STIR: Modest Dovish Fed Repricing Following Data
May-15 12:40
Softer-than-expected retail sales and PPI data outweighs in line to slightly lower weekly jobless claims prints, making for a modest dovish reaction in Fed pricing.
- Fed-dated OIS contracts now show 2.5bp of cuts for June, 10.5bp of cuts through July, 24.5bp through September, 37.5bp through October and 52bp through year-end, little changed to 2.5bp more dovish vs. pre-data levels.
- Note that our macro team has flagged potential downside risks to PCE, based on the heavy declines in PPI portfolio management fees although that depends on what analysts had pencilled in. We'd seen unrounded estimates averaging around 0.20% M/M for core PCE in April after Tuesday's CPI.
- Still, markets are generally happy consolidating the bulk of the hawkish recent moves that came as the left tail risks surrounding tariffs was shortened.
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US TSYS: Post Empire MFG, Import/Export Prices React
Apr-15 12:37
- Two-way flow as Treasuries inch off lows then retreat -- holding to narrow overnight range after Empire Mfg comes out less negative than expected, both import & export price index figures lower than expected, prior import prices down revised while prior export prices are up-revised.
- Jun'25 10Y futures currently -2 at 110-22, well above initial technical support at 109-08 (Low Apr 11). Curves mildly steeper, 21s10s +1.019 at 53.492, 5s30s +1.874 at 81.411.
- Cross asset: Bbg US$ index near steady: -.48 at 1229.58, stocks weaker w/ SPX eminis -18.75 at 5422.00.
SONIA: Call spread vs put spread
Apr-15 12:35
SFIQ5 96.30/96.45cs vs 96.00/95.90ps, bought the cs for 2.5 in 6k.
SONIA: Call spread
Apr-15 12:31
SFIZ5 97.00/97.75cs, bought for 7.75 in 10k.
