STIR: Hawkish Fed Cut Priced, Highest Terminal Since June
* Fed Funds implied rates for meetings out to mid-2026 hold their hawkish tilt seen yesterday with...
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EGB OPTIONS: RX Downside Being Rolled Out
RXG6 128 puts paper paid 52 on 8K vs. RXZ5 128.00 puts at 6.5, rolling out the curve.
SOFR: Net Short setting Dominated In Futures On Friday
OI data points to net short setting dominating as the SOFR futures strip twist steepened on Friday.
- SFRU5 seemed to see the only instance of net long setting, while net short setting outweighed any instances of net long cover further out the strip (in net pack terms).
| 07-Nov-25 | 06-Nov-25 | Daily OI Change |
| Daily OI Change In Packs |
SFRU5 | 1,368,954 | 1,363,750 | +5,204 | Whites | +34,537 |
SFRZ5 | 1,463,465 | 1,429,462 | +34,003 | Reds | +20,745 |
SFRH6 | 1,200,012 | 1,204,612 | -4,600 | Greens | +31,944 |
SFRM6 | 1,090,951 | 1,091,021 | -70 | Blues | +7,049 |
SFRU6 | 1,101,732 | 1,100,311 | +1,421 |
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SFRZ6 | 1,202,057 | 1,202,939 | -882 |
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SFRH7 | 841,411 | 834,972 | +6,439 |
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SFRM7 | 813,661 | 799,894 | +13,767 |
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SFRU7 | 765,582 | 748,577 | +17,005 |
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SFRZ7 | 804,505 | 804,277 | +228 |
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SFRH8 | 438,003 | 426,474 | +11,529 |
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SFRM8 | 406,936 | 403,754 | +3,182 |
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SFRU8 | 352,757 | 343,579 | +9,178 |
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SFRZ8 | 331,139 | 332,094 | -955 |
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SFRH9 | 203,432 | 203,438 | -6 |
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SFRM9 | 186,997 | 188,165 | -1,168 |
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FED: Likely Experiencing A Negative Demand Shock - Daly
SF Fed’s Daly has published an essay (link) on the likely negative demand shock hitting the economy and the need for a balanced approach to policy setting. Her remarks support her dovish leaning stance, having last week said she completely supported the October 25bp cut and wants to keep an open mind about cutting again in December (although she doesn’t have a voting role in either 2025 or 2026).
- The bottom line of analyzing wage developments: “We are likely experiencing a negative demand shock. Demand for workers has fallen —it just happened to be met with a nearly coincident decline in the labor supply.”
- “[U]nlike what many projected, trade rebalancing has not led to more broad-based and persistent inflation dynamics.6 Indeed, so far, the effects of the tariffs have largely been confined to goods, with little spillover into services inflation or inflation expectations, which remain relatively well-anchored around our target.”
- Concerning a wide range of productivity growth “We don’t want to work so hard to not be the 1970s that we cut off the possibility of the 1990s, losing jobs and growth in the process. That would be trading one mistake for another.”
- “The FOMC had vigorous debates about whether to react strongly to low unemployment and signs of rising inflation or take signal from emerging hints of a secular shift in productivity growth and the labor market. In the end, they took a balanced approach to policy, and we ended up with the roaring 90s and contained inflation.”
- “Getting policy right will require an open mind and digging for evidence on both sides of the debate. Clarity is there. You just have to look for it, regardless of where it leads.”
- She repeats that monetary policy is “modestly” restrictive.
