STIR: Dovish Reaction To Cook Resignation Call Pared
Aug-20 13:58
- Fed rates have pared a modest dovish reaction to President Trump building on FHFA’s Pulte calling for Fed Governor Cook to resign, although latest weakness in equities is starting to see dovish momentum return.
- It leaves Fed Funds implied rates back near unchanged on the day, with 21.5bp of cuts for Sept before a cumulative 34.5bp for Oct and 54.5bp for Dec.
- The SOFR implied terminal yield of 3.08% (SFRH7) is 2bps lower on the day having closed the past three sessions between 3.10-3.11%. More broadly, it holds the +/-5bp of 125bp of cuts from current levels range seen since the Aug 1 payrolls report.
- Being a Board of Governors position, this would carry a permanent voting role, and Cook’s term specifically runs until 2038 so it would be a coveted position to be able to fill.
- The Board composition has already changed under the Trump administration, with Bowman switching from Governor to the Vice Chair for Supervision role (and vice versa for Barr). More recently, Kugler surprisingly resigned having missed the July decision ahead of her role expiring in Jan 2026 – Miran has been nominated as a short-term replacement.
- The MNI Jackson Hole/Minutes Preview will be published later this morning ET.
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SOFR: SFRU5 Blocked
Jul-21 13:58
Latest block trade lodged at 09:35:58 NY/14:35:58 London:
- SFRU5 6K lots blocked at 95.835, looks like a seller.
BOE APF SALES RESULTS: Strong long-dated sales op
Jul-21 13:56
- The vast majority of the sales today were of the 32-year 1.75% Jul-57 gilt with just over GBP550mln out of GBP600mln sales made of that gilt.
- Overall the BOE will be pretty happy with this operation.
- There was a decent bid-to-cover and the price achieved on the 1.75% Jul-57 gilt in particular was above the secondary market mid-price as the operation closed (and not far off the high of the day).
- Indeed, the price of that gilt has moved higher following the result and there is likely some wider relief with 10s30s down around 0.2bp since the the results were published.
BOE APF SALES RESULTS: Detailed results
Jul-21 13:51
| Long Gilts | Bids received | BOE sells | WAAP | Prev offers | Prev buys |
| 0.875% Jan-46 | GBP0.0m | GBP0.0m | GBP0.0m | ||
| 4.25% Dec-46 | GBP25.9m | GBP8.0m | 85.860 | GBP22.3m | GBP0.0m |
| 1.50% Jul-47 | GBP0.0m | GBP18.3m | GBP0.0m | ||
| 1.75% Jan-49 | GBP0.0m | GBP0.0m | GBP0.0m | ||
| 4.25% Dec-49 | GBP0.0m | GBP0.0m | GBP0.0m | ||
| 0.625% Oct-50 | GBP0.0m | GBP0.0m | GBP0.0m | ||
| 1.25% Jul-51 | GBP0.0m | GBP0.0m | GBP0.0m | ||
| 3.75% Jul-52 | GBP68.5m | GBP0.0m | GBP0.0m | GBP0.0m | |
| 1.50% Jul-53 Green | GBP0.0m | N/A | N/A | ||
| 1.625% Oct-54 | GBP0.0m | GBP0.0m | GBP0.0m | ||
| 4.25% Dec-55 | GBP264.3m | GBP41.5m | 82.523 | GBP718.3m | GBP443.4m |
| 1.75% Jul-57 | GBP550.4m | GBP550.4m | 45.081 | GBP94.6m | GBP25.0m |
| 4.00% Jan-60 | GBP0.0m | GBP4.1m | GBP0.0m | ||
| 0.50% Oct-61 | GBP0.0m | GBP40.6m | GBP28.1m | ||
| 2.50% Jul-65 | GBP129.1m | GBP0.0m | GBP93.9m | GBP16.6m | |
| 3.50% Jul-68 | GBP0.0m | GBP77.2m | GBP36.8m | ||
| 1.625% Oct-71 | GBP3.9m | GBP0.0m | GBP18.9m | GBP0.0m |
