STIR: US Front Rates Underperform, Fedspeak To Resume After Divided FOMC Remarks
Oct-31 10:35
- US front rates have seen some modest downward pressure overnight, amongst other things extending uncertainty over a third consecutive cut at the next meeting in December after Powell’s press conference comments.
- Fed Funds implied rates have seen a 1-1.5bp increase for FOMC meetings out to April overnight, with the December implied rate back at Wednesday’s post-Powell high after yesterday’s mild paring.
- Cumulative cuts from an assumed 3.87% effective: 15.5bp Dec, 24bp Jan, 33bp Mar, 39.5bp Apr and 53.5bp Jun.
- SOFR futures have seen volumes concentrated in the SFRZ5, now up to 140k (next largest 83k in the H6) having already been above 100k heading into the European session. It underperforms at -0.02 with the strip more broadly little changed on the day.
- As such, the SOFR terminal implied yield of 3.105% (SFRH7) holds close to yesterday’s highest close since August.
- Fedspeak resumes today with the FOMC blackout now lifted, coming from a Dallas Fed Bank Funding Conference. We don’t expect many market moving headlines but will nevertheless monitor any comments regarding recent funding market pressures as well as those on the economic outlook or broader monetary policy after Powell indicated a strongly divided FOMC on December cut prospects.
- 0930ET – Logan (’26 voter) opening remarks (text only)
- 1200ET – Hammack (’26 voter) and Bostic (non-voter) in fireside chat (text tbd)
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
MNI EXCLUSIVE: UK Nationwide Economist Talks to MNI
Oct-01 10:30
- UK Nationwide economist talks about the outlook for consumers and the property market -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
EUR: Phase of EUR Weakness Stands Out, EUR/USD Within Range of Sizeable Strike
Oct-01 10:30
EUR selling pressure helps tip EUR/USD, EUR/JPY and EUR/GBP through to new daily lows. Little headline flow or news to trigger the phase of EUR weakness here, although it does coincide with Bund futures creeping back to flat on the day, as mentioned above. Gov shutdown risks and the BoJ Tankan survey have been the primary drivers so far today, but the latest phase of EUR weakness stands out somewhat - but looks largely flow driven at this stage.
- Futures markets show a decent pick-up in interest in EUR selling 1118BST, which marked some of the best activity of the session so far, even including the price action across the PMI and HICP releases. Over 3k EUR Z5 futures contracts traded into the session low for a cash equivalent of just below E500mln.
- The fade in price tips spot toward some of the more sizeable options interest rolling off at today's cut, with E2.4bln expiring between $1.1700-10 today.
SONIA OPTIONS: SFIM6 96.60/96.80 Call Spread Lifted
Oct-01 10:27
SFIM6 96.60/96.80 call spread paper paid 3.5 on 8.6K. Desks note paper bought 9K at the same price on Tuesday.
