NORWAY: Conservative Leader Solberg To Step Down

Secured rates ticked up Tuesday as largely expected, primarily on account of Treasury bill settlements ($55B in net cash today). SOFR rose 2bp to 4.36%, with BGCR and TGCR up 1bp apiece. Upside pressure is due to relent today, but could subsequently pick up with $42B in bill settlements on Thursday, followed by $35B in coupon settlements Friday. 

REPO REFERENCE RATES (rate, change from prev. day, volume):
* Secured Overnight Financing Rate (SOFR): 4.36%, 0.02%, $2804B
* Broad General Collateral Rate (BGCR): 4.34%, 0.01%, $1175B
* Tri-Party General Collateral Rate (TGCR): 4.34%, 0.01%, $1144B

New York Fed EFFR for prior session (rate, chg from prev day):
* Daily Effective Fed Funds Rate: 4.33%, no change, volume:  $114B
* Daily Overnight Bank Funding Rate: 4.33%, no change, volume:  $247B
 

• SFRZ5 96.37/96.50cs vs 2QZ5 96.93/97.06cs, bought the front for -0.25 in 2.5k.

This was bought Yesterday for -0.5 in 2.5k.

The dovish move in Fed pricing has extended a little since Tsy Secretary Bessent reiterated his call for a 50bp cut in September, along with stressing that the Fed Funds target range should be 150-175bp lower than it currently is (pointing to the potential for a “series” of rate cuts) and adding to the growing list of candidates to succeed Fed Chair Powell.

• A 25bp cut is now fully discounted come the end of next month’s FOMC, with 63.5bp of cuts priced through year-end.
• That compares to 24bp and 62bp pre-Bessent.
• SFRZ6 is 1.5bp above pre-Bessent levels.
• All of those contracts stick within their respective recent ranges.