US TSYS/OVERNIGHT REPO: Secured Rates Dip Between Treasury Settlement Days
Secured rates pulled back sharply Wednesday, reversing Tuesday's Treasury supply-led rise. SOFR fell 3bp to 4.33%, with BGCR and TGCR down 2bp each. That's the lowest SOFR rate since Aug 4.
- While Wednesday's softening was expected, pressures are expected to start rebuilding today amid $42B in net bill settlements, followed by $35B in coupon settlements Friday.
REPO REFERENCE RATES (rate, change from prev. day, volume):
* Secured Overnight Financing Rate (SOFR): 4.33%, -0.03%, $2796B
* Broad General Collateral Rate (BGCR): 4.32%, -0.02%, $1177B
* Tri-Party General Collateral Rate (TGCR): 4.32%, -0.02%, $1146B
New York Fed EFFR for prior session (rate, chg from prev day):
* Daily Effective Fed Funds Rate: 4.33%, no change, volume: $116B
* Daily Overnight Bank Funding Rate: 4.33%, no change, volume: $267B
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FRANCE: RN Leader Bardella Indicates Censure Is Likely Via X
Jordan Bardella via X
@J_Bardella
The abolition of two public holidays, which are otherwise as meaningful as Easter Monday and May 8, is a direct attack on our history, our roots, and the France of work. No National Rally (RN) MP will accept this measure, which is provocative.
CANADA: Firm CPI Report Firmly Closes Door To July BOC Cut
If there was any lingering chance remaining of a BOC cut on July 30, it was very likely eliminated on the stronger-than-anticipated price pressures evident in the June CPI report.
- July pricing is now under 8% for a 25bp cut, vs 16% prior to CPI and having fallen from a little over 30% before Friday's strong labour market report. Further BOC easing by year-end is no longer seen, with just 17bp through the December meeting (23bp pre-CPI, 30bp pre-labour data).
- The main takeaway was the slightly-higher-than-expected print for the BOC's preferred inflation metric: with the trim / median average finishing Q2 averaging 3.05%, higher than the 2.95% "forecast" by the BOC in its April projections (its two tariff scenarios were 2.9% or 3.0%). For the quarter, Y/Y trim averaged 3.03% and median 3.07%.
- The underlying details by category and breadth of inflation pressures, which we'll look at separately, won't haave offered the BOC more comfort either.
- In short, June didn't see a major upside miss on the major core metrics, but when combined with the upside "miss" in headline CPI (a below-BOC target 1.8% Y/Y in Q2, but vs 1.5% in April's BOC projections), the apparent acceleration in inflation momentum, and the more solid-than-expected activity/labour market data, there's almost no reason for the BOC to contemplate a cut until at least the following meeting in September.
- The bigger question now is whether there will be further cuts at all.
FRANCE: Bayrou Plans Tax On Small Parcels
"*BAYROU: PLANS TAX ON SMALL PARCELS AMID UNFAIR COMPETITION" Bloomberg
- This was reported as a possibility back in April, where Bloomberg ran headlines suggesting France was considering "small-parcel fees as flows from China surge".
- In today's announcement, Bayrou cites the need to "protect our businesses and our producers from the tide of unfair competition that is assailing them." (via Le Parisien)
Additionally from earlier: "*BAYROU: WILL CREATE NEW TAX FOR HIGHEST EARNERS" Bloomberg
