That’s what makes this so difficult
August 26, 2025
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–News this morning is all about the firing of Fed Governor Lisa Cook. Will another Trump appointment change the Fed’s path? I doubt it. However, bonds and stocks have come under modest pressure. Yesterday featured flattening with red sofr contracts -4.25, greens -2.625, blues -1.125 and golds unch’d. This morning spreads are closer to Friday’s levels as a potential Fed re-make undercuts support for longer maturities, as if haphazard Presidential policy announcements aren’t enough. 10y ended yesterday +1.5 at 4.273%.
–Early in Biden’s term in 2021 there were delays in filling appointments. From google: “The slow pace of nominations and confirmations in the Senate was widely understood to be a key reason for the vacancies. Progressive Democrats and other critics used the situation to push for the appointment of officials who would support different policy goals.” From Reuters: Sept 9 2021 (Reuters) – As U.S. President Joe Biden assesses whether to reappoint Federal Reserve Chair Jerome Powell and nominate as many as three others to the central bank’s powerful board, he has the opportunity to revamp a leadership team long criticized for being too white and too male.
The Fed still raised rates aggressively to combat inflation beginning in 2022.
–Early buyer adding, +25k TYV5 113.5c 15 cov’d 112-005, 19d. 113c settled 20 and 113.5c settle 13 ref 112-00. Open interest gained in 113.5 and fell in 113’s suggesting a roll.
–Late seller 15k SFRH6 9650/9725cs vs 9575p vs 9644.5, 38d sold 15k at 13.0. Settles: 19.75, 5.75 (14 in cs) 1.0 in put vs 9644.0
–Interesting steepener: sold 0QH6 9650p vs 9696, 22d vs bot 3QH6 9612.5p vs 9656 22d 1.0 paid 8k for +3QH. So this is a red/blue steepener with a hedge. Good timing if the Cook steepener starts running, though I suspect Senate confirmation for new appointees is unlikely to be a cakewalk.
Settles are 9695.5, 9650p 9.0 and 9656 9.5. Futures spread settled +40.5, strike difference 37.5.
–FFV5/ FFV6 settled exactly -100. 9588.5 vs 9688.5.
–NVDA reports Wed, 2/5/7 auctions with 2’s today. Data includes Philly Fed Services, Durables, Consumer Confidence.
–Bitcoin weak…saw it printing 111,111 late! This morning snapshot 110,182.
