STIR: Next Fed Cut Seen In Sept With CPI and Powell Response Eyed
Feb-12 11:26
- Fed Funds implied rates hold yesterday’s push higher (seen prior to Powell’s Senate appearance with his comments then consolidating the move) ahead of today’s US CPI report and Powell’s turn in the House.
- Cumulative cuts from 4.33% effective: 1bp Mar, 6.5bp May, 14bp Jun, 19bp Jul, 26bp Sep and 36bp Dec.
- CPI headlines today’s macro docket whilst the second day of Powell’s congressional testimony at 1000ET will be watched for any reaction to the data in the Q&A. He characterized the labor market as “very strong” vs “solid” in recent months, and noted the neutral rate has risen meaningfully since before the pandemic.
- MNI US CPI Preview: https://media.marketnews.com/USCPI_Prev_Feb2025_e3ccd233d6.pdf
- Today’s other Fedspeak sees only Bostic as set to talk on mon pol matters. We watch for any further hawkish shift with Hammack and Logan recently very subtly speculating about a possible rate hike as the Fed’s next move (more on that here).
- 1200ET – Bostic (non-voter) on economic outlook (Q&A only). He said earlier this month that he wants to see the impact of past cuts and may wait “for a while” and doesn’t think there will be inflation clarity by the Fed’s next meeting. He sees nominal neutral at 3-3.5%
- 1705ET – Waller (permanent voter) on stablecoins (text + Q&A)
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LOOK AHEAD: Monday Data Calendar: NY Fed Inflation, Budget Balance, Tsy Bills
Jan-13 11:23
- US Data/Speaker Calendar (prior, estimate)
- 13-Jan 1100 NY Fed 1-Yr Inflation Expectations (2.97%, --)
- 13-Jan 1130 $84B 13W & $72B 26W Bill auctions
- 13-Jan 1400 Federal Budget Balance (-$366.8B, -$73.8B)
EU-BOND SYNDICATION: New 3-year / 3.375% Oct-54 tap: Mandate
Jan-13 11:06
"The EU has mandated Barclays, BNP Paribas, J.P. Morgan, LBBW and NatWest Markets as Joint Lead Managers for its upcoming EUR Fixed Rate RegS Bearer dual tranche transaction comprising a new long 3-year benchmark line due 4th July 2028 and an increase of EU 3.375% benchmark due 5th October 2054 (EU000A3K4EY2). No further group. The transaction will be launched tomorrow, subject to market conditions. "
MNI comments
- The new 3-year maturing 4 July 2028 was one of the three issues highlighted as likely to launch in H1. We pencil in a tranche size of E5-7bln (we have not seen an EU-bond tranche larger than that since March 2022 - but there is a possibility we go a bit higher with the large H1 EU funding plan).
- The 3.375% Oct-54 tap we pencil in between E4-6bln (possibly partly depending upon the size of the new 3-year).
- We look for a combined E9-13bln total transaction size.
US: SOFR FIX - 13/01/25
Jan-13 11:05
SOFR - Bloomberg.
- 1mth 4.30624 0.0037
- 3mth 4.30198 0.01497
- 6mth 4.27941 0.03483
- 12mth 4.24478 0.06645
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