STIR: Slightly Less Dovish, More Post-FOMC (and NFP) Fedspeak Later
- Fed Funds implied rates are up to 1.5bp higher for meetings out to Mar 2026, hovering close to their highest since the Friday’s NFP and ISM mfg reports had been digested but still holding a strong dovish shift on net.
- Cumulative cuts from 4.33% effective: 22.5bp Sep, 38.5bp Oct, 57.5bp Dec, 69bp Jan and 81bp Mar.
- The SOFR implied terminal yield of 3.055% (SFRH7, +2.5bp) continues its slow rise off Monday’s lowest close since late April, but still broadly prices five cuts from current levels.
- Today sees a particularly thin data docket although there is a continuation of post-FOMC and NFP Fedspeak later on. Bostic and Hammack took a measured tone on Friday, Daly a little more dovish on Monday.
- 1400ET – Gov. Cook (permanent voter) and Collins (’25 voter) in a panel event (no text). We last heard from Cook back in early June when she warned the Fed must be open to all possibilities regarding rates including explicit mention of rate hikes. Collins pushed an “actively patient” approach to monetary policy as remaining appropriate when last speaking in mid-July.
- 1610ET – Daly (non-voter) speaks at Anchorage Economic Summit (text + Q&A). She told Reuters late Monday that she still sees two rate cuts this year as “an appropriate amount of recalibration”. “We of course could do fewer than two if inflation picks up and spills over or if the labor market springs back”. However, “I think the more likely thing is that we might have to do more than two...we also should be prepared in my judgment to do more if the labor market looks to be entering that period of weakness and we still haven’t seen spillovers to inflation”
- Trump yesterday on deliberations over Gov. Kugler’s board position: “I’ll be making that decision before the end of the week. We’ll either decide on one for permanence or the four-month period — the term. You know, there’s a term of about a number of months.”
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US 10YR FUTURE TECHS: (U5) Monitoring Support At The 50-Day EMA
- RES 4: 113-07 76.4% retracement of the Apr 7 - 11 bear leg
- RES 3: 112-23 High May 1 and key resistance
- RES 2: 112-12+/15 High Jul 1 / 61.8% of the Apr 7 - 11 sell-off
- RES 1: 111-28 High Jul 3
- PRICE: 111-06+ @ 11:12 BST Jul 07
- SUP 1: 110-31 50-day EMA
- SUP 2: 110-16 Low Jun 20
- SUP 3: 110-10+ Low Jun 16
- SUP 4: 110-03 76.4% of the May 22 - Jul 1 bull leg
A bull cycle in Treasury futures is intact and - for now - the latest pullback appears corrective. The contract remains above a key support at 110-31, the 50-day EMA, and the Jul 3 low. A clear break of this average would signal scope for a deeper correction and highlight a possible reversal. For bulls, a resumption of gains would open 112-15, the 61.8% retracement of the Apr 7 - 11 steep sell-off. Initial resistance is at 111-28, the Jul 3 high.
EGB OPTIONS: Bund Put Spread seller
RXU5 127.5/125.5ps, sold at 15 in 1.5k.
US-EU: German Gov't Spox: Merz Coordinating w/VdL, Meloni & Macron On Tariffs
Reuters reports comments from a German gov't spox stating that Chancellor Friedrich Merz is coordinating with European Commission President Ursula von der Leyen, Italian PM Giorgia Meloni, and French President Emmanuel Macron with regard to the situation vis-a-vis US tariffs. Adds that "time is money when it comes to tariff negotiations." Germany and France remain on different tracks in terms of response to US tariffs, with Berlin seeking a swift deal even if it is not perfect, while France has sought to avoid perceptions of EU 'weakness' at the risk of no agreement being reached.
- There has been significant uncertainty over the weekend as to the date of when 'reciprocal' tariff rates might kick back in. The initial date of 9 July supposedly remains, but both President Trump and Secretary of the Treasury Scott Bessent have said that 1 August will be the point at which the higher rates "boomerang back", (although denying this is a new deadline).
- In any case, there is little-to-no expectation of a deep trade deal being announced between the two sides, with a thin skeleton deal that includes the 10% baseline US tariff, seen as the best outcome in terms of avoiding friction in the short term.
- Bloomberg report comments from Portuguese Finance Minister Joaquim Miranda Sarmento, who said ahead of the EU economic affairs minsiters' meeting on 8 July, that “It’s possible to have an agreement with very low tariffs,” but added “If the terms of the deal are not favorable for the EU then there is no agreement,”
