STIR: Majority But Not All Of Trump-Powell Headline Rally Reversed
Jul-16 16:20
- Near-term rates are back close to where they were before the initial CBS headlines, judging by Fed Funds futures, although haven’t fully reversed the move.
- That includes a cumulative 15.5bp of cuts for the Sept FOMC (vs 14.5bp pre-headlines, 13.5bp pre-PPI and 16bp pre yesterday’s CPI) or 46bp for the Dec FOMC.
- Further out the curve, SOFR futures initially fully reversed the move but have since lifted again, not fully accepting the apparent reversal from Trump re Bloomberg headlines that it’s highly unlikely Powell will be fired.
- Of course, Powell’s term as Fed Chair is due to expire May 2026 and Trump is very explicitly quoted as saying he is “ONLY INTERESTED IN 'LOW INTEREST PEOPLE' FOR FED CHAIR" – bbg - not that should be surprising by his continued calls for significantly lower rates including at 1%.
- SFRZ6 sits +0.07 on the day at 96.780, 2 ticks higher than pre-CBS headlines vs post headline highs of 96.815.
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US TSYS/SUPPLY: Preview 20Y Auction Re-Open
Jun-16 16:15
Tsy futures remain mildly higher ahead of the $13B 20Y bond auction re-open (912810UL0) at 1300ET, WI is currently at 4.932%, 11.5bp rich to last month's tail. Today's results will be available shortly after the competitive auctions closes at 1300ET.
- May auction recap: Treasury futures extended lows (TYM5 109-23.5 -15) after the $16B 20Y Bond auction (912810UL0) tailed, drawing a high yield of 5.047% vs 5.035% When-Issued yield at the cutoff; 2.46x bid-to-cover vs. 2.63x prior.
- Peripheral stats: indirect take-up at 69.02% vs. 70.7% prior; direct bidder take-up 14.07% from 12.3% prior; primary dealer take-up of 16.91% vs. 17.0% prior.
SOFR OPTIONS: Latest Call Structures
Jun-16 16:09
- Update, total 20,000 0QZ5 96.75/97.00/97.50/97.75 call condors, 6.0 ref 96.72/0.05%
- Block, 5,000 SFRV5 95.75/95.93/96.50 broken call trees, 2.5 net ref 96.125
OPTIONS: Expiries for Jun17 NY cut 1000ET (Source DTCC)
Jun-16 16:07
- EUR/USD: $1.1625(E1.3bln)
