US NATGAS: Natgas End of Day Summary: Henry Hub Drops After Dec. 23 Rally

US rates have so far today considered greater expectations of a hawkish cut from the FOMC at next month’s meeting, primarily stemming from NY Fed Williams’ (voter, center leaning dove) uncharacteristic steer forwards a “near term” cut on Friday. There's been little impact from equity futures extending Friday's recovery since the cash open. 

• Fed Gov. Waller (voter, dove) in unscheduled remarks on Fox Business earlier today helped that at the margin, reiterating that he sees a cut next month but then expects a more meeting-by-meeting approach in January in what could be “a little trickier” decision as the central bank receives a flood of economic data.
• FF cumulative cuts from 3.88% effective: 18.5bp Dec, 26bp Jan, 35bp Mar, 43.5bp Apr and 60bp Jun.
• SOFR futures range from +0.015 (Z5) to -0.01 (M6/U6), with the terminal implied yield at 3% to hold near lows since the Oct 29 FOMC press conference first drove the idea of a particularly divided FOMC around December cut prospects.
• The Chicago Fed’s early unemployment rate nowcast for November at 4.44% pointed to the same 4.44% as in Thursday’s BLS report for back in September.
• Tomorrow sees more notable data releases including post-shutdown catch-up for September releases of both retail sales and PPI inflation.

RRP usage slips to $1.077B with 7 counterparties this afternoon from $2.503B Friday. Compares to last Tuesday's $0.905B - lowest level since mid-March 2021; this years highest excess liquidity measure: $460.731B on June 30.

US President Donald Trump’s formal designation of Venezuela’s Cartel de los Soles as a foreign terrorist organisation takes effect today, escalating tensions between the US and Venezuela and granting the US government “a whole bunch of new options” to confront narco-terrorist groups, per Bloomberg.

• Reuters reports the US is “poised to launch a new phase of Venezuela-related operations in the coming days,” but Reuters was not able to establish the exact timing or scope of the new operations, nor whether a final decision to act had been taken. Reuters notes that two US officials said "covert operations would likely be the first part of the new action against [Venezuelan President Nicolas] Maduro."
• Semafor reports: “It’s unclear how the volatile Ukraine talks may connect to the escalation against Caracas, a Russian ally and major focus for US Secretary of State Marco Rubio, who is also involved in Kyiv-Moscow peace negotiations. The outcome of the twin crises could shape Rubio’s political future, analysts said.”
• A new CBS News/YouGov survey found that “Across party lines, big majorities say the administration needs to explain what the U.S. intends regarding any action, and that it has not done so clearly yet.”
• According to the survey, “…the idea of potential U.S. military action in Venezuela meets with widespread disapproval. It doesn't get overwhelming backing from Republicans either.”

Figure 1: US Military Action in Venezuela

Source: CBS News/YouGov