FED: Bostic Notes Potential Downgrade Ripple But Still Sees Just One Cut
Atlanta Fed’s Bostic (non-voter) said to CNBC early this morning that Friday’s Moody’s downgrade of the US could have a ripple through the economy but he still leans “much more” to just one rate cut this year.
- "*BOSTIC: US DOWNGRADE COULD HAVE A RIPPLE THROUGH THE ECONOMY"
- *BOSTIC: TREASURY MARKETS ARE STILL FUNCTIONING QUITE WELL” - bbg
“*BOSTIC: I'M LEANING MUCH MORE INTO ONE RATE CUT THIS YEAR” - bbg
This is a repeat of his prior view, having reiterating just last week that he sees only one rate cut this year, but we're repeating here following the earlier comment on the US downgrade potential ripple effect.
- “*BOSTIC: HAVE TO WAIT 3-6 MONTHS TO SEE HOW UNCERTAINTY SETTLES
- *BOSTIC: IF TARIFF TRANSITION LONGER, MAY IMPACT CONS. BEHAVIOR
- *BOSTIC: I WORRY A LOT ABOUT THE INFLATION SIDE OF OUR MANDATE
- *FED'S BOSTIC: NOT HEARING THAT LARGE LAYOFFS ARE IMMINENT
- *BOSTIC: AS THINGS GET MORE EXPENSIVE, IT WILL AFFECT INVESTMENT
- *BOSTIC: TARIFFS ON CHINA ARE STILL ECONOMICALLY SIGNIFICANT" - bbg
Recall Friday's remarks (taken from a Bloomberg Odd Lots podcast interview conducted Wed): "Our policy is going to have to anticipate - and to some extent - potentially push against those inflationary forces to the extent that we see them, so that will put a limit on where our current policy stance is". He also said last week that he expects slower growth now but for the US to avoid recession with growth of 0.5-1% this year.
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LOOK AHEAD: Eurozone Timeline of Key Events (Times BST)
| Date | Time | Country | Event |
| 25-Apr | 0745 | FR | Manufacturing Sentiment |
| 29-Apr | 0700 | DE | GFK Consumer Climate |
| 29-Apr | 0800 | ES | HICP (p) / GDP |
| 29-Apr | 0900 | EU | M3 / Consumer Expectations Survey |
| 29-Apr | 0900 | IT | ISTAT Confidence Indices |
| 29-Apr | 1000 | EU | Consumer Confidence, Industrial Sentiment |
| 30-Apr | 0630 | FR | GDP (p) / Consumer Spending |
| 30-Apr | 0700 | DE | Import/Export Prices / Retail Sales |
| 30-Apr | 0745 | FR | HICP (p) / PPI |
| 30-Apr | 0855 | DE | Unemployment |
| 30-Apr | 0900 | DE | GDP (p) / State level CPI |
| 30-Apr | 0900 | IT | GDP (p) |
| 30-Apr | 1000 | EU | GDP preliminary flash est. |
| 30-Apr | 1000 | IT | HICP (p) |
| 30-Apr | 1100 | IT | PPI |
| 30-Apr | 1300 | DE | HICP (p) |
JGBS: Twist-Steepener Holds Going Into W/E, BoJ Gov Ueda Reiterates Caution
JGB futures are stronger, +18 compared to settlement levels, sitting near the middle of the range after a choppy session.
- “Governor Kazuo Ueda reiterates his stance that the central bank will carefully monitor if its economic outlook will be realized, accounting for the effects of US tariff measures, without preconception. The BoJ will raise the benchmark rate if the outlook is realized, Ueda says in response to questions in parliament.” (per BBG)
- “Fukoku Mutual Life Insurance Co. plans to invest in Japan's super-long government bonds this fiscal year after their yields skyrocketed. The company aims to increase domestic government bond holdings by ¥30 billion, with gross purchases potentially reaching ¥300-400 billion.” (per BBG)
- Earlier today, Headline CPI for March showed +3.6% y/y versus +3.7% estimate. Core and Core-Core printed +3.2% y/y and +2.9% y/y, respectively, versus estimates of +3.2% and +2.9% and priors +3.0% and +2.6%.
- Cash US tsys are closed today for the Good Friday holiday.
- Cash JGBs have twist-steepened, pivoting at the 20-year, with yields 2bps lower to 5bps higher.
- Swap rates are 2bps lower to 2bps higher, with a steepening bias.
- On Monday, the local calendar will see Tokyo Condominiums for Sale data.
CHINA: Bond Futures Marginally Up Despite Liquidity Injection.
- China’s bond market reacted very little to a second day of sizeable liquidity injection.
- China’s 10YR bond future is up just +0.03 at 109.04 and remains firmly above all major moving averages. The nearest being the 20-day EMA at 108.61.
- The 2YR bond future is down -0.02 at 102.46; remaining below all major moving averages – the nearest being the 20 day EMA at 102.52.
- The 10YR CGB is marginally lower in yield at 1.64%
