STIR: Near-Term Rate Path Back Close To Pre-ADP Levels, FOMC Minutes To Come
Oct-08 16:47
- Fed Funds implied rates are towards their most hawkish of the day, with the Dec implied rate for example back close to levels prior to last week’s soft ADP release.
- Further gains for crude oil futures (WTI 1st +1.3%) and S&P 500 e-minis back at record highs are likely in the driving seat.
- Moves are still relatively modest on the day, with 1.5bp increases for Dec and Jan meetings and 2.5bp higher through Mar-Jun meetings.
- Cumulative cuts from 4.08% effective: 22bp Oct, 42.5bp Dec, 52.5bp Jan, 62.5bp Mar, 69bp Apr and 82.5bp June.
- SOFR futures also see modest losses, sitting 2 ticks lower through H6-H7 contracts.
- The SOFR implied terminal yield of 3.07% is back in the SFRH7 after technically tilting into the Z6 on Monday for the first time since mid-July. It roughly points to 100bp of cuts ahead.
- Fedspeak has indeed been a non-event today although we are still to get the FOMC minutes at 1400ET - see the above posts starting 1121ET for a more detailed take on what to look for. That's barring any spillover to front rates at the upcoming 10Y auction at 1300ET.
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PIPELINE: Corporate Bond Update: $2B Home Depot Launched
Sep-08 16:16
- Date $MM Issuer (Priced *, Launch #)
- 09/08 $2.05B NCL Corp $1.025B each: 5.25NC2, 8NC3
- 09/08 $2B #Home Depot $500M 3Y +30, $500M 5Y +45, $1B 10Y +63
- 09/08 $1.75B #Duke Energy $1B 10Y +95, $750M 30Y +103
- 09/08 $500M #Puget Sound Energy WNG 30Y +88
- 09/08 $500M Millrose Properties 7NC3 65
- 09/08 $500M Antero Midstream 8NC3
- 09/08 $Benchmark Bank of Nova Scotia 3NC2 +75, 3NC2 SOFR, 6NC5 +100a, 6NC5 SOFR
- 09/08 $Benchmark Equitable America Global Funding 2Y +80a, 2Y SOFR, 7Y +115a
- 09/08 $Benchmark Hewlett Packard 2Y +85a, 3Y +95a, 3Y SOFR, 5Y +110a
- 09/08 $Benchmark Elevance 3Y +55, 7Y +80, +10Y +95, 30Y +110
- 09/08 $Benchmark Wells Fargo 4NC3 +90a, 4NC3 FRN, 11NC10 +115a
- 09/08 $Benchmark Korea Development Bank 5Y SOFR+68a
- 09/08 $Benchmark Capital One 6NC5 +92, 11NC10 +115
- 09/08 $Benchmark Ares Strategic Inc +3Y +185, +5Y +210a
- 09/08 $Benchmark Virginia Electric 10 +110a, 30Y +115a
- 09/08 $Benchmark Danske Bank 6NC5 +105a, 6NC5
- 09/08 $Benchmark Uber +5Y +90a, 10Y +110a
- 09/08 $Benchmark Westpac NZ 5Y +65
- 09/08 $Benchmark Denso 5Y inv calls
- 09/08 $Benchmark PIF 10Y +120a
SOFR OPTIONS: BLOCK: Mar'20 SOFR Calls
Sep-08 16:08
- 20,000 SFRH6 97.00 calls, 11.0 vs. 96.65/0.28% at 1158:51ET
FOREX: EURJPY Eyes Key Bull Trigger at 173.97
Sep-08 16:05
- Japanese developments have prompted a more notable 0.4% increase for EURJPY, which earlier in the session traded within 7 pips of key resistance and the bull trigger at 173.97. Clearance of this level would confirm a continuation of the bull cycle and place the cross at the highest level since July 2024, levels reached shortly before the BOJ’s multiple bouts of intervention.
- 174.86 would be the next chart level (a Fibonacci projection), before 175.43, last year’s high.
- Japan PM Ishiba's resignation triggered an immediate leadership race in the LDP, with Thatcherite MP Sanae Takaichi a front-runner among many opinion polls. She's made clear her preference for easy monetary policy and a bigger role for fiscal spending.
- Bank of Japan officials are watching for signs that a stock market correction, combined with fiscal expansion concerns, could accelerate longer-term yield moves and steepen the JGB curve, potentially prompting the Ministry of Finance to cut issuance in Q4, which would mean the BOJ could scale back its own purchases in order to maintain liquidity, MNI understands.
