ENERGY SECURITY: Top officials Present Trump with Military Options for Venezuela

• Date $MM Issuer (Priced *, Launch #)
• 10/14 $Benchmark Goldman Sachs 5pt 4NC3 +67, 4NC3 SOFR+92, 6NC2 +77, 6NC5 SOFR+108, 11NC10 +92
• 10/14 $600M *KEB Hana Bank $300M 3Y SOFR+60, $300M 5Y +43
• 10/14 $3.2B Terawulf 5NC2 investor calls

There is no sign that the US government shutdown is weighing on President Donald Trump’s approval rating, with Trump’s approval strengthening slightly since the shutdown started on October 1.

• Silver Bulletin notes, “As of today, Trump has a net approval rating of -8.4. Compare that to one week ago (-9.3), two weeks ago (-9.4), and three weeks ago (-7.5) and you’ll notice a remarkable lack of long-term movement. The percentage of Americans who strongly disapprove of Trump is also down from its peak of 44 percent on September 30th to a more normal (for Trump) 42.5 percent.”
• The absence of negative polling for Trump may increase pressure on Senate Democrats, as they are betting that negative fallout from the government shutdown, and broader concerns about the political implications of allowing Obamacare subsidies to expire, will ultimately compel Trump to strike a deal with Congressional Democrats.
• Trump’s approval rating may be bolstered further in the coming days in light of positive news coverage of the US-brokered peace deal in Gaza. 

Figure 1: President Donald Trump Approval Rating

Source: Silver Bulletin

Chair Powell's speech Tuesday, titled "Understanding the Fed’s Balance Sheet", is largely focused as the title suggests on the Fed's balance sheet policy. He gives the clearest sign yet that the balance sheet runoff which started in June 2022 and has reduced the SOMA portfolio by $2.2T is nearing an end. He says: "Our long-stated plan is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions. We may approach that point in coming months, and we are closely monitoring a wide range of indicators to inform this decision."

• This shouldn't be considered a major surprise. We wrote last Thursday after the release of the NY Fed's latest Survey of Market Expectations that consensus was still for reserves levels to fall below $2.9T by early 2026, with balance sheet runoff still expected to conclude in early 2026.
• And the September FOMC minutes showed the SOMA deputy manager noted at the meeting reserves were expected "to be close to the $2.8 trillion range by the end of the first quarter of next year".
• We took that as a fairly clear signal that the Fed is beginning to eye the end of QT by early 2026, with reserve management purchases restarting the balance sheet rebuild later in the year.
• Powell's comments are clear confirmation that this is a decision that will be discussed at the upcoming October meeting, potentially with an announcement coming in December or perhaps January.