US: First Senate Vote On Govt Funding Package Fails

• +10,000 TYH6 112-21, DV01 $670,100.
• The 10Y contract trades 112-23 last (+0.0+ vs. 112-25.5 early overnight high

• -25,000 FVH6 109-12.5, sell through 109-12.75 post time bid at 1041:01ET, DV01 $1,099,000.
• The 5Y contract has since rebounded, trades 109-14.5 last.

As for the 8 permanent voting members of the FOMC, we haven't heard from many of them since the December meeting (just 3) but we continue to believe they are the driving force behind signaling further cuts.

• Gov Waller, currently one of the most dovish FOMC members, said on Dec 17 that his 2026 rate dot submission was below the FOMC median (of 3.4%) at "about three", saying "maybe we're 50 to 100 basis points off of neutral. We still got some room" to ease. But "We're not seeing a dramatic decline of labor market going off a cliff...I don't think we have to do anything dramatic. If you have to do something dramatic, it's too late."
• After dissenting in favor of 50bp cuts at each of the last 3 meetings, Gov Miran said on Dec 22 he hasn't decided on whether to push for a 25bp or 50bp cut at the January meeting - he "could see voting for" 25 given that with rates having come down 75bp at the last 3 meetings "the need for me to dissent for 50 becomes less", but "I do think it's important we continue steadily reducing the policy rate". Of course, that could be Miran's last meeting if he is replaced after his term ends at the end of January.
• NY Fed Pres Williams - who recall reignited December rate cut pricing in a speech he gave in November signalling unusually clearly that he saw room for a further cut in the "near term" - said on Dec 19 that “I don’t personally have a sense of urgency to need to act further on monetary policy right now because I think the cuts we’ve made have positioned us really well."
• The latest major data reports have been downplayed as factors driving monetary policy thinking, with Williams noting that the latest soft CPI print as well as the tickup in the unemployment rate in November were distorted by technical factors.
• We haven't heard since the December meeting from Chair Powell, Gov Barr, Gov Bowman, Gov Cook, or Gov Jefferson. Four of those five (Barr being the exception) are more dovish leaning than the Committee as a whole.
• We use the term "permanent" to describe these 8 voters only in terms of their positions: three may not be voting too much longer including Powell (term as Chair ends in May, after which he may resign from the Board), Cook (Supreme Court hearing on Jan 21 over the White House's attempt to fire her), and Gov Miran.