MEXICO: Deutsche Bank Sees Further 100bp Cuts This Year, Remains Cautious MXN

• President Biden declared January 9, 2025, as a National Day of Mourning in observance of the passing of former President James Earl Carter, Jr. CME Group has coordinated market openings and closings with regard to the declared National Day of Mourning for President James Earl Carter, Jr.
• INTEREST RATES: Open outcry and CME Globex trading session for interest rate products will have an early
  close of 1300 ET and 1315ET, respectively on January 9, 2025. All transactions submitted on CME ClearPort will have normal hours. Settlement prices will be derived at 1300ET.

• Canada has sold C$5.5bn of the 3.0% Feb'27 at an average yield of 2.947%.
• The bid-to-cover of 2.179x was the lowest for a 2Y since June and compares with a prior five-auction average of 2.38x.

Bloomberg reports, citing sources, that Gov Bowman Is being considered by the incoming Trump administration as the Fed's next Vice Chair for Supervision. That's not much of a surprise, as we noted Monday following VC Barr's resignation from the position effective end-Feb. (Trump said Tuesday that a Barr replacement would be announced soon.)

• BBG reports that the list to replace Powell as Chair in May 2026 includes largely familiar names including Kevin Hassett, Kevin Warsh, and ... Bowman.
• But Gov Waller, one of the more dovish members of late, appears to be out of the running, due to his support for September's 50bp cut (which Bowman dissented against) - "Trump called the larger-than-usual Fed cut, just weeks before the presidential election, 'a political move to try and keep somebody in office.'"
• By mid-2026, the Fed's permanent leadership could
  be significantly more hawkish-leaning. Bowman as Fed Chair would be considered a hawkish shift from Powell. And it's also notable the BBG piece suggests that Cleveland Fed Pres Hammack - one of the biggest hawks on the FOMC, and who dissented against December's rate cut - "is also said to be in the mix for a possible seat on the Fed’s board during Trump’s second term." That could be as soon as January 2026 when Gov Kugler's term expires. (Powell's term as Governor is the next to expire, in Jan 2028.)
• Whether this impacts Fed policy and communications in the meantime is a key question. Per the article, Trump's advisers "are closely watching current Fed officials’ interest-rate commentary as they add and subtract names from consideration" for Chair. It's unclear whether they're looking for doves or hawks - Trump said Tuesday that rates are too high, but he and some of his advisers have suggested that long-end rates can be brought down for example through supply-side solutions.
• But it may come down to how potential leadership candidates portray the response to Trump administration policy shifts, eg are tariffs considered inflationary and necessitating tighter monetary policy.