OUTLOOK: Price Signal Summary - USDJPY Tests Resistance At The 50-Day EMA

Defense Secretary nominee, Pete Hegseth, will become the first of US President-elect Donald Trump’s Cabinet nominations to face Senate scrutiny when he appears before the Senate Armed Services Committee at 09:30 ET 14:30 GMT. LIVESTREAM

• Hegseth will receive a grilling from Democrats over personal misconduct allegations and a lack of managerial experience. Today's hearing will set the tone for upcoming hearings with other embattled nominees - Robert F. Kennedy Jr. (Health Secretary), Kash Patel (FBI Director), and Tulsi Gabbard (Director of National Intelligence) -  who are yet to have hearings scheduled.
• Key panel Democrat Senator Mark Kelly (D-AZ) said: “I'm interested in hearing about how [Hegseth's] experience has prepared him for the job of managing 3 million people and an $850 billion a year budget,”
• According to prepared remarks, Hegseth will argue that US national security will be bolstered by “someone with dust on his boots [at] the helm” of the Department of Defense, pledging to give "new defense companies" a better chance to win contracts, and rapidly deploy emerging technologies.
• If the Armed Services Committee votes to discharge Hegseth’s nomination to the full Senate, he can drop three Republican votes and remain on track for confirmation without requiring Democrat support.
• Data from Polymarket shows Hegseth has weathered an initial wave of opposition, with an implied probability of 85% of Senate confirmation.

Figure 1: Trump’s Defense Secretary, % Implied Probability of Confirmation 

Source: Polymarket

• US Tnotes found some support at the 4.80% Mark Yesterday, and while the street wait on the US CPI Tomorrow, PPI Today, some desks will again be watching the 4.80% level, tested a 4.8026% high and a 107.06 low in TYH5.

Looking further out and in case of upside traction in Yield, most Investors will be eyeing the big 5% level:

• 4.8500% = 106.30.
• 4.9000% = 106.20.
• 4.9500% = 106.10.
• 5.0000% = 106.00+.
• 5.0187% = 105.28+ (2023 high and highest since July 07).

(Chart source: MNI/Bloomberg):

OI data suggests short setting dominated through the SOFR greens on Monday, with only limited pockets of net long cover seen in that area of the strip.

• Net long cover then became more prominent in the blues,
• Hawkish adjustments continued in the wake of Friday’s NFP release, with a bid in energy commodities adding further weight.