STIR: Doves To Kickstart Fedspeak
Mar-21 10:34
- Fed Funds implied rates consolidate yesterday’s decline, with rates little changed overnight.
- Cumulative cuts from 4.33% effective: 5.5bp May, 20.5bp Jun, 32bp Jul and 69bp Dec.
- There’s no data of note today with focus instead on the first post-FOMC Fedspeak.
- 0830ET – Goolsbee (’25 voter, dove) on CNBC. He said Feb 28 that he was comfortable that the Fed is on a path to 2% inflation whilst being “partly” concerned about slow growth and inflation risks. Before that, on Feb 24, he still supported a wait-and-see approach on Trump policies.
- 0905ET – Williams (perm. voter, dovish leaning) keynote remarks (text + Q&A). He said Feb 11 that mon pol is “modestly” restrictive, a term that has been used by hawks and could be considered less dovish vs his previous commentary in mid-January (“somewhat” restrictive): "Monetary policy is well positioned to achieve maximum employment and price stability. The modestly restrictive stance of policy should support the return to 2% inflation while sustaining solid economic growth and labor market conditions. But it’s important to note that the economic outlook remains highly uncertain, particularly around potential fiscal, trade, immigration, and regulatory policies."
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PORTUGAL T-BILL AUCTION PREVIEW: 11-month BT
Feb-19 10:33
| Type | 11-month BT |
| Maturity | Jan 16, 2026 |
| Amount | E1bln |
| Target | E0.75-1.00bln |
| Previous | E1bln |
| Avg yield | 2.27% |
| Previous | 2.42% |
| Bid-to-cover | 2.22x |
| Previous | 2.67x |
| Previous date | Jan 15, 2025 |
GERMAN AUCTION RESULTS: 2.50% Feb-35 Bund
Feb-19 10:32
| 2.50% Feb-35 Bund | Previous | |
| ISIN | DE000BU2Z049 | |
| Total sold | E4.5bln | E4.5bln |
| Allotted | E3.47bln | E3.439bln |
| Avg yield | 2.52% | 2.54% |
| Bid-to-offer | 2.13x | 2.17x |
| Bid-to-cover | 2.76x | 2.84x |
| Average Price | 99.78 | 99.67 |
| Low acc. Price | 99.77 | 99.67 |
| Pre-auction mid | 99.745 | 99.635 |
| Previous date | 29-Jan-25 |
GILTS: Holding Lower After CPI, Next Support In Futures Nears
Feb-19 10:32
Gilt futures just above session lows, with a downtick in wider core global FI and this morning’s mixed domestic CPI data providing much of the weight.
- Futures have breached initial support, with bears now looking to test the 29 Jan low (91.96), which protects more meaningful support at the 24 Jan low (91.52). The short-term bull cycle remains intact above the latter.
- Yields 3-5bp higher across the curve, 10s lead the move.
- Demand at the 4.375% Mar-28 gilt auction was a little soft, with the lowest accepted price below pre-auction mids and the cover ratio edging lower vs. the previous auction. There was no tangible market reaction
- Elsewhere, the DMO announced the launch of a new index-linked gilt maturing on 22 September 2049. The transaction is set to take place in the week commencing 10 March 2025, subject to demand and market conditions.
- BoE-dated OIS shows 50.5bp of cuts through December vs. 53.5bp at yesterday’s close.
- Further forwards, the strip shows 0.5bp of cuts for next month, 20bp of easing through May and 26bp of cuts through June.
- A reminder that we have suggested that today’s inflation data is unlikely to move the needle when it comes to specific MPC member votes in March and continue to look for the next rate cut to come in May.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Mar-25 | 4.450 | -0.4 |
May-25 | 4.252 | -20.3 |
Jun-25 | 4.193 | -26.1 |
Aug-25 | 4.055 | -39.9 |
Sep-25 | 4.027 | -42.7 |
Nov-25 | 3.963 | -49.1 |
Dec-25 | 3.950 | -50.4 |
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