STIR: Next Fed Cut In July Ahead Of ADP and ISM Services, Cook Speech Late On
Feb-04 11:33
- Fed Funds implied rates are 0-2bp higher for 2026 meetings, primarily 2H26, as they shift back towards yesterday’s more hawkish levels.
- It’s ahead of the week’s main data releases (ADP employment and ISM services) with the BLS payrolls report delayed. Monday’s strong ISM manufacturing report drew a hawkish reaction.
- Cumulative cuts from 3.64% effective: 2.5bp Mar, 6bp Apr, 17.5bp Jun, 25bp Jul, 36bp Sep, 41.5bp Oct and 47.5bp Dec.
- SOFR futures are 2 ticks lower across 2027 contracts, with the terminal implied yield 3.245% (Z6, +2bp) vs the Jan 22 highest close since Jul at 3.285%.
- Today’s sole scheduled Fedspeak comes from Gov. Cook (voter) in a rare update on mon pol and the economy late on at 1830ET (text + Q&A). Focus around Cook has obviously been on her ongoing Supreme Court case (perhaps the most important case in Fed history according to Powell) and she last spoke on the economic outlook on Nov 3. We estimate she was one of the four dots at the December SEP who penciled in one cut in 2026, the median view on a highly divided FOMC.
- Gov. Miran (voter, dove) has stepped down from his CEA role (previously on unpaid leave) to remain on the Fed’s Board of Governors after the temporary role he filled ended in January. He can remain at the Fed until a successor is confirmed by the Senate.
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EGB OPTIONS: Bund Put Spread
Jan-05 11:32
RXH6 129/127ps, bought for 127 in 2k (ref 127.27).
LOOK AHEAD: Monday Data Calendar: ISM Manufacturing, Tsy Bill Auctions
Jan-05 11:27
- US Data/Speaker Calendar (prior, estimate). All times ET
- 1/5 1000 ISM Mfg (48.2,48.4), Prices Paid (58.5, 58.7)
- 1/5 1130 US Tsy $86B 13W, $77B 26W bill auctions
- Source: Bloomberg Finance L.P. / MNI
US TSY FUTURES: Short Setting Across The Curve On Friday
Jan-05 11:25
OI data points to net short setting across the curve on Friday, with the most pronounced moves coming in TU, TY, UXY & US futures.
- The curve saw over $10mln DV01 of fresh net short exposure added.
| 02-Jan-26 | 31-Dec-26 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 4,589,831 | 4,530,950 | +58,881 | +2,280,913 |
FV | 6,697,936 | 6,696,715 | +1,221 | +53,482 |
TY | 5,498,255 | 5,461,347 | +36,908 | +2,463,029 |
UXY | 2,573,262 | 2,543,105 | +30,157 | +2,716,584 |
US | 1,871,803 | 1,853,697 | +18,106 | +2,504,451 |
WN | 2,095,929 | 2,093,461 | +2,468 | +451,566 |
|
| Total | +147,741 | +10,470,025 |
