FED: Can’t Wait Forever To Cut Rates - Daly
San Francisco Fed’s Daly (non-voter), speaking on Bloomberg TV, reiterates that she sees two rate cuts this year. She says it’s important to not lower rates pre-emptively but at the same time, the Fed can’t wait forever on rates.
Recall that talking at an MNI event on Jul 10, she thought the Fed should start thinking about cutting interest rates, potentially twice this year, and it's possible that a large tariffs-driven increase in inflation does not materialize. To support a September rate cut, Daly said she's looking for "a continuation of what we've been seeing, which is modest" disinflation. Back to today’s comments:
- “I wouldn’t want to see more weakness in the labor market, I really wouldn’t want to see that. Which is why you can’t wait for ever, thinking that inflation is just around the corner so you have to wait until you know. Clarity in central bank is overrated. We want some clarity, but we can’t wait for clarity” otherwise will be backwards looking and by then it’s too late.
- Other Bloomberg headlines:
- “* FED'S DALY: GOODS PRICE INFLATION DOES SHOW EFFECT OF TARIFFS
- *FED'S DALY: OTHER AREAS OF INFLATION AREN'T GOING BACK UP
- *FED'S DALY: HAVEN'T SEEN EVIDENCE OF TARIFF INFLATION SPILLOVER
- *FED'S DALY: MIGHT GET MORE MUTED TARIFF IMPACT THAN WE THOUGHT
- “*FED'S DALY: WE'RE IN A GOOD PLACE, NEED TO FINISH INFLATION JOB
- *FED'S DALY: WE HAVE SOLID GROWTH, A SOLID LABOR MARKET
- *FED'S DALY: SEE SLOWER CONSUMER SPENDING, NOT FALLING OFF CLIFF
- *FED'S DALY: HOLDING POLICY TOO TIGHT COULD CREATE LABOR PROBLEM” – all bbg
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FED: US TSY 4Y-10M TIPS AUCTION: HIGH YLD 1.650%; ALLOTMENT 93.57%
- US TSY 4Y-10M TIPS AUCTION: HIGH YLD 1.650%; ALLOTMENT 93.57%
- US TSY 4Y-10M TIPS AUCTION: DEALERS TAKE 6.55% OF COMPETITIVES
- US TSY 4Y-10M TIPS AUCTION: DIRECTS TAKE 18.82% OF COMPETITIVES
- US TSY 4Y-10M TIPS AUCTION: INDIRECTS TAKE 74.62% OF COMPETITIVES
- US TSY 4Y-10M TIPS AUCTION: BID/COV 2.53
SECURITY: Trump To Decide On Iran Strategy In NatSec Meeting Underway Shortly
Bloomberg reporting that German Chancellor Friedrich Merz, speaking at the G7 Leaders’ Summit in Canada, said the US will decide today "whether to join Iran conflict,” noting the US decision “depends on whether Iran negotiates.” The comments are the latest in a series of hawkish remarks from Merz that have aligned Berlin firmly with Israel’s operation against Iran.
- Politico reported earlier: "Asked in a TV interview whether Germany is expecting that the U.S. will take part in the Israeli military strikes, Merz said “we have talked about this” and that the decision depends on whether the Iranian regime “is prepared to return” to the negotiating table.”
- The comments support recent reporting from Barak Ravid at Axios that Trump will make “make decisions about U.S. policy towards the war” at a White House Situation Room meeting set to get underway at 13:00 ET 18:00 BST.
- Ravid notes: “The U.S. officials said Trump is seriously considering joining the war and launching a U.S. strike against Iran's nuclear facilities, especially its underground uranium enrichment facility in Fordow.”
- Ravid adds that two Israeli officials said, “Prime Minister Benjamin Netanyahu and the Israeli defense establishment continue to believe Trump is likely to enter the war in the coming days to bomb Iran's underground enrichment facility.”
- Even if Tehran commits to a return to nuclear negotiations, it is difficult to see Israel concluding its operations against Iran’s nuclear programme as they have long viewed nuclear talks with Washington as a delaying tactic.
PIPELINE: Corporate Bond Update: $3B UnitedHealth Launched, Hyundai Updated
- Date $MM Issuer (Priced *, Launch #)
- 06/17 $5B *EIB 7Y SOFR+50
- 06/17 $3B *KFW 2Y SOFR+26
- 06/17 $3B #UnitedHealth $500M 3Y +52, $750M +5Y +70, $1B 10Y +92, $750M 30Y +112
- 06/17 $2B #Enterprise Products $500M 3Y +45, $750M +5Y +65, $750M +10Y +85
- 06/17 $Benchmark Hyundai Capital AM: 2Y +93, 2Y SOFR, 3Y +103, 3Y SOFR, 5Y +112, 5Y SOFR, 7Y +127
- 06/17 $675M Islamic Development Bank Sukuk 5Y SOFR+58a
