US: Trump Unlikely To Fire Powell But Has "Substantial Concerns" - Vought
Jul-17 14:48
OMB Director, Russell Vought, told reporters that President Donald Trump “was pretty clear” he isn’t likely to fire Fed Chair Jerome Powell, but reiterated the White House has issues with Powell’s handling of a Fed renovation project in Washington DC, seen as a potential ‘for cause’ to dismiss Powell.
- Vought: “I think the president was pretty clear yesterday that he is unlikely to fire the chairman, but he has substantial concerns with regard to how he has managed the Fed. Not just on interest rate policy but [also] cost overrun [at the Fed D.C. office renovation] we’re trying to get a visit right now…”
- Vought says, referring to the DC office.: “I wanna see it... Get a sense of why it’s overrun… The inconsistencies with the plan that was submitted initially. The statements the chairman made before the Financial Services Committee... It's either misleading Congress or it needs to go back to the planning committee."
- In his White House remarks yesterday, Trump kept the door ajar for Powell's removal due to fraud: “I don't rule out anything, but I think it's highly unlikely unless he has to leave for fraud.”
- The New York Times reports that although Trump and Vought have seized on the Fed renovation as a potential avenue, “firing a Fed chair is a legally knotty endeavour and one that has not been tested in modern U.S. history.”
- On July 10, Vought sent a letter to Powell accusing him of “grossly” mismanaging the Fed. The letter called for a response from Powell within 7 business days (July 18).
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PIPELINE: Corporate Bond Update: $5B EIB, $3B KFW Priced
Jun-17 14:47
- Date $MM Issuer (Priced *, Launch #)
- 06/17 $5B *EIB 7Y SOFR+50
- 06/17 $3B *KFW 2Y SOFR+26
- 06/17 $675M Islamic Development Bank Sukuk 5Y SOFR+58a
- 06/17 $Benchmark Hyundai Capital AM, 2Y +125a, 2Y SOFR, 3Y +135a, 3Y SOFR, 5J +145a, 5Y SOFR, 7Y +160a
- 06/17 $Benchmark UnitedHealth 3Y +80a, +5Y +95a, 10Y +120a, 30Y +140a
- 06/17 $Benchmark Enterprise Products 3Y +70a, +5Y +90a, +10Y +115a
- 06/17 $Benchmark The Bahamas 11Y 8.5%a
SEK: June 12 Low In EURSEK At Risk If Riksbank Rate Path Troughs At 2.00%
Jun-17 14:40
The Riksbank decision is due tomorrow at 0830BST/0930CET. With consensus leaning heavily towards a 25bp rate cut to 2.00%, focus will be on the policy statement guidance and June MPR rate path projection.
- Developments since March support a downward revision to the rate path from its current flat 2.25% level, but we don’t expect the path to move much below 2.00%. It’s still too early for the Executive Board to signal a material chance of a cut to 1.75% in the baseline projection – the June MPR alternative scenarios are best placed to incorporate a dovish pivot of that nature.
- If the rate path troughs at 2.00% and the policy statement is ambiguous on the chances of further easing, there may be modest hawkish risks to the SEK intraday.
- Overnight ATM EURSEK vols have moved up to 9.7 points ahead of the decision, above the 7.6 YTD average. That pushes the breakeven on an overnight ATM straddle expiring at tomorrow’s NY cut to 40 pips in either direction.
- The lower break-even on that structure aligns closely with last Thursday’s low at 10.9033, and this level may be at risk if the hawkish conditions noted above are realised. Firm support is then seen at 10.7941, the April 4 low.
- MNI’s full Riksbank preview is here.
MNI EXCLUSIVE: McGill Professor Ruge-Murcia looks at the BOC's mandate
Jun-17 14:33
McGill Professor Ruge-Murcia looks at the Bank of Canada's mandate - On MNI Policy MainWire now, for more details please contact sales@marketnews.com
