FED: Reminder: SF Fed's Daly To Speak On Economic Outlook At MNI Event Today
A reminder that MNI is hosting SF Fed President Mary Daly for a discussion on the US economic outlook and policy later today (starts 2:30pm ET, 7:30pm London). You can register for the Zoom Webinar at this link.
- For background: we last heard Daly commenting on the monetary policy outlook on June 26th, when she implied that she remains among the FOMC members at the median for the end-2025 Fed funds rate showing 2 cuts, with easing resuming in the fall (calling this her "modal" outlook).
- She said that policy is currently in a "good place", and said that "incoming information on the labor market...does not signal real weakness, it just signals slowing."
- We haven't heard from her since the latest round of reciprocal and sectoral tariffs were announced, nor since the June nonfarm payrolls report.
- Previous comments on the rate outlook: "My modal outlook has been for some time that we would begin to be able to adjust the rates in in the fall and I haven't really changed that view... It does seem like that, of course, if the tariffs are one off, you can look through them... It's both sides of our mandate that have really come into frame since we brought inflation down from the the really high levels to something that's closer to our target. Ultimately, we have to watch both sides and that's what I'm doing, and then the fall looks promising for a rate cut." This implies that she maintains her previously stated view (from both the December and March SEPs) of 50bp of cuts by end-2025 -Jun 24
- On tariff passthrough impacts on inflation: She sees three scenarios for the impact of tariffs: "one, is that it's just delayed. The tariffs are going to have some impact on inflation ... and that will be a more persistent effect. The second opportunity or possibility, is that it's delayed, but it will be a one off. And then the third of course, which I think is increasingly possible, it's not my modal, but it's increasingly possible, is that this just doesn't amount to as much as the models in history would tell us, because businesses find ways to absorb the costs, and they split it down the production chain, and ultimately consumers pay less of that.. my own view is that they will potentially raise inflation. That's my modal outlook, but they should dissipate over the period." -Jun 24
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US 10YR FUTURE TECHS: (U5) Bearish Threat Remains Present
- RES 4: 111-30 76.4% retracement of the May 1 - 22 downleg
- RES 3: 111-19+ 1.0% 10-dma envelope
- RES 2: 111-14+ High Jun 5 & 61.8% of the May 1 - 22 downleg
- RES 1: 110-20 50-day EMA
- PRICE: 110-06+ @ 16:50 BST Jun 10
- SUP 1: 109-26 Low May 29
- SUP 2: 109-12+ Low May 22 and the bear trigger
- SUP 3: 109-09+ Low Apr 11 and key support
- SUP 4: 108-25+ 0.764 proj of the Apr 7 - 11 - May 1 price swing
The recent reversal lower in Treasury futures, undermines the current bullish theme. An extension down would expose support at 109-26, the May 29 low, where a break would open key support and the bear trigger, at 109-12+, the May 22 low. Key short-term resistance has been defined at 111-14+, a Fibonacci retracement and the Jun 5 high. Clearance of this hurdle would be bullish.
OPTIONS: Larger FX Option Pipeline
- EUR/USD: Jun12 $1.1350(E1.9bln), $1.1395-00(E1.3bln), $1.1425-35(E1.4bln), $1.1440-50(E2.6bln), $1.1500(E2.2bln); Jun13 $1.1400-05(E1.7bln), $1.1485-00(E1.9bln); Jun16 $1.1400(E1.2bln)
- USD/JPY: Jun12 Y143.00($1.3bln), Y143.85-00($1.0bln); Jun13 Y144.00($1.2bln); Jun16 Y145.00($4.4bln)
- AUD/USD: Jun12 $0.6475-85(A$1.1bln)
UK: POLITICAL RISK - Spending Review 2025
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MNI's Political Risk team has published an article looking at the political implications of tomorrow's Spending Review, particularly in the context of the Labour government's challenge from the right-wing populist Reform UK in opinion polls.
