STIR: Back Close To 50bp Of Fed Cuts For 2025
May-22 16:59
- Fed Funds implied rates are back close to levels seen late yesterday, helped by stronger than expected manufacturing and services flash PMIs for May.
- Cumulative cuts from 4.33% effective: 1.5bp Jun, 7.5bp Jul, 20.5bp Sep, 33.5bp Oct and 51bp Dec.
- We had touched 54bp of cuts for 2025 ahead of the PMIs.
- The SOFR implied terminal yield at 3.36% (SFRZ6) is still 4bp lower on the day however, but remains within recent relatively narrow ranges seen since May 15.
- Still to come today, NY Fed’s Williams (permanent voter) keynote remarks at 1400ET. We was more explicit than usual on Monday in offering a rough timetable behind rate cut patience, with broader FOMC communications continuing to suggest that a cut before the end of summer is not in the frame.
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US TSYS/SUPPLY: 2Y WI
Apr-22 16:56
The 2Y WI holds at 3.787%, 19.7bp rich to last month's in-line sale (3.984% high yield vs. 3.985% WI).
UK: ONS Corrects March Claimant Count Rate Data
Apr-22 16:54
- "*UK'S ONS CORRECTS MARCH CLAIMANT COUNT RATE TO 4.6%"
- "*UK'S ONS CITES `MINOR PROCESSING ERROR' FOR DATA CORRECTION" (BBG)
- For reference, previously the March claimant count rate had been reported as 4.7%.
OPTIONS: Large Euro Rate Upside Notable In Return From Holiday
Apr-22 16:52
Tuesday's Europe rates/bond options flow included:
- RXK5 129/130.50cs, sold at 146 in 12.5k
- ERM5 97.8125/97.9375cs, sold at 9.75 in 20k
- ERM5 98.12/98.25 call spread paper paid 1.25 on 5K
- ERU5 98.375/98.50/98.625c fly, bought for 2.5 in 10k
- ERZ5 98.3125/98.0625 put spread, paper sells for 8 in 15k
- ERZ5 98.3125p, sold at 14.5 down to 14 in 8k.
- ERZ5 98.1875/98.4375/98.6875/98.9375c condor, bought for 10 and 10.5 in 25k total
- ERZ5 98.50/62 call spread vs. 98.31/18 put spread paper paid 0.5 for the put spread on 13K
- ERZ5 98.75/99.00/99.25c fly, bought for 2.25 in 8k
- ERH6 98.4375/98.125 1x2 put spread, paper pays 2.25 in 9.5k
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