Closing Wrap - Wednesday 05.01
Headlines
  • Fed Minutes Flag Chance Of Earlier Hikes, Balance-Sheet Rundown
  • Biden Could Name New Fed Officials As Soon As This Week
  • Lawmakers Discuss Additional Covid Relief Amid Omicron, But Talks Stall
  • UK PM Johnson Pressed To Scrap GBP12 Bln NI Rise Amid Cost Of Living Crisis
  • Chinese Premier Li Urges Bigger Tax Cuts To Ensure Economic Growth
  • Iraq Approves Sale Of Exxon Oil Field Stake To State Firm
  • Allegiant Sets $2.5 Bln Boeing Max Order, Ending Airbus Grip
  • Walmart, FedEx Sign Deals With GM For Thousands Of New BrightDrop EVs
Commentary
Federal Reserve Puts Wheels In Motion For Balance Sheet Reduction

The Federal Reserve at its December meeting began plans to start cutting the amount of bonds it is holding, with members saying that a reduction in the balance sheet likely will start sometime after the central bank starts raising interest rates, according to minutes released Wednesday.

 

While officials did not make any determination about when the Fed will start rolling off the nearly $8.3 trillion in bonds it is holding, statements out of the meeting indicated that process could start in 2022, possibly in the next several months.

 

“Almost all participants agreed that it would likely be appropriate to initiate balance sheet runoff at some point after the first increase in the target range for the federal funds rate,” the meeting summary stated. (CNBC – Continue Reading)

There's No Easing Into The New Year For The ECB

Italy is out of the traps fast in 2022 with a new 30-year syndicated bond. It's a bold move as European yields have increased substantially in recent weeks in conjunction with the selloff in U.S. Treasuries. Investor appetite is still strong with over 43 billion euros ($49 billion) of orders for what is an expected 7 billion euro issue — priced attractively at just over 2.1%. That’s 30 basis points in extra yield since mid-December.

 

For Italy, it still makes sense to raise large clips of money via long duration bonds now to get ahead of its annual funding schedule. That’s because the European Central Bank will terminate its 1.85 trillion-euro Pandemic QE bond-buying program, known as the PEPP, at the end of this quarter. Slovenia is also in the market with four- and 40-year tranches. The supply schedule is likely to be rapidly filled by other European nations and the European Union itself which is likely to issue around 100 billion euros this year to fund its NextGeneration recovery program.  

 

But there are other problems swirling nearer to home.

 

While the ECB will continue to buy a significant amount of debt for the foreseeable future, its intended direction of travel is clear: to wean the euro-denominated debt market off gargantuan monetary stimulus. This comes at a tricky time because political risk is rising. Italian Prime Minister Mario Draghi could step aside for the presidency later this month. This would present a challenging handover and possibly trigger a general election. The French presidential elections follow in April. (Bloomberg – Continue Reading)

Rare SOFR Trade Highlights A Key Glitch In Libor’s Transition

A unique trade in options tied to the Secured Overnight Financing Rate turned heads in the U.S. rates options market on Tuesday, showing how far the contracts are from linking to Libor’s replacement.

 

The short call position was in the December three-month SOFR options, referenced by futures tied to Libor’s heir, which is the current benchmark for the popular eurodollar options. The trade size was just 5,000 contracts. But it still was more than double the outstanding positions held across all three-month SOFR options, a miserly 7,772 contracts as of Tuesday’s close. (Bloomberg – Continue Reading)

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/*jshint esversion: 6 */ var socket; var assigned_server = 3001; var distributor_server = 3010; var publisher_channel = ''; var broadcaster_channel = ''; var remote_ip = ''; var session_info = {}; var logging_interval; var logging_interval_time = 120000; var socket_emits = 0; var session_start_time; var reconnectionDelayGrowFactor = 1.2; var reconnection_delay = 1000; var playing = false; var connected_to_assigned = false; var socket_close_timeout; self.onmessage = function (msg) { switch(msg.data.action) { case 'Reactivate': reactivate(); break; case 'ConnectDistributor': connect_to_distributor(msg); break; case 'SessionStaticInfo': session_static_info(msg); break; case 'SessionInfo': update_session_info(msg.data); break; case 'PauseLogging': clearTimeout(logging_interval); break; case 'RestartLogging': postMessage({action: 'RequestSessionStaticInfo' }); break; case 'JoinPublisherChannel': join_publisher_channel(msg.data); break; case 'JoinPlayerChannel': join_player_channel(msg.data); break; case 'CheckChannelStatus': check_channel_status(msg.data); break; case 'PlayerLogResponse': player_log_response(msg.data); break; case 'CloseSocket': close_socket(); break; } }; function reactivate() { playing = false; connect_to_assigned_server(); } function player_log_response(data) { var data_array = {}; data_array.type = 'PlayerLogResponse'; data_array.respond_to_socket_final = data.respond_to_socket_final; data_array.respond_to_socket = data.respond_to_socket; data_array.player_socket_id = data.player_socket_id; data_array.logs = data.logs; var msg_string = JSON.stringify(data_array); if (socket.readyState == 1) { socket.send(msg_string); } } function check_channel_status(data) { var data_array = {}; data_array.type = 'check_channel_status'; data_array.app_name = data.app_name; var msg_string = JSON.stringify(data_array); if (socket.readyState == 1 && connected_to_assigned) { socket.send(msg_string); } else { setTimeout(function() { check_channel_status(data); },500); } } function check_channel_status_response(data) { postMessage({ action: 'CheckChannelStatusReponse', stream_status: data.stream_status.status, onair: data.stream_status.onair, connected: data.stream_status.connected }); } function join_publisher_channel(data) { var data_array = {}; data_array.type = 'join_publisher_channel'; data_array.publisher_channel = data.publisher_channel; data_array.username = data.username; data_array.subscriber_group = data.subscriber_group; data_array.display_name = data.display_name; data_array.single_sign_on = data.single_sign_on; data_array.remote_ip = data.remote_ip; data_array.http_referrer = data.http_referrer; data_array.current_page = data.current_page; data_array.php_session_id = data.php_session_id; var msg_string = JSON.stringify(data_array); if (socket.readyState == 1) { socket.send(msg_string); } postMessage({action: 'PublisherChannelJoined' }); } function session_static_info(msg) { set_static_session_info(msg.data); start_log(); } function connect_to_distributor(msg) { publisher_channel = msg.data.publisher_channel; remote_ip = msg.data.remote_ip; socket = new WebSocket("wss://ws.livesquawk.com/ws"+distributor_server); socket.onopen = function(event) { request_server_assignment(); }; socket.onmessage = function(event) { var msg_string = event.data.toString(); var data = JSON.parse(msg_string); switch(data.type) { case 'server_assignment_response': server_assignment_response(data); break; } }; } function session_info_interval() { postMessage({action: 'RequestSessionInfo' }); logging_interval = setTimeout(session_info_interval,logging_interval_time); } function server_assignment_response(data) { assigned_server = data.selected_server; socket.close(); connect_to_assigned_server(); } function request_server_assignment() { var data_array = {}; data_array.type = 'request_server_assignment'; var msg_string = JSON.stringify(data_array); if (socket.readyState == 1) { socket.send(msg_string); } } function connect_to_assigned_server() { socket = new WebSocket("wss://ws.livesquawk.com/ws"+assigned_server); socket.onopen = function(event) { postMessage({ action: 'VisibleConsole',console_string: "Connected to server "+assigned_server }); console.log("Connected to server "+assigned_server); postMessage({ action: 'ConnectedToAssigned' }); connected_to_assigned = true; if (playing) { postMessage({ action: 'RejoinPlayerChannel' }); } }; socket.onmessage = function(event) { var msg_string = event.data.toString(); var data = JSON.parse(msg_string); if (data.type != 'server_ping') { /* console.log(data.type); */ } switch(data.type) { case 'reconnect': postMessage({ action: 'VisibleConsole',console_string: "Reconnected" }); break; case 'reload': postMessage({ action: 'Reload' }); break; case 'start_log_response': start_log_response(data); break; case 'application_refresh_start': application_refresh_start(data); break; case 'application_refresh_stop': application_refresh_stop(data); break; case 'player_log_request': case 'check_channel_status_response': check_channel_status_response(data); break; case 'PlayerLogRequest': case 'new_tweet': case 'new_latest_news': case 'delete_report': case 'add_report': case 'add_ref_doc': case 'calendar_change': case 'calendar_insert': case 'calendar_delete': case 'new_note': case 'AppStart': case 'AppStop': case 'BroadcasterStarted': case 'BroadcasterStopped': pass_straight_to_post_message(data); break; case 'output': case 'server_ping': case 'reconnect': case 'disconnect': break; } }; socket.onerror = function(event) { postMessage({ action: 'VisibleConsole',console_string: "LS Socket Error" + event.type }); console.log(event); postMessage({ action: 'LSSocketConnectionError' }); }; socket.onclose = function(event) { console.log('Socket is closed. Reconnect will be attempted in 1 second.', event.reason); socket_close_timeout = setTimeout(connect_to_assigned_server, reconnection_delay); reconnection_delay = reconnection_delay*reconnectionDelayGrowFactor; connected_to_assigned = false; }; } function close_socket() { clearTimeout(socket_close_timeout); socket_close_timeout = null; socket.onclose = function(event) {}; socket.onmessage = function(event) {}; socket.onerror = function(event) {}; socket.close(1000); console.log('Socket Closed'); } function pass_straight_to_post_message(data) { data.action = data.type; postMessage(data); } function join_player_channel(data) { var data_array = {}; data_array.type = 'join_player_channel'; data_array.player_channel = data.player_channel; data_array.remote_ip = data.remote_ip; data_array.username = data.username; data_array.app_name = data.app_name; data_array.onair_status = data.onair_status; data_array.http_referrer = data.http_referrer; data_array.current_page = data.current_page; data_array.php_session_id = data.php_session_id; var msg_string = JSON.stringify(data_array); if (socket.readyState == 1) { socket.send(msg_string); } postMessage({action: 'PlayerChannelJoined' }); playing = true; } function start_log_response(data) { session_info.session_id = data.log_record_id; session_info_interval(); } function application_refresh_start(data) { if (data.app_name == session_info.application_name) { postMessage({action: 'ApplicationRefreshStart' }); } } function application_refresh_stop(data) { if (data.app_name == session_info.application_name) { postMessage({action: 'ApplicationRefreshStop' }); } } function set_static_session_info(data) { session_info.browser_codename = data.browser_codename; session_info.browser_name = data.browser_name; session_info.user_agent = data.user_agent; session_info.browser_version = data.browser_version; session_info.cookies_enabled = data.cookies_enabled; session_info.platform = data.platform; session_info.player_version = data.player_version; session_info.stream = data.stream; session_info.connection_protocol = data.protocol; session_info.delay_target = data.delay_target; session_info.session_email = data.session_email; session_info.remote_ip = data.remote_ip; session_info.php_session_id = data.php_session_id; session_info.application_name = data.application_name; session_info.http_referrer = data.http_referrer; } function start_log() { var session_start_date = new Date(); session_start_time = session_start_date.getTime(); var months = ['Jan','Feb','Mar','Apr','May','Jun','Jul','Aug','Sep','Oct','Nov','Dec']; var session_start_date_string = session_start_date.getDate() + " " + months[session_start_date.getMonth()] + " " + session_start_date.getFullYear(); var data_array = {}; data_array.type = 'webrtc_start_log'; data_array.remote_ip = session_info.remote_ip; data_array.username = session_info.session_email; data_array.php_session_id = session_info.php_session_id; data_array.webrtc_protocol = ''; data_array.session_start_time = (session_start_time/1000).toFixed(0); data_array.stream_name = session_info.stream; data_array.session_start_date = session_start_date_string; var msg_string = JSON.stringify(data_array); if (socket.readyState == 1) { socket.send(msg_string); } } function update_session_info(data) { var data_array = {}; var msg_string = ''; var current_date = new Date(); var current_time = current_date.getTime(); session_info.protocol = data.protocol; session_info.curr_delay = (data.effective_latency / 1000).toFixed(2); session_info.session_length = current_time - session_start_time; session_info.ping_time = data.ping_time; session_info.jitter = data.jitter; session_info.packet_loss = data.packet_loss; session_info.effective_latency = data.effective_latency; session_info.mean_opinion_score = data.mean_opinion_score; session_info.restarts = data.restarts; if (socket_emits == 0) { data_array = {}; data_array.type = 'webrtc_log_data_full'; data_array.connection_protocol = session_info.protocol; data_array.threshold = 0; data_array.curr_delay = session_info.curr_delay; data_array.session_length = session_info.session_length; data_array.date = current_time; data_array.browser_codename = session_info.browser_codename; data_array.browser_name = session_info.browser_name; data_array.user_agent = session_info.user_agent; data_array.browser_version = session_info.browser_version; data_array.cookies_enabled = session_info.cookies_enabled; data_array.platform = session_info.platform; data_array.player_version = session_info.player_version; data_array.stream = session_info.stream; data_array.restarts = session_info.restarts; data_array.delay_target = 0; data_array.op_sys = ''; data_array.flash_version = ''; data_array.remote_ip = session_info.remote_ip; data_array.http_referrer = session_info.http_referrer; data_array.php_session_id = session_info.php_session_id; data_array.user_email = session_info.session_email; data_array.webrtc_protocol = session_info.protocol; data_array.ping_time = session_info.ping_time; data_array.jitter = session_info.jitter; data_array.packet_loss = session_info.packet_loss; data_array.effective_latency = session_info.effective_latency; data_array.mean_opinion_score = session_info.mean_opinion_score; data_array.session_id = session_info.session_id; msg_string = JSON.stringify(data_array); if (socket.readyState == 1) { socket.send(msg_string); } } else { data_array = {}; data_array.type = 'webrtc_log_data'; data_array.session_id = session_info.session_id; data_array.php_session_id = session_info.php_session_id; data_array.connection_protocol = session_info.protocol; data_array.restarts = session_info.restarts; data_array.threshold = 0; data_array.curr_delay = session_info.curr_delay; data_array.session_length = session_info.session_length; data_array.date = current_time; data_array.webrtc_protocol = session_info.protocol; data_array.ping_time = session_info.ping_time; data_array.jitter = session_info.jitter; data_array.packet_loss = session_info.packet_loss; data_array.effective_latency = session_info.effective_latency; data_array.mean_opinion_score = session_info.mean_opinion_score; data_array.stream = session_info.stream; msg_string = JSON.stringify(data_array); if (socket.readyState == 1) { socket.send(msg_string); } } socket_emits++; if (socket_emits == 100) { socket_emits = 0; } }