Balance of risks says WAIT

March 28, 2024

–From Waller last night:

My judgment on the balance of risks for monetary policy, which I explained in a speech on February 22, hasn’t changed: The risk of waiting a little longer to cut rates is significantly lower than acting too soon.

–Curve flattened in response with red SOFR contracts bearing the brunt of selling. Currently SFRM4 is 9485.5 -3.0, M5 is 9592.5 -7.0, M6 is 9630 -6.0, M7 is 9639.5 -2.0.   

–CBO director Phillip Swagel, in an interview with the FT warned about the trajectory of US borrowing:

“The danger, of course, is what the UK faced with former Prime Minister (Liz) Truss, where policymakers tried to take an action, and then there’s a market reaction to that action,” he told the newspaper, referring to the investor backlash against plans for unfunded tax cuts that forced Truss to resign after just 45 days in office.(CNN) 

–Today’s news includes final Q4 GDP, Jobless Claims 212k, Chgo PMI 46.0 from 44.0, Uof Mich final Sentiment and inflation expectations.

–The SOFR option pit closes at noon, so all month-end settlements will be at noon.  Markets are closed on Friday.  PCE prices are released tomorrow and Powell speaks at the SF Fed.

Posted on March 28, 2024 at 5:29 am by alexmanzara · Permalink
In: Eurodollar Options

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