FOMC Day
January 29, 2025
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–Boring day in rates as stocks rebounded from yesterday’s pullback (related to NVDA plunge/DeepSeek). Ten year yield +2 to 4.546%. In SOFR, all contracts from SFRU5 thru SFRU9 were -1.5 to -2.5. Vols softer. Late seller 6k TYH5 107.75/110.225 strangle at 32. Settled 32 down 3 on the day vs TYH5 settle 109-01.
–Today is the FOMC decision. There is no SEP (projection table) for this meeting, but there is a press conference. At the Dec FOMC, 2025 estimates for PCE and Core Prices were jacked up to 2.5% from 2.1% and 2.2% respectively. In the press conference, Powell said several times that the FF rate is now much closer to neutral. Hammack was the dissenter, and preferred no cut at that time. Since then, the economy appears to remain on firm footing. The Atlanta Fed GDP Now was just revised up to 3.2% for Q4 2024, and the NY Fed’s GDP Nowcast is 3.0% for Q1 2025. The latest yoy CPI was 2.9% and PCE prices, which are released on Friday, are expected 2.5% yoy with Core 2.8%. This little preamble is only to assess Powell’s posture at the press conference. If I had to guess, I would think he would lean slightly hawkish despite, (or maybe because of) Trump’s vocal wish for lower rates.
–MSFT. META and TSLA report today. AAPL tomorrow.
–From Alyosha/ market vibes: “DeepSeek offers its services at a significantly lower price point. For instance, DeepSeek starts at just $0.50 per month for its subscription, while ChatGPT’s premium models begin at $20 per month. This makes DeepSeek’s operational cost for users approximately 40 times cheaper in terms of monthly subscription fees.”
–(RTRS) Doomsday Clock moves up one second to 89 seconds to midnight — its closest ever to the 12 o’clock apocalypse point.
–Below is the BBG Commodity Ag sub-index. Soybeans and products, Corn, Wheat, Sugar, Cotton, Coffee. Same price as it was 20 years ago.
