Adding up the ‘one-offs’
November 18, 2025
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–Weak front end yesterday with SFRZ5 and SFRH6 both settling -1.0 at 9617.5 and 9638.0. Overall activity was light, but some of the near calendars posted new recent lows, for example, SFRH6/M6 at -24.5, down 1.0 (9638/9662.5) and SFRH6/H7 one-year calendar at -51.5, down 2.5 on the day. While the two front contracts settled lower, reds (2nd year) were +1.5 (9687.5), greens +2.0 (9673.625) and blues +2.375 (9655.75). The implication is a rather modest tilt to the ‘no-ease-in-December’ camp. The conclusion one might draw is, ‘no ease now means more later’ but the near 1-yr calendars just aren’t indicative of aggressive easing. SFRZ5/Z6 is -70 (9617.5/9687.5) and as mentioned H6/H7 is -51.5, so 3 or 2 eases.
–Fed VC Jefferson comments were very straightfrd and simple:
Thinking more broadly, I see the balance of risks in the economy as having shifted in recent months with increased downside risks to employment compared to the upside risks to inflation, which have likely declined somewhat recently.
I expect that the unemployment rate is likely to inch up slightly by the end of the year from the relatively low 4.3 percent rate recorded in August. While still solid, I continue to view the risk to my employment forecast as skewed to the downside.
The current policy stance is still somewhat restrictive, but we have moved it closer to its neutral level that neither restricts nor stimulates the economy. The evolving balance of risks underscores the need to proceed slowly as we approach the neutral rate.
–Waller sounded the same concerns, but is clearly more concerned about a weak consumer in an environment of a poor job market.
…the labor market is still weak and near stall speed. Second, that inflation through September continued to show relatively small effects from tariffs and support the hypothesis that tariffs are having a one-off effect raising price levels in the U.S. and are not a persistent source of inflation.
This reading of the data leads me, at this moment, to support a cut in the FOMC’s policy rate at our next meeting on December 9 and 10 as a matter of risk management.
–The idea of a risk-mgmt cut could easily go either way. The problem is, funding and leverage issues could force the Fed’s hand. Stocks are starting to wobble a bit more. Bitcoin traded sub-90k this morning. But there are also more ‘one-off’ problems popping up. For example Blue Owl gated one of its funds yesterday. By its nature, private credit and equity are long-dated assets, apparently re-branded as having liquidity much nearer on the time horizon. That is, of course, unless you really want your money now. OWL was 26.58 in January, but is now just OW as it closed 13.77 yesterday. Robinhood started the year at 41, but the cutting-edge bros are experiencing a small setback there as well: HOOD is down about 20% from the start of this month, from 147 to 116. (Yes I’m long HOOD puts).
–Jobless Claims were already released this morning at 232k. ADP WEEKLY later. FOMC minutes tomorrow with NVDA following.
