97%) at 5800.5
Nasdaq up 252.4 points (1.4%) at 18175.95
US 10-Yr yield is up 0.4 bps at 4.0295%
US Dec 10-Yr futures are up 0.5/32 at 112-16
EURUSD down 0.0003 (-0.03%) at 1.0972
USDJPY up 0.17 (0.11%) at 148.35
WTI Crude Oil (front-month) down $3.29 (-4.27%) at $73.85
Gold is down $25.38 (-0.96%) at $2617.07
European bourses closing levels:
EuroStoxx 50 down 20.71 points (-0.42%) at 4949
FTSE 100 down 113.01 points (-1.36%) at 8190.61
German DAX down 37.63 points (-0.2%) at 19066.47
French CAC 40 down 54.7 points (-0.72%) at 7521.32
US TREASURY FUTURES CLOSE
3M10Y +2.112, -60.943 (L: -66.754 / H: -57.106)
2Y10Y +3.045, 5.874 (L: 3.926 / H: 6.589)
2Y30Y +3.972, 34.731 (L: 32.072 / H: 35.754)
5Y30Y +1.83, 45.611 (L: 44.246 / H: 46.583)
Current futures levels:
Dec 2-Yr futures up 1.75/32 at 103-14.25 (L: 103-12.75 / H: 103-16.375)
Dec 5-Yr futures up 1.5/32 at 108-18 (L: 108-14.5 / H: 108-23.25)
Dec 10-Yr futures up 0.5/32 at 112-16 (L: 112-10 / H: 112-24)
Dec 30-Yr futures down 5/32 at 121-5 (L: 120-24 / H: 121-21)
Dec Ultra futures down 8/32 at 129-2 (L: 128-17 / H: 129-26)
MNI US 10YR FUTURE TECHS: (Z4) Bearish Theme
- RES 4: 115-00+ High Oct 1
- RES 3: 114-07 20-day EMA
- RES 2: 113-26+ 50-day EMA
- RES 1: 113-12 Low Sep 3 and a recent breakout level
- PRICE: 112-17 @ 1413 ET Oct 8
- SUP 1: 112-10 Low Oct 8
- SUP 2: 112-00 Round number support
- SUP 3: 111-14 50.0% retracement of the Apr - Sep bull cycle (cont)
- SUP 4: 111-00 Low Jul 22
Treasuries traded sharply lower Friday and again Monday as the contract extends the current bear cycle. The latest sell-off has resulted in a break of the 50-day EMA and this has been followed by a breach of 113-12, the Sep 3 low. The move undermines the recent bullish theme and instead highlights potential for a continuation lower. Sights are on the 112-00 handle next. 113-12, the Sep 3 low, is the first resistance.
SOFR FUTURES CLOSE
Dec 24 +0.020 at 95.710
Mar 25 +0.040 at 96.10
Jun 25 +0.035 at 96.355
Sep 25 +0.035 at 96.515
Red Pack (Dec 25-Sep 26) +0.015 to +0.030
Green Pack (Dec 26-Sep 27) -0.005 to +0.010
Blue Pack (Dec 27-Sep 28) -0.01 to -0.005
Gold Pack (Dec 28-Sep 29) -0.01 to -0.01
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
SOFR Benchmark Settlements:
- 1M +0.00512 to 4.82354 (-0.02204/wk)
- 3M +0.03927 to 4.67595 (+0.09197/ wk)
- 6M +0.07636 to 4.46820 (+0.18721/wk)
- 12M +0.11187 to 4.15975 (+0.29393/wk)
US TSYS: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.83% (+0.00), volume: $2.350T
- Broad General Collateral Rate (BGCR): 4.82% (+0.00), volume: $811B
- Tri-Party General Collateral Rate (TGCR): 4.82% (+0.00), volume: $773B
- (rate, volume levels reflect prior session)
STIR: FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.83% (+0.00), volume: $86B
- Daily Overnight Bank Funding Rate: 4.83% (+0.00), volume: $222B
FED Reverse Repo Operation
RRP usage inches up to $325.355B this afternoon from $322.948B prior. Compares to $239.386B on Monday September 16 2024 -- the lowest level since early May 2021. Number of counterparties rises to 65 from 54.
PIPELINE
MNI PIPELINE: Corporate Debt Update: $4.7B Royal Bank of Canada 5Pt Launched
- Date $MM Issuer (Priced *, Launch #)
- 10/08 $5B *World Bank 5Y +39
- 10/08 $4.7B #Royal Bank of Canada $750M 3NC2 +55, $650M 3NC2 SOFR+72, $850M 4NC3 +65, $450M 4NC3 SOFR+86, $2B 6NC5 +80
- 10/08 $1.6B Cleveland-Cliffs $800M 5NC2 6.75%, $800M 8.5NC3.5 7.25%
- 10/08 $1.5B *NWB 2Y SOFR+33
- 10/08 $1.5B #Standard Chartered 6NC5 +115
- 10/08 $1.25B #Islamic Development Bank5Y SOFR+50
- 10/08 $1B *KDB (Korea Development Bank) WNG 3Y SOFR+60
- 10/08 $750M *Sharjah 10.5Y +140
- 10/08 $500M #Norinchukin Bank 5Y +123
EGBS
MNI BONDS: EGBs-GILTS CASH CLOSE: Tentative Stabilisation As ECB Cut Nears
European FI stabilized Tuesday after two consecutive weak sessions, with Gilts modestly outperforming Bunds.
- Short-ends/bellies outperformed on regional curves in steepening moves (Germany's lightly twist steepening, the UK's bull steepening), as equities sold off overnight on China economic stimulus disappointment.
- The early rally faded, though no single factor was evident. In data, German industrial production growth surprised to the upside, a development we had flagged was possible yesterday.
- Bundesbank President Nagel said he was “open” to an October cut, with the noted hawk's comment serving to confirm market pricing for next week's decision (still over 90% implied of a 25bp cut).
- Periphery EGBs started on the back foot in line with the initial risk-off cross-asset move, but spreads tightened as equities recovered from session lows.
- Wednesday's docket includes German trade data, and ECB commentary from Villeroy and Elderson.
Closing Yields / 10-Yr Periphery EGB Spreads To Germany
- Germany: The 2-Yr yield is down 1.9bps at 2.228%, 5-Yr is down 2bps at 2.103%, 10-Yr is down 1.3bps at 2.243%, and 30-Yr is up 0.2bps at 2.538%.
- UK: The 2-Yr yield is down 2.9bps at 4.194%, 5-Yr is down 3bps at 4.072%, 10-Yr is down 2.4bps at 4.184%, and 30-Yr is down 1.4bps at 4.716%.
- Italian BTP spread down 1.5bps at 130.1bps / Spanish down 1.7bps at 74.9bps
WEDNESDAY DATA CALENDAR
| Date | ET | Impact | Period | Release | Prior | Consensus | |
| 09/10/2024 | 0700 | ** | 04-Oct | MBA Mortgage Applications w/w | -1.3 | -- | % |
| 09/10/2024 | 1000 | ** | Aug | Wholesale Inventories m/m | 0.2 | 0.2 | % |
| 09/10/2024 | 1000 | ** | Aug | Wholesale Sales m/m | 1.1 | -- | % |
| 09/10/2024 | 1030 | ** | 04-Oct | Crude Oil Stocks ex. SPR w/w | -- | -- | bbl (m) |
| 09/10/2024 | 1030 | ** | 04-Oct | Distillate Stocks w/w change | -- | -- | bbl (m) |
| 09/10/2024 | 1030 | ** | 04-Oct | Gasoline Stocks w/w change | -- | -- | bbl (m) |
| 09/10/2024 | 1300 | ** | Oct | Bid to Cover Ratio | -- | -- |