US TSYS/OVERNIGHT REPO: SOFR Holds Ahead Of Month-End/Settlement Pressures
Secured rates were unchanged Thursday after successive rises, with SOFR remaining at 4.33%.
- There were probably countervailing forces at play: to the upside by looming month-end pressures, and to the downside by $29B net Treasury paydowns (bills).
- Friday and Monday will see significantly more upside pressure on rates though: month-end dynamics and $46B in Treasury net new cash raised via FRN / TIPS auction settlements (Friday), and a further $94B in nominal coupon settlements Monday.
REPO REFERENCE RATES (rate, change from prev. day, volume):
* Secured Overnight Financing Rate (SOFR): 4.33%, no change, $2652B
* Broad General Collateral Rate (BGCR): 4.32%, no change, $1059B
* Tri-Party General Collateral Rate (TGCR): 4.32%, no change, $1021B
New York Fed EFFR for prior session (rate, chg from prev day):
* Daily Effective Fed Funds Rate: 4.33%, no change, volume: $114B
* Daily Overnight Bank Funding Rate: 4.33%, no change, volume: $302B
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CAD: FX Exchange Traded Options
FX Exchange trade Option, looking for CAD Weakness, covers the next 4th June BoC rate meeting.
- CADUSD (6th June) 73.50c, sold at 0.23 in 1.58k.
- *CADUSD (6th June) 73.00c, sold at 0.11 in 1.1k.
US: Senate Expected To Vote Today On Symbolic Resolution To Block Trump Tariffs
The Senate is expected to vote today on a resolution to block President Donald Trump’s 'reciprocal' tariffs. The resolution, if it makes it to the floor, is largely symbolic as House Speaker Mike Johnson (R-LA) has taken steps to block the mechanism by which lawmakers can force a House vote.
- Earlier this month, four Republican Senators joined Democrats to vote in favour of a comparable messaging resolution to block Trump’s “Liberation Day” tariffs. A similar level of dissent can be expected today, despite efforts from the administration to whip Republicans against the resolution.
- The vote comes after a two-week recess during which many Republican Senators returned to home states that are likely to be on the frontline of tariff fallout, potentially increasing a political imperative to stand more firmly against Trump’s trade measures.
- Dissent could also be pushed higher if Republican senators see today's GDP and inflation prints as signals that Trump’s trade agenda is contributing to a weaker economic outlook.
- Senate Majority Leader John Thune (R-SD), a Republican from an agricultural state who has previously expressed scepticism towards tariffs, said: “I think [Trump’s negative polling] numbers on the economy… may be related in some respects to the policy discussions being held about tariffs... [but] you’ve got to take the long view. And I think his policy decisions are the right ones.”
- USTR Jamieson Greer assured Senate Republicans yesterday that multiple market-soothing trade deals are in the works, although the administration is yet to make any formal announcements.
US TSY FUTURES: BLOCK: Jun'25 5Y Sale
- -5,000 FVM5 109-05.5, post time bid at 0921:00ET, DV01 $205,000. The 5Y contract trades 109-05 last (+2)
