US: Trump To Meet Hardliners At White House, Advocate For Year-Long Funding Bill
US President Donald Trump is expected to meet Republican hardliners at the White House today to drum up support for a Continuing Resolution to keep the government funded through September 30. The meeting will be another test of Trump's influence with conservatives after his outreach flipped the votes of a handful of deficit hawks on the House budget blueprint.
- Rep Thomas Massie (R-KY) is likely a 'hard no' but Senator Rick Scott (R-FL) and House Freedom Caucus chair Andy Harris (R-MD) indicated yesterday they would follow leadership guidance on this funding deadline.
- House Speaker Mike Johnson (R-LA) is likely to put the measure on the floor next week to avert a government shutdown on March 15. The bill is expected to be ‘clean’ – meaning funding will continue at Biden administration-era levels.
- Democrat strategy remains unclear. They have leverage but have been historically unwilling to play brinksmanship with a shutdown. House Approps Chair Tom Cole (R-OK) warned yesterday: "I think the 13 Democrats sitting in Trump seats ought to think twice about shutting down Trump's government,"
- A prevailing view is that enough Senate Democrats are likely to join with the GOP to pass a funding package, if Johnson can force it through the House.
- The risk of a government shutdown in 2025 ticked up slightly to nearly 60%, according to Polymarket.
Figure 1: Government Shutdown in 2025, %Implied Probability 
Source: Polymarket
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GILTS: /SWAPS: BofA Tweak Recommendations Ahead Of BoE
Bank of America outline a couple of trades “for those keen to continue the curve steepening theme - perhaps wishing to position for the possibility that the market focuses on the BoE's 2y- and 3y-ahead inflation forecasts next week (which we expect to be lowered).”
- They maintain their 3s5s7s swap fly position (targeting a move to 10bp, stop set at -21bp).
- Elsewhere, they still “think 5-Year real rates need to be higher than priced to combat inflation but now see that being delivered via lower-than-priced inflation.” As a result, they have switched their “bearish real rate bias into a bearish RPI view in the 5-Year area.”
USD: Grassely 'Pleads' For Potash Exemption From Canada Tariffs
Senator Chuck Grassley (R-IA), one of the senior-most members of the Senate Republican conference, has "pleaded" with President Donald Trump to exempt potash from tariffs levied on imports from Canada.
- Grassley said in a message on X: "Biden inflation increase the input cost to farming by 20% incl particularly high prices on fertilizer. So I plead w President Trump to exempt potash from the tariff because family farmers get most of our potash from Canada"
- The message is a sign that Trump's tariff agenda may burn significant political capital with Republicans from agricultural and manufacturing states, likely to bear the brunt of Trump's tariffs and retaliatory actions from targetted countries.
- Former Senate Republican Leader Mitch McConnell (R-KY), a regular adversary of Trump, said on Sunday: “[Tariffs] will drive the cost of everything up. In other words, it will be paid for by American consumers. Why would you want to get in a fight with your allies over this?”
- Axios notes that Senate Majority Leader John Thune (R-SD) said in August that he is against "across-the-board tariffs” but is open to the selective use of tariffs.
- As a reminder, the power of the executive is limited. For durable legislative change, Trump needs to keep Republican lawmakers onside. Any major revolt from agricultural state Republicans will put the entire GOP agenda at risk.
STIR: Effective Fed Funds Rate
- FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $83B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $227B
- Earlier Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.38% (+0.02), volume: $2.533T
- Broad General Collateral Rate (BGCR): 4.34% (+0.00), volume: $918B
- Tri-Party General Collateral Rate (TCR): 4.34% (+0.00), volume: $892B
- (rate, volume levels reflect prior session)
