Jan 31. Trump’s new executive actions will positively impact JOLTS!
–Little change in interest rate futures despite a modest end of the month pullback in stocks. One trade of note was a new seller of 30k FFJ7 (April Fed Funds) at a price of 9929 down to 28.5. It’s pretty slow when we’re forced to highlight FF trades…but here it goes. April 1, 2 are both weekend days that will use the Fed effective from the last day of March. April 28 is the last weekday of the month, so the Fed Eff for the 28th, 29th and 30th will also be lower. For our purposes, assume 10 bps lower for end-of-month days. Current Fed eff is 66. So if no change then (66*25 + 56*5)/30 is 64.3 or a price of 99.357. On a hike in March, assume new Fed Eff of 91 and month end 81 which yields 89.3 average or 99.107. So at a price of 9928.5 the odds of hike are 29%. Which is too low. Because they’re gonna hike. Just remember, NO press conference at tomorrow’s FOMC, so the Humphrey Hawkins testimony on Feb 14 and 15 might be quite important.
–BoJ modestly increased growth estimate for the coming year to 1.5% from 1.3%. (But still finds it appropriate to hold the ten year JGB near zero).
–News in the US today includes ECI expected +0.6 and Chicago PMI expected slightly firmer at 55.3.
–Trump is ALREADY fulfilling his promise creating new job openings in the US…first in the State Dept and now Justice!
