BOE: Greene, Bailey, Lombardelli, Taylor on neutral rates
Sep-03 13:56
- Greene: "I think there are indications that we're still restrictive, but I'm not convinced that we're meaningfully restrictive. We've been in a rate cutting cycle for, you know, a year now, so it can't go on forever with us also being restrictive."
Bailey: "I think we're probably a bit more restrictive than Megan thinks we are one of the and just to draw out one point there, the mortgage market is obviously a very important part of that story. And because, of course, we've switched to having a mortgage market which has gone from a variable rate to sort of five to seven year fixed rates, it means that the transmission Mechanism takes longer. So, this sort of question about how restrictive we are, does it just over time. We think we said in the box, we'll probably pass peak restriction. Now, that's not surprising because we've been cutting rates but because of the lag it takes longer to get to that peak point, so I think we're past peak restriction." - Lombardelli: "I would put myself closer to Megan in that I would put myself at the upper end of the sort of range that the bank has set out analytically we sell it somewhere between two to four, I'd be surprised, I would think I'm more likely in the upper half of that."
- Taylor: "I felt, based on my estimate of neutral that we were more restrictive than maybe my colleagues. Then I felt we had more space for an extra cut this year, and I thought the extra cut was justified on insurance grants when I when I saw that constellation of risks building."
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BUNDS: Pushing above Friday's high
Aug-04 13:56
- Bund is lifted in 5k, new intraday high and now a couple of ticks above Friday's high.
- Next immediate area of interest comes at 2.600% = 130.59.
US: Senate Joins House On Recess w/Out Clear Strategy For Avoiding Govt Shutdown
Aug-04 13:47
The Senate has joined the House on recess until Sept. 2, without agreeing on a deal to confirm dozens of pending executive branch nominees, or a broader funding strategy to avert a shutdown on October 1.
- Politico notes that before recessing, the Senate passed its first three spending bills. "In an 87-9 vote, the upper chamber passed a two-bill package that would fund the departments of Veterans Affairs and Agriculture, along with military construction and the Food and Drug Administration. A third bill “to fund Congress itself” passed, 81-15."
- Senate Minority Leader Chuck Schumer (D-NY) and House Minority Leader Hakeem Jeffries (D-NY) wrote a letter to GOP counterparts requesting a “Big Four” meeting this week to discuss "the government funding deadline and the health care crisis you have visited upon the American people".
- Punchbowl notes on the prospect of a shutdown: “The outlook for a government-funding deal is pretty poor right now. A shutdown or CR – or both – is a real possibility heading into the Sept. 30 deadline. Or potentially a hybrid situation where Congress passes some spending bills and then adopts a short-term CR... That would leave Washington lurching along from shutdown threat to shutdown threat throughout 2025-26.”
- According to Polymarket, the implied probability of a government shutdown remains around 40%, with bettors likely considering Democrats unwilling to allow the government to shut down.
Figure 1: Government Shutdown in 2025
Source: Polymarket
EQUITIES: Commerzbank Put Option Trades for more
Aug-04 13:45
Adding to the Commerzbank Option trade:
- CBK (18/06/27) 24p, bought for 4.10 in 14.25k.
This option also traded on the 30th July:
- CBK (18/06/27) 24p, bought for 4.09 and 4.15 in 42k, most of the size for 4.15.
