POLAND: Polymarket Pricing Shifts But Election Will Go Down To Wire
May-25 23:01
The implied probabilities of victory in Poland's presidential election based on Polymarket data diverged in first-round front-runner Rafał Trzaskowski's (KO) favour again, following his televised debate against Karol Nawrocki (PiS) and a subsequent meeting with third-place finisher Sławomir Mentzen (Confederation). When this was being typed, the platform shows the probability of Trzaskowski's win at 62%.
- Local bookmakers continue to favour Nawrocki. The odds of his victory are quoted at 1.80 against 2.00 for Trzaskowski's win in STS and Superbet, while Fortuna gives 1.75 and 2.00, respectively. For the record, Nawrocki has managed to withstand several PR crises, adopting the strategy of showing no remorse for any controversies.
- A Newsweek piece published before the weekend suggested that unpublished opinion polls commissioned by both candidates showed Nawrocki as a front-runner, but with a razor-thin advantage within the margin of error. Should this remain the case, unpredicatable exogenous factors determining voter turnout could prove decisive.
- There was no definite winner of Friday's debate, with both candidates having their better and worse moments. Trzaskowski's conversation with far-right Confederation's Sławomir Mentzen may have been more impactful, as it stood in sharp contrast with Mentzen's earlier interview with Karol Nawrocki, who quickly agreed to all of Mentzen's demands. Trzaskowski accepted half of Mentzen's eight postulates but showed a decent degree of assertiveness on other matters.
- Trzaskowski may have benefitted from a footage doing the rounds after the interview, showing him grab a beer with Mentzen. The informal meeting was reportedly facilitated by Foreign Minister Radosław Sikorski, who watched the interview in a pub owned by Mentzen, and who then posted a video on his social media documenting the meeting.
- The incident exposed a tension within the far-right Confederation, an umbrella party uniting Mentzen's conservative-liberal New Hope and Krzysztof Bosak's nationalist National Movement. In the course of the second leg of the campaign, Bosak's camp made it clear that they would prefer Nawrocki to win. Mentzen has maintained strategic ambiguity, noting that he would publish a summary of both interviews and clarify his stance on Wednesday.
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US TSYS: Extraordinary Measures And Cash Look Sufficient To Head Off X-Date
Apr-25 20:32
Treasury has about $164B in "extraordinary measures" available as of April 23 to avoid hitting the debt limit, per its regular report out Friday. That's out of a maximum total of $375B (they have used $211B).
- With Treasury cash looking healthy (around $600B), that's a fair amount of dry powder to get through the summer months to wait out the debt limit impasse. Tax receipts have looked strong with tariff revenues also starting to boost cash flows, further reducing the near-term urgency to adjust bond issuance.
- This has also helped push back analyst “x-date” expectations to later in the summer/September. We expect to hear from Treasury about its own x-date assumptions next week.
US TSYS: Treasury Market Trading Stayed Orderly In April: Fed Report
Apr-25 20:25
Liquidity across financial markets including the Treasury market deteriorated after President Trump's April 2 reciprocal tariffs announcement but market functioning was generally orderly, according to the Federal Reserve's semiannual report on financial stability, released Friday. (PDF link is here)
- Treasury market liquidity has been poor for years and yields were particularly volatile in early April, contributing to a deterioration in market liquidity, the Fed said.
- Nevertheless "trading remained orderly, and markets continued to function without serious disruption," according to the report, which looked at information available as of April 11.
FED: Ex-Gov Warsh: Fed Has Failed To Satisfy Price Stability Remit
Apr-25 20:22
From our Washington Policy Team - Some fairly sharp words today from ex-Fed Governor Warsh on the central bank (who for what it's worth is seen by betting markets as by far the frontrunner for the next Fed Chair):
- The best way for the Federal Reserve to safeguard its independence is for policymakers to avoid expanding the institution's role over time, including wading into policy areas that are outside its core mission, former Fed Governor Kevin Warsh, a leading contender to replace Jerome Powell as chair next year, said Friday.
- "I strongly believe in the operational independence of monetary policy as a wise political economy decision. And I believe that Fed independence is chiefly up to the Fed," Warsh said in a speech at a Group of Thirty event on the sidelines of the IMF meetings. "Institutional drift has coincided with the Fed’s failure to satisfy an essential part of its statutory remit, price stability. It has also contributed to an explosion of federal spending." His speech made no mention of Trump's tariffs or the appropriate monetary policy to deal with them.
- He said the ideas of data dependence and forward guidance widely adopted by Fed officials are not especially useful and might even be counterproductive.
"We should care little about two numbers to the right of the decimal point in the latest government release. Breathlessly awaiting trailing data from stale national accounts -- subject to significant, subsequent revision -- is evidence of false precision and analytic complacency," he said.
"Near-term forecasting is another distracting Fed preoccupation. Economists are not immune to the frailties of human nature. Once policymakers reveal their economic forecast, they can become prisoners of their own words. Fed leaders would be well-served to skip opportunities to share their latest musings."
