FED: Powell Says FOMC Has Policy in Good Place, Q&A Ends
May-07 19:22
- Q: You mentioned earlier that you were monitoring the shipping data and we have seen in the shipping data the imports from China into the port of Los Angeles have plunged. And that has raised concerns about potential shortages. What tools, if any, does the Fed have to ensure that prices and inflation expectations don't get out of hand if tariffs do cause significant supply chain disruptions?
- A: We don't have the kind of tools that are good at dealing with supply chain problems. That's a job for the administration and for the private sector more than anything. What we can do with our interest rate tool is we can be more or less supportive of demand and that would be a very inefficient way to try to fix supply chain problems. But we don't see the inflation yet.
- Q: Public records of your schedule so far this year show no meetings with President Trump, past presidents Obama, Bush and Clinton med with Fed chairs and you met with trump during his first term. Why haven't you asked for a meeting yet with the president.
- A: I have never asked for a meeting with any president and I never will. I wouldn't do that, there's never a reason for me to ask for a meeting. I think it's always comes the other way, a president wants to meet with you but that hasn't happened.
- Q: When it is time to cut rates, how will you determine how far rates will have to come to try to keep a balance on the inflation mandate as employment weakens?
- A: I think once you have a clear direction, you can make judgment about how fast to move and that kind of thing. So, it's really the harder question is the timing, and when will that become clear. And fortunately as I mentioned, we have our policy in a good place, the economy is in a good place, and it's really appropriate, we think, for us to be patient and wait for things to unfold, as we get more clarity about what we should do.
- Q&A Ends
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TARIFFS: Trump Administration Officials Debating Exporter Tax Credit - Bloomberg
Apr-07 19:13
There’s been a mildly negative but slow to build reaction in equity indices since the below story, potentially because it signals another lack of off-ramp on tariff policy. It also followed shortly after surprisingly weak consumer credit data.
- Bloomberg writes that “Trump administration officials are debating the merits of creating a new exporter tax credit, a move that offers an implicit acknowledgment of the harm that the White House’s tariff policies risk inflicting on US companies.” See the full Bloomberg story here.
- “The rebate, which would be geared toward boosting US manufacturers, would be issued at the end of the year to offset the effects of retaliatory tariffs as American companies seek to sell their goods in foreign markets, according to people familiar with the deliberations.”
- The anonymous sources note that “Neither President Donald Trump nor Treasury Secretary Scott Bessent have been formally briefed on the plan, and the idea has divided the administration’s economic team, they said.”
- There’s been a slow mildly negative reaction in equity indices since the headlines, which followed shortly after surprisingly weak consumer credit data, potentially because it signals a lack of off-ramp on tariff policy.
US TSYS: Late SOFR/Treasury Option Roundup
Apr-07 19:12
SOFR option volumes picked up as the day progressed, took a bearish tone as underlying futures retreated from early highs. While projected rate cuts through mid-2025 have cooled from this morning's highs - they still reflect first full 25bp cut still priced in for June and over a full point by year end. Current levels vs. early morning (*) as follows: May'25 at -11.1bp (-13.1bp), Jun'25 at -33.3bp (-35.3bp), Jul'25 at -55.4bp (-60.6bp), Sep'25 -72.4bp (-80.4bp).
- SOFR Options:
- +10,000 SFRU5 96.12/96.43/97.25 call flys 4.0 vs. 96.44/.08%
- +10,000 0QJ5 97.25/97.75 call spds 2.25 ref 96.835
- -20,000 2QM5 96.75/97.00 call spds 9.0 over 95.50/95.75 put spds vs. 96.78/0.18%
- +5,000 SFRK5 95.68/95.93/96.18 call flys, 10.0 ref 96.07
- +5,000 0QK5 97.50/98.00 call spds, 4.0 ref 96.855
- Block, 10,000 SFRZ5 95.12/95.62 put spds, 1.5 vs. 96.665/0.05%
- Block, 24,000 SFRM5 96.25/96.87 call spds, 13.25 splits
- -7,500 SFRZ6 96.75/97.75 call spds, 38.5-39.0
- -10,000 SFRH7 96.75/97.75 call spds, 38.5-38 ref 96.875
- -7,000 0QU5 97.00/98.00 call spds, 23.5 ref 96.935
- +7,500 0QN5 96.75/97.25/97.75 call flys vs 0QU5 97.25/97.75 call spds, 2.75 Sep over
- -6,000 SFRU5 96.25/96.62 3x2 put spds, 26.5
- 2,500 SFRK5 95.75/95.87/96.00 put flys
- Block 3,000 SFRU5 96.12/96.50 3x2 put spds 27.0 ref 96.52
- 1,500 0QK5 97.50/98.00 call spds vs. 0QM5 98.00 calls
- 12,750 SFRM5 95.62/95.75 put spds ref 96.13
- Block/screen, 20,000 SFRK5 95.68/95.93/96.18 call flys, 9.0-9.5
- 3,000 SFRK5 95.50/95.62/95.75 put flys ref 96.175
- 3,000 SFRM5 96.50/97.00/97.50 call flys ref 96.195
- 2,500 0QK5/0QM5 98.00 call spds, 2.0 ref 97.07
- 2,000 SFRZ5 95.87/96.37 call spds ref 96.885
- 1,500 SFRZ5/SFRH6 99.50 call spds
- over 9,100 0QJ5 97.50/98.00 call spds ref 97.115 to -.105
- Treasury Options:
- 1,500 TYK5 110.5/114 strangles 40 ref 112-00
- 3,000 FVK5 109/111.25 call spds vs 107.5 puts ref 108-31.75
- 5,000 TYK5 112/113/114 call trees ref 112-04
- 9,500 TYK5 112.25 puts, 55-56 ref 112-08.5 to -07.5
- 5,000 TYK 110 puts
- Block: 40,000 TYK5 114 calls vs. 35,000 TYM5 116 call spds vs. 5,998 TYM at 113-01.5
- Block, 1635 WNM5 113/119 put spds 53 vs. 124-19/0.14%^
- -1,000 TYM5 111/112/113 call flys, 9
- +4,000 UXYM5 112/113 put spds, 9
- 3,000 TYM5 109/110/112 broken put flys ref 113-04 to -03.5
- 2,800 TYK5 111 puts, 8 ref 113-15.5
MNI: US FEB CONSUMER CREDIT -$0.8B
Apr-07 19:00
- MNI: US FEB CONSUMER CREDIT -$0.8B
- US FEB REVOLVING CREDIT +$0.1B
- US FEB NONREVOLVING CREDIT -$0.9B
