FED: Powell: Moving Away From Dual Mandate Goals Probably For "Balance Of Year"
Apr-16 18:03
Powell says "I do think we'll be moving away from" the dual mandate goals "probably for the balance of this year. Or at least not making any progress, and then we'll resume that progress as we can."
- He repeats that "the tariffs are larger than than forecasters had expected, certainly larger than we expected, even in our upside case."
- Powell asked on whether the Fed would intervene if the stock market falls sharply, he says "I'm going to say 'no', with an explanation... what I think is going on in markets is markets are processing what's going on. And you know, it's really the policies, particularly the trade policy. And really the question is, where is that going to come in? Where's that going to land? And we don't know that yet, and until we know that, you can't really make informed assessments, that would still be highly uncertain. Once you know what the policies are, it'll still be highly uncertain what the economic effects will be. So markets are struggling with a lot of uncertainty, and that means volatility. But having said that, markets are functioning conditional on being in such a challenging situation, Markets are doing what they're supposed to do. They're they're orderly and they're functioning, just about as you would expect them to function."
- Asked about the rise in Tsy yields, Powell doesn't sound concerned: "I think it's very hard to know [why] In real time. I've had a lot of experience with significant moves, for example, in the bond market, where there's a narrative that people land on, and then two months later, you look back and go, that was completely wrong. So I think it's very premature to say exactly what's going on. Clearly, there's some delevering going on among hedge funds in levered trades and things like that. It's also, again, it's the markets processing historically unique developments with great uncertainty and I think you'll see you'll probably see continued volatility, but I wouldn't I don't I wouldn't try to be definitive about exactly what's causing that - I would just say, markets are orderly and they're functioning kind of as you would expect them to in this time of high uncertainty."
- Powell asked about March's decision to taper balance sheet runoff, says "we're not particularly close to the point where we would stop" QT.
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EURUSD TECHS: Bullish Theme Intact
Mar-17 18:00
- RES 4: 1.1083 High Oct 2 2024
- RES 3: 1.1040 High Oct 4 2024
- RES 2: 1.0961 76.4% retracement of the Sep 25 ‘24 - Feb 3 bear leg
- RES 1: 1.0947 High Mar 11
- PRICE: 1.0920 @ 16:26 GMT Mar 17
- SUP 1: 1.0766/1.0674 Low Mar 6 / 20-day EMA
- SUP 2: 1.0557 50-day EMA and a short-term pivot level
- SUP 3: 1.0471 Low Mar 4
- SUP 4: 1.0360 Low Feb 28 and a key support
Trend conditions in EURUSD remain bullish and the pair is holding on to its recent gains. Moving average studies remain in a bull-mode position, highlighting a dominant uptrend. Bulls have their sights on 1.0961 next, a Fibonacci retracement. A break of this level would strengthen the current uptrend. Initial key support to watch lies at 1.0557, the 50-day EMA. The uptrend is overbought, a pullback would allow this set-up to unwind.
OPTIONS: Multiple Large May Bund Structures Feature
Mar-17 17:52
Monday's Europe rates/bond options flow included:
- RXK5 129/130.5/132/133.5 call condor paper paid 0.335/0.345 on 20K.
- RXK5 127/126 ps, bought for 33.5 in 10k.
- RXK5 130c, bought for 49.5 in ~5.6k.
- RXK5 126.50/125.50ps, bought for 33 in 7.75k.
- ERJ5 97.875/98.00 call spread paper paid 2 on 10k
- ERK5 97.62/97.50ps 1x2, bought for 1 in 15k.
- ERM5 97.62/97.50ps bought for 1.75 in 16.5k.
US: Opinion Of Democratic Party Plummets Amid Unclear Strategy
Mar-17 17:47
The lack of a coherent plan to counter the Trump administration’s aggressive policy moves is weighing heavily on the Democratic party, according to a new CNN survey.
- CNN notes: “Among the American public overall, the Democratic Party’s favorability rating stands at just 29% – a record low in CNN’s polling dating back to 1992 and a drop of 20 points since January 2021”.
- The party’s standing is likely to fall further after Senate Minority Leader Chuck Schumer (D-NY) bucked the majority of his colleagues by voting in favour of a partisan Republican spending bill to avert a government shutdown.
- CNN notes: “The majority’s desire to fight the GOP marks a significant change in the party’s posture from the start of Trump’s first term. A September 2017 poll found a broad 74% majority of Democrats and Democratic leaners saying their party should work with Republicans in an attempt to advance their own priorities, and just 23% advocating for a more combative approach.”
- The survey data suggests Democrat leadership may be more empowered to take a hardline posture when given leverage in Congress, potentially on a standalone debt ceiling bill or at the government funding deadline in September.
Figure 1: Opinion of Democratic Party Among US Adults
Source: Semafor, CNN
