Drivel
July 10, 2025
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–Back in the day on the old CME floor when we traded eurodollars, I would meet a group for market discussions and general pontifications on Thursday post-close at the Venice Cafe, a lunch cafeteria across the street from Sears Tower and 2 blocks south of the Merc. A more succinct description is: we sat at a big round table and drank a lot of happy hour beer. Although these meetings could sometimes get boisterous, bordering as they were, on the edge of inebriation, the conversations were a hell of a lot more insightful then this little excerpt from the FOMC minutes: (I am adding a couple of editorialized comments which might have come from the round table).
A couple of participants noted that, if the data evolve in line with their expectations, they would be open to considering a reduction in the target range for the policy rate as soon as at the next meeting. [Think they can go in July? NO! …would make Powell look like he rolled over. Well I bot some Aug Funds at 68.5. Then you’re gonna lose at least 1 tick, Why not buy some extra time with some Sept SOFR call spreads? Of course, you’re WRONG, but you can lose your money more slowly] Some participants saw the most likely appropriate path of monetary policy as involving no reductions in the target range for the federal funds rate this year, noting that recent inflation readings had continued to exceed the Committee’s 2 percent goal, that upside risks to inflation remained meaningful in light of factors such as elevated short-term inflation expectations of businesses and households, or that they expected that the economy would remain resilient. [Did ya see copper? New all time hi. Watching antimony? It’s up 10x in the last few years! WTF is antimony? I think they use it to strengthen beer mugs you idiot. They’re not going at all. Guy bot Z5 9587.5/9568.75/9562.5p trees. Great trade for a hold.] Several participants commented that the current target range for the federal funds rate may not be far above its neutral level. [We’re neutral now!! No we’re NOT. Gonna ease 150 by this time next year]
Various participants discussed risks that, if realized, [yes, bring two more pitchers] would have the potential to affect the appropriate path of monetary policy. Regarding upside risks to inflation, participants noted that, if the imposition of tariffs were to generate a larger-than-expected increase in inflation, if such an increase in inflation were to be more persistent than anticipated, or if a notable increase in medium- or longer-term inflation expectations were to occur, then it would be appropriate to maintain a more restrictive stance of monetary policy than would otherwise be the case, especially if labor market conditions and economic activity remained solid. [Labor market’s going to hell because of the tariffs and threats. Doesn’t mean they need to ease]
–Anyway, there was a buyer of >100k FFQ5 yesterday at 68.5. Open interest up 66k. Either goes to 67 or 92. CME lists a product called FYT. 3*FVU vs 2*TYU. Traded 35k early and 45 k all day. So that’s 135k FV vs 90k. Traded early at +0.25, by end of day it was -1.75/-1.5. Open interest in FVU was +32k but TY was unch’d. Doesn’t make much sense…thought was a steepener.
–Jobless Claims expected 235k today.
