STIR: US Rates Reflect Latest Leg Higher In Hassett Fed Chair Probability
Dec-03 11:25
- Overnight rate moves chime with another tick higher in odds that NEC’s Hassett will be the next Fed chair, even if there was little initial reaction to Trump explicitly referring to him as potential chair yesterday when the likelihood in betting markets increased from 65-70% to 85%.
- WSJ reporting has since helped solidify the modest rally, led by mid-2026/early-2027 contracts, noting that the Trump administration canceled a slate of interviews set to start on Wed with a group of finalists. A person familiar with the matter said the cancellation was because of a scheduling conflict for the vice president.
- Fed Funds implied rates are unchanged through March after which they sit a touch lower on the day.
- Cumulative cuts from 3.89% effective: 23.5bp Dec, 31bp Jan, 38.5bp Mar, 46bp Apr and 60.5bp Jun.
- SOFR futures are up to +0.02 on the day, with the terminal implied yield of 3.035% (H7) extending the week’s decline back towards the 3% seen since NY Fed’s Williams’ dovish guidance on Nov 21.
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US TSY FUTURES: Curve-Wide Positioning Little Changed On Friday
Nov-03 11:24
OI data points to a mix of net long cover (TY, UXY & WN) and short setting (US) further out the curve as long end futures settled lower on Friday.
- TU & FV futures were unchanged at settlement, so it is difficult to make any meaningful assertions when it comes to positioning swings in those contracts (outside of exposure being added in TU and trimmed in FV).
- Net curve-wide DV01 equivalent exposure was little changed on the day.
| 31-Oct-25 | 30-Oct-25 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 4,603,126 | 4,565,661 | +37,465 | +1,420,372 |
FV | 6,804,374 | 6,815,692 | -11,318 | -487,624 |
TY | 5,489,795 | 5,509,193 | -19,398 | -1,300,555 |
UXY | 2,486,249 | 2,489,353 | -3,104 | -279,552 |
US | 1,904,209 | 1,895,255 | +8,954 | +1,145,107 |
WN | 2,124,810 | 2,128,266 | -3,456 | -650,824 |
|
| Total | +9,143 | -153,076 |
FED: More Dovish Fedspeak Eyed After Friday’s Broad Rate Cut Pushback
Nov-03 11:22
Today’s Fedspeak sees more dovish/at most centrist FOMC members scheduled compared to Friday’s mostly more hawkish stance (before a typically dovish Waller late on). We’re set to hear from Miran, Daly and Cook, with our pick being Cook for her first monetary policy relevant remarks in nearly three months.
- ~0715ET – Gov. Miran (voter) on Bloomberg TV. He didn't publish a dissent statement on Friday, having also shied away from tradition after the September meeting, but his dovish stance is well-known. He has been advocating for 50bp cuts and noted after the mid-October deterioration in US-China trade relations that there was more urgency to get rates to neutral. It will be interesting to see whether this latest urgency is dialled back at the margin. Limited headlines from a NYT interview published Saturday morning noted that restrictive policy poses a risk to the labor market and is making the economy more brittle to shocks.
- 1200ET – SF Fed’s Daly (non-voter) in moderated conversation (no text). Recently towards the more dovish end of the FOMC spectrum, she said on Sep 24 that she "fully supported" the Fed's 25bp September cut, and suggested "Moving forward, it is likely that further policy adjustments will be needed as we work to restore price stability while providing needed support to the labor market." She notes that the latest Fed Dot Plot showed that further cuts were expected, "but these are projections, not promises, and making good decisions will require us to anchor on our objectives, assess the tradeoffs, and decide, again and again."
- 1400ET – Gov. Cook (voter) on economy and monetary policy (text + Q&A). We haven’t heard from Cook on monetary policy since the second half of August when President Trump tried to force her resignation and then fire her in what’s been a lengthy legal process. She noted back in early August that the jobs report at the time was concerning as big jobs revisions were somewhat typical of turning points and that the unemployment rate is still a good indicator of slack. We consider her to towards the center of the hawk/dove spectrum, albeit slightly on the dovish side.
- For a review of Friday’s post-FOMC Fedspeak, see the MNI US Macro Weekly here which captured remarks from Bostic, Hammack, Logan and Schmid. It was published before Waller said all the data suggest the Fed should cut rates again in December. He would say yes if President Trump asked him to be Fed Chair.
CHF: USDCHF Strength Will Hinge on US Private Data This Week
Nov-03 11:09
- Broad USD strength combined with firmer global equities has helped USDCHF clear the October high, prompting the pair to change hands at its highest level since August 22nd. This clears resistance up to 0.8104. Sustainability of the move higher here will depend on the suite of private US data releases set for this week, specifically: today's US ISM Manufacturing and S&P Global Manufacturing PMI, ISM Services and ADP Employment data on Wednesday ahead of prelim UMich sentiment data on Friday.
- Following the surprising division of the FOMC at last week's rate decision, a presumed December rate cut has been called into question - and absent official US government releases, these private sector numbers will take on greater importance, and should certainly play a part in policy-setting for the hawks into the final decision of the year (indeed, Powell has referenced the Michigan inflation expectations survey in press conferences previously).
- As a result, a strong turnout from the private sector numbers this week would pose upside risks to USDCHF, and clearance of 0.8104 would extend the upside of the range toward 0.8171, the late July rally top.
