FOREX: Dollar Index Holds Narrow Range Following US Data

Monday's Europe rates/bond options flow included:

• DUK5 107.40 calls paper paid 5.5 on 5K
• DUK5 107.40/107.70 call spread paper paid 3.5-4.0 on 17.5K
• OEM5 119 calls paper paid 39-39.5 on 5K
• RXK5 125.00 puts paper paid 7.5 on 5K
• SFIK5 96.00 calls paper paid 1.5 on 8K

Voters in Florida will go to the ballot box tomorrow to vote in special elections to fill the vacant House seats of former Republican Rep Matt Gaetz and National Security Advisor Mike Waltz. Voters in Wisconsin will also vote in a state Supreme Court race that has morphed into a “real-time referendum on the second Trump administration,” per USA Today. Elon Musk has spent millions in the Wisconsin race in an effort to get conservative candidate Brad Schimel onto the court in an effort to flip its control away from liberal-leaning justices.

• While the GOP is expected to retain both Florida seats, the race for Waltz’s former seat is tighter than anticipated, with Democrat Josh Weil dramatically outraising Republican Randy Fine on the back of a strong campaign.
• Punchbowl notes: “Republicans complain Fine is a bad candidate who didn’t raise enough money. That may be true. But anything less than a 20-point victory should raise alarm bells in GOP leadership ranks and at NRCC HQ.”
• Should the GOP win both Florida races, House Speaker Mike Johnson’s (R-LA) majority will increase to 220-213, giving Republicans a four-vote buffer until special elections are called to replace former Democrat reps Sylvester Turner and Raul Grijalva, who died this month.

Figure 3: Florida 6th Congressional District Special Election, April 1, %Implied Probability of Democrat Josh Weil Victory

Source: Polymarket

Second, manufacturing activity likely pulled back in March. Regional Fed surveys showed a pullback in headline activity indices across 4 of 5 regional Feds (Kansas City was the exception), with NY's Empire standing out with a drop to a 2+ year low.

• The 5 regional Fed survey average of -6.0 was a 6-month low and down more than 9 points vs February.
• That's consistent with a headline ISM Manufacturing reading in the 47-49 area, vs 50.3 in February (as are the combined Empire-Philly surveys' ISM-equivalent underlying measures, which were 48.7 in NY and 50.5 in Philly).
• Current consensus for Tuesday's ISM headline release is 49.5.
• Note the S&P Global Manufacturing PMI also pulled back to sub-50.0 in March in the flash reading (49.8, down 2.9 points from Feb for a 3-month low); MNI Chicago PMI remained contractionary in March at 47.6.