US: MNI POLITICAL RISK - No Clear Offramp To Avert Govt Shutdown
Sep-26 12:24
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- President Donald Trump will depart the White House just before 10:00 ET 15:00 BST to attend the Ryder Cup. He will return at 16:55 ET 21:55 BST.
- Trump signed an order approving a deal to keep TikTok operational in the US.
- A government shutdown on October 1 now appears inevitable, with Senate Minority Leader Chuck Schumer (D-NY) giving no indication he will fold in a standoff with his Republican counterpart.
- A group of leading economic policymakers signed a brief urging the Supreme Court to allow Fed Governor Lisa Cook to remain in place.
- Defense Secretary Pete Hegseth summoned US military leaders for a meeting in Virginia on Tuesday.
- Trump announced new tariffs on pharmaceuticals, trucks, and kitchen cabinets and bathroom vanities. The pharma tariff could raise the average US tariff rate by up to 3.3 percentage points.
- Trump is weighing a new plan to reduce the US’s reliance on foreign-made semiconductors.
- European Trade Commissioner Maros Sefcovic will send the US "suggestions on how to resolve issues on steel and aluminium".
- Trump said he could bail out US farmers with tariff revenue, acknowledging that his trade war is adversely affecting farmers.
- Senator Chuck Grassley (R-IA) criticised Treasury Secretary Scott Bessent’s plan to stabilise the Argentinian economy.
- President Trump urged Turkish President Recep Tayyip Erdogan to stop buying Russian oil
- Poll of the Day: Trump’s approval rating has fallen slightly this week.
Full Article: US DAILY BRIEF
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US DATA: Mortgage to Swap Rate Spreads Holding Near Post-Tariff Lows
Aug-27 12:09
- MBA composite mortgage applications dipped -0.5% (sa) last week after -1.4% the week prior as they still holds onto most of its refi-driven 11% increase before that.
- New purchase applications increased 2.2%, their largest increase in a month, whilst refi applications fell another -3.5% after -3.1% following the 23% jump before that.
- Levels relative to 2019 averages: composite 58%, new purchases 63% and refis 51%.
- The 30Y conforming rate inched up another 1bp to 6.69% after the 6.67% two weeks prior was the lowest since early April.
- The spread to 10Y swap rates of 291bp saw a second week below the range of 300bp +/-5bp seen mostly since reciprocal tariff announcements in April vs 285bps averaged in Q1.
- Tsy Sec Bessent on Fox Business today said he doesn’t want a wider spread on mortgages vs Treasuries as part of discussions around Fannie Mae and Freddie Mac sales. He’s not sure on the timing of sales, with potential deal news sometime in September or early October.
- That’s similar rhetoric from a couple weeks ago when he said the White House wants to maximize value for the taxpayer and also keep the spread between mortgage rates and treasuries flat or even bring it down.
- To his point, spreads to 10Y Tsy yields (the usual point of focus) have been fairly stable around the 250bp level so far this year (latest 244bp) vs closer to 300bp in 2023. Alternatively, spreads to 30Y Tsy yields have fallen to 181bps most recently having started the year nearer 220bps amidst 30Y yields holding at elevated levels due to Fed independence concerns.
STIR: Repo Reference Rates
Aug-27 12:07
- Secured Overnight Financing Rate (SOFR): 4.38% (+0.01), volume: $2.820T
- Broad General Collateral Rate (BGCR): 4.37% (+0.02), volume: $1.164T
- Tri-Party General Collateral Rate (TCR): 4.37% (+0.02), volume: $1.125T
- (rate, volume levels reflect prior session)
FINLAND AUCTION PREVIEW: ORI Facility Tomorrow
Aug-27 12:06
Finland has announced it will be looking to sell up to a combined E400mln of the following at its ORI Facility tomorrow, August 28:
- the 2.625% Apr-32 RFGB (ISIN: FI4000591862)
- the 0.125% Apr-52 RFGB (ISIN: FI4000480488)
