Powell speech today
September 23, 2025
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–Fed speeches today from Bowman at 9 and Powell at 12:30. Yesterday Miran gave a speech indicating the neutral rate could be around zero, due to the reversal in immigration and fiscal policies:
“R* reflects the balance of saving and investment in an economy and it evolves over time with demographics, productivity, fiscal policy, and other factors. It is my view that previously high immigration rates and large fiscally driven decreases in net national saving, both of which raise neutral rates, were insufficiently accounted for in previous estimates of neutral rates. Monetary policy was not as tight as many believed. That same effect may be taking place today, but in the opposite direction.”
Contrasting Miran: BOSTIC SEES LITTLE REASON TO CUT RATES FURTHER FOR NOW: WSJ
–Big trade from yesterday was a new buyer of 125k TYZ 114.0c: paid 32 covered 112-255, 29d, 50k. Paid 33 covered 112-275 for 50k, 31d, and 31 cov 112-24, 25k, 28d. Settled 30 vs 112-225. This trade most likely is a replacement for expiring October 113, 113.5. 114 calls which had been bought delta neutral. Oct options expire Friday; TYV 113c settled 7 with 28d and have 196k open, which is peak OI strike in Oct calls. TY vol remains low with TYZ 5.1.
–Yields had little net change with flatter bias. 2s +1.9 bps to 3.597 in front of today’s auction (followed by 5s and 7s). Tens +0.6 to 4.139%. In SOFR H6, M6. U6 were weakest at -3 (9653.5, 9676, 9690). Blues (4th year frd) were unch’d.
–Yesterday Argentina received a lifeline: US Is Ready to Do What’s Needed to Support Argentina: Bessent.
Another admin overreach.
–Gold and NVDA continue to power higher. Gold mkt cap now around $25T while NVDA is $4.47T
–Cattle also surging. LCZ5 208 in early July, now 240. StoneX’s Arlan Suderman cites a case of New World Screwworm just south of the US border (I thought it was a new band!) and mentions a ‘protein deficit’ in the US. On the other hand, I’ve been seeing reports of harsh conditions affecting US farmers (thx DK) with low crop prices and difficulties servicing debt on equipment. Farm Aid type stuff. Most recent data from the KC Fed on Farmland Values shows annual changes in land prices: -2.1% in Q1 2025 and -1.5% in Q2 (non-Irrigated) and -4.0, -3.0% (Irrigated) vs latest +4.2% yoy in Q2 for Ranchland.
