STIR: Still ~10% Odds Of 50bp Fed Cut Next Week With PPI Ahead
Sep-10 10:38
- Fed Funds implied rates have cooled a little from yesterday’s push higher, a move that was mostly seen through the session after admittedly very large downward revision estimates for payrolls were within wide ranges for analyst estimates.
- It still sees ~10% odds of a 50bp cut with the FOMC decision next week ahead of today’s PPI report for August at 0830ET after a surprising surge in July. CPI then unusually follows tomorrow.
- Cumulative cuts from 4.33% effective: 27.5bp Sep 17, 46bp Oct, 67.5bp Dec, 79.5bp Jan and 94bp Mar.
- The SOFR implied terminal yield of 2.895% (SFRH7) is just 1bp higher on the day, a little off Monday’s lowest close since Sep 2024 with 2.84% and towards cycle lows.
- Latest on the Cook lawsuit: A federal judge Tuesday night granted a preliminary injunction blocking President Donald Trump from firing Federal Reserve Governor Lisa Cook while her lawsuit challenging her termination is resolved. The FOMC is set to meet again September 16-17. "At this preliminary stage, the Court finds that Cook has made a strong showing that her purported removal was done in violation of the Federal Reserve Act’s 'for cause' provision," Judge Jia Cobb wrote.
- Just recently, the White House has pushed back on the ruling, saying it is not the last say on the matter.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
BONDS: EGBs Underperform Peers
Aug-11 10:36
EGBs lead the pullback from session highs seen over the past couple of hours, with both Tsys & gilts outperforming Bunds on the day.
- This is presumably owing to Europe’s sensitivity to inflation linked to the Russia-Ukraine conflict, as the market takes a more sanguine outlook on the prospect for a breakthrough re: a Russia-Ukraine ceasefire.
- A related uptick from session lows in crude oil weighs on wider core global FI.
SONIA OPTIONS: SFIH6 96.70 Calls Sold
Aug-11 10:35
SFIH6 96.70 calls 3.5K given at 5
US TSY FUTURES: OI Data Points To Low Conviction Trade On Friday
Aug-11 10:32
OI data points to fairly non-committal trade during Friday’s downtick, with a slight bias towards net long cover
| 08-Aug-25 | 07-Aug-25 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 4,572,846 | 4,576,293 | -3,447 | -125,693 |
FV | 7,035,359 | 7,051,471 | -16,112 | -686,029 |
TY | 5,156,048 | 5,139,598 | +16,450 | +1,083,807 |
UXY | 2,465,513 | 2,462,510 | +3,003 | +262,652 |
US | 1,772,004 | 1,775,201 | -3,197 | -447,205 |
WN | 1,997,589 | 1,999,098 | -1,509 | -275,200 |
|
| Total | -4,812 | -187,669 |
