US NATGAS: Gulf Coast Natgas Fundamentals

Gov Bowman's speech on "Views on the Economy and Monetary Policy" is here - she warns that bigger, faster cuts may be warranted with the possibility that the Fed has fallen behind the curve on weakening labor market conditions. She's definitely one of the 9 rate dots at 3.6% for end-2025, and we would guess she's one of the 5 who are either at 2.6% or 2.9% (3-4 additional cuts) in 2026, though she may have more to say in Q&A.

• "Now that we have seen many months of deteriorating labor market conditions, it is time for the Committee to act decisively and proactively to address decreasing labor market dynamism and emerging signs of fragility. In my view, the recent data, including the estimated payroll employment benchmark revisions, show that we are at serious risk of already being behind the curve in addressing deteriorating labor market conditions. Should these conditions continue, I am concerned that we will need to adjust policy at a faster pace and to a larger degree going forward."
• The last line suggests that while she didn't support a 50bp cut at the September meeting, she could be open to larger front-loaded easing if there is evidence of greater deterioration in labor market conditions.
• She sees the latest Fed statement as signalling additional cuts, which to her is appropriate given weakening labor conditions: "Cutting the policy rate 25 basis points and signaling additional adjustments at upcoming meetings should allow longer-term interest rates to remain materially lower than earlier this year and help to support the economy", though she says policy is "not on a preset course", and while she'll "carefully monitor the incoming data and information" ahead of the October meeting, "we should consider reframing our focus from overweighing the latest data to a proactive forward-looking approach and a forecast that reflects how the economy is likely to evolve going forward."
• In addressing the FOMC's newfound recognition of the shift in the balance of risks, she nods to "concerns that we have not yet perfectly achieved our inflation goal" but says "we should turn our focus toward the side of the mandate that is showing signs of deterioration or fragility even though inflation is above but within range of our target" and that "Economic research is clear that, when conditions exist like those we are currently facing, monetary policy should de-emphasize inflation."
• She says that higher tariffs are creating a negative supply shock that are also "affecting" aggregate demand, conditions that are unlikely to lead to persistent effects on inflation. Addiitonally, productivity is likely to be revised up given the downward rebenchmarking of employment, also potentially dampening inflationary pressures.
• And with monetary policy working with a lag, "optimal policy calls for looking through temporarily elevated inflation readings. Therefore, we should proactively remove some policy restraint on aggregate demand to avoid damage to the labor market and a further weakening in the economy, provided that long-run inflation expectations remain well anchored." 

SPX: 6,704.8 (+0.2%); DJIA: 46,511 (+0.3%/+129pts); NDX: 24,804.4 (+0.2%).

CIBC note that “modified durations will remain basically unchanged across the FTSE Canada Universe Bond Index (-0.004yrs), short (-0.004yrs), mid (-0.003yrs) and long (-0.001yrs) segments on October 1 with no bonds rolling out of the Universe index and SunLife Oct 1/30 (C$716mm) being the only bond moving from Mid to Short that day. Coupon payments totalling approximately C$407mm between September 30th and October 1st will have minimal impact to the duration change in the Universe Index”.