FED: Bullard, Sumerlin Not New Names In Fed Leadership Talk
Aug-08 19:48
The USD nears the session's best levels on a Wall Street Journal article which reports an additional two names in contention to succeed Fed Chair Powell, in addition to the various candidates previously known (the "Kevins" Hassett and Warsh, and Gov Waller).
- James Bullard is a fairly known quantity among Fed watchers. Recall he was more aligned with President Trump on rates in 2019 when he dissented in favor of a cut (the first dissent since Powell became chair in 2018). Bullard also said that he had had "exploratory discussions" with Trump in 2019 about becoming a Fed governor, but he opted to remain St Louis Fed President, resigning in 2023. Overall he's been primarily known as a relative hawk on monetary policy. (Bullard is also on the MNI Connect Advisory Board).
- Ex-National Economic Council deputy director Marc Sumerlin's not a new name - earlier this year after Trump's election but pre-inauguration he had been mentioned as a possible Powell successor, with Waller having been seen as out of the running due to his support for a 50bp cut in September (BBG on Jan 8: "Trump’s advisers are so far considering the following people to replace Powell: Kevin Hassett, who is currently set to serve as director of the White House National Economic Council, former George W. Bush White House officials Larry Lindsey and Marc Sumerlin, former World Bank President David Malpass, former Fed official Kevin Warsh and Bowman, according to people familiar with the matter. Fed Governor Christopher Waller, who has previously been considered a possibility for chair, may no longer be under serious consideration after he backed a half-point interest-rate cut in September, the people familiar said.").
- Also, Sumerlin apparently declined a nomination to become governor in 2019, per Bloomberg.
- There is this bit of color in the WSJ article as well: "Waller interviewed with Bessent two weeks ago. While some people who have spoken with Bessent say Waller has impressed them, others have been skeptical of his candidacy and regard him as a long shot."
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AUDUSD TECHS: Support Remains Intact
Jul-09 19:30
- RES 4: 0.6700 76.4% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6688 High Nov 7 ‘24
- RES 2: 0.6603 High Nov 11 ‘24
- RES 1: 0.6590 High Jul 01 and the bull trigger
- PRICE: 0.6532 @ 16:48 BST Jul 09
- SUP 1: 0.6486 Low Jul 07
- SUP 2: 0.6474/6373 50-day EMA / Low Jun 23 and a reversal trigger
- SUP 3: 0.6357 Low May 12
- SUP 4: 0.6275 Low Apr 14
The trend set-up in AUDUSD remains bullish and recent weakness is considered corrective. A fresh cycle high earlier this month maintains the bullish price sequence of higher highs and higher lows. Note too that moving average studies remain in a bull-mode position, highlighting a dominant uptrend. Scope is seen for a climb towards 0.6603 next, the Nov 11 2024 high. Initial firm support to watch is 0.6474, the 50-day EMA.
US TSYS: Late SOFR/Treasury Option Roundup
Jul-09 19:24
SOFR & Treasury options took advantage of the rebound in underlying futures to buy puts/put spreads (Dec SOFR put tree looking at year end Fed on hold), unwind calls with a few exceptions. Not a strong reaction to the June FOMC minutes - while projected rate cut pricing gained momentum vs morning (*) levels: Jul'25 at -1.7bp (-1.2bp), Sep'25 at -18.6bp (-17.3bp), Oct'25 at -33.7bp (-31.7bp), Dec'25 at 52bp (-49.3bp).
- SOFR Options:
- Update, +12,000 SFRZ5 95.62/95.75/95.81 broken put trees, 0.5 ref 96.17
- +2,000 SFRU5 96.00/96.25 1x2 call spds 1.0 vs. 95.90/0.05%
- +2,000 SFRU5 96.00/96.25 call spds, 2.75
- -2,000 SFRH6 96.37/96.87 call spds, 15.0 ref 96.40/0.26%
- +2,500 SFRU5 95.62/95.75 put spds, 3.0
- -15,000 0QU5 97.12/98.12 call spds, 5.25 ref 96.745
- +5,000 SFRU5 96.00 calls, 4.75 ref 95.88
- +20,000 SFRU5 96.06/96.12 call spds, 0.75
- +6,000 SFRU5 95.75/96.00/96.25 call trees, 9.0 ref 95.865
- +4,000 SFRZ5 95.87/96.62 call over risk reversals, 1.0 vs. 96.15/0.40%
- +1,000 SFRZ5 96.25 straddles, 38.5
- over +20,000 SFRQ5 95.68/95.75 put spd, 1.25 (more on a 2x3 ratio)
- +2,000 SFRQ5/SFRU5 95.75 put spd, 2.0
- 3,000 SFRU5 95.62/95.75 put spd, 3.0
- Treasury Options:
- Block, 9,000 wk2 TY 111.5 calls, 3
- 2,000 USQ5 110/112 put spds 14 ref 113-18
- 10,000 TYQ5 110.5/111.5 put spds 33 vs. 111-00/0.34%
- -5,000 TYU5 111 calls, 46 vs 110-24/0.44%
- +2,250 TYU5 110/110.5/111/111.5 call condor, 7 vs 110-30/0.05%
- 3,950 TYQ5 111.75/112.25 call spds ref 110-28
- -5,000 wk2 TY 111 put, 15
- +5,000 wk2 TY 111 straddle, 26 vs 110-28.5 to -29/0.20%
US STOCKS: Late Equities Roundup: Moderate Support Post June FOMC Minutes
Jul-09 19:16
- Stocks are drawing some support following the June FOMC minutes release late Wednesday, Treasuries extend highs, curves flatter as markets digested uneven tariff-tied inflation progress. Currently, the DJIA trades up 163.08 points (0.37%) at 44403.01, S&P E-Minid up 28 points (0.45%) at 6300, Nasdaq up 163.8 points (0.8%) at 20582.09.
- Communication Services and Information Technology sectors continued to lead gainers in late trade, interactive media and entertainment shares buoyed the former with Meta Platforms +2.08, Alphabet +1.39%, Match Group +1.11% and Warner Bros Discovery +0.92%.
- Tech sector shares were supported by Enphase +4.37%, Arista Networks +3.55%, Broadcom +2.04%, Palantir Technologies +1.80% and NVIDIA +1.74% (fist company to reach $4T market cap).
- On the flipside, Consumer Staples and Energy sectors underperformed in late trade, The Hershey Co -4.30%, Altria Group -3.65%, Monster Beverage -3.58% and Mondelez Int -1.92% weighed on the Consumer Staples sector while Targa Resources -1.61%, EOG Resources -1.56%, Devon Energy -1.42% and Kinder Morgan -1.33% kept pressure on the Energy sector.
