US: House Budget Cte To Mark Up Budget Resolution Underway Shortly
Feb-13 15:01
The House Budget Committee is shortly due to convene to mark up a budget resolution that will underpin a huge reconciliation bill to legislate President Donald Trump's agenda. A livesteam of proceedings is likely to be available here. Details of the budget resolution here.
- The resolution includes $4.5 trillion for the House Way and Means Committee to write up Trump's tax agenda, including the extension of 2017 tax cuts and potentially new Trump campaign pledges like exempting tipped earnings from federal tax.
- The resolution aims to "reduce mandatory spending by $2 trillion over the budget window" setting floors for various departments to decrease the federal deficit.
- House Speaker Mike Johnson (R-LA) told reporters yesterday that the budget blueprint is merely the “starting place” for cuts, adding that his objective, “is to try to save $2 trillion or more because we think that’s necessary to prevent an increase in the deficit,”
- Discharging the resolution from the Budget committee will be the first major test of Johnson and Trump's influence over hardliners in the House GOP conference. Several deficit hawks, including Rep Chip Roy (R-TX) and Ralph Norman (R-SC), sit on the budget panel and have indicated they could oppose the resolution.
- If Johnson, and Budget Committee Chair Jodey Arrington (R-TX), fail to discharge the resolution from the committee, it will put the Senate in the driver’s seat for reconciliation.
- Additional analysis of the budget resolution in today's edition of the US Daily Brief.
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PIPELINE: $2.5B BNG Bank 5Y SOFR Launched
Jan-14 14:55
- Date $MM Issuer (Priced *, Launch #)
- 01/14 $2.5B #BNG Bank 5Y SOFR+47
- 01/14 $2.5B #CADES 5Y SOFR+68, upsized from $2B
- 01/14 $3B KFW +5Y +40
- 01/14 $2B IFC 3Y SOFR+29
- 01/14 $2B CAF 5Y SOFR+82
- 01/14 $Benchmark Blackstone Private Cr Fund 7Y +190a
- 01/14 $Benchmark LifePoint Health 7NC3
- 01/14 $Benchmark Adobe 3Y +50a, 5Y +60a, 10Y +80a
- 01/14 $Benchmark British Colombia 3Y SOFR+45
- 01/14 $Benchmark BFCM 5Y +120a, 5Y SOFR
- 01/14 $Benchmark Hyundai 3Y +100a
US DATA: Sequential Producer Prices On The Low Side, Core Momentum Soft
Jan-14 14:50
December's PPI report showed softer sequential price pressures than had been expected: headline final demand PPI came in at 0.2% M/M (0.4% expected, 0.4% prior), with the "core" ex-food/energy/trade category printing 0.1% (0.3% expected, 0.1% prior). From a broader perspective for this volatile series, pipeline inflation remains uncomfortably elevated. But this was not a particularly worrisome report in its own right and core PPI - while still elevated - does not appear to be accelerating.
- This left the Y/Y figures higher vs November but lower than expected: headline at a 22-month high 3.3% (3.5% expected, 3.0% prior), with ex-food/energy/trade actually decelerating to 3.3% (no consensus, 3.5% prior).
- So on the one hand, headline PPI has been steadily accelerating Y/Y since bottoming at 0.8% in Nov 2023 and is now at a 22-month high, but Core PPI prices have settling in at above 3.0% Y/Y, where it has been for 9 consecutive months. That lends further credence to the idea that the prolonged period of Y/Y core goods deflation is over - but likewise there are no obvious signs of a pronounced resurgence in pipeline inflation outside of food and energy.
- Indeed, as the headline figures suggest, food (+6.4% Y/Y after +6.7%) and energy (-2.0% Y/Y after -6.1%) prices have been more inflationary/less deflationary, respectively, on an annual basis.
- But we interpret the "core" reading to imply that pipeline price momentum has continued to slow: at 1.9%, the 3-month annualized moving average fell to 1.9% from 2.1% prior, well down from over 5% earlier in 2024 for the lowest since December 2023. The 6-month m.a. likewise pulled back to the softest since November 2023.
- For the two major subcategories of final demand PPI, services inflation was flat, vs 0.3% M/M prior for the weakest since July, while goods inflation came in at 0.6% (after 0.7%).
- As we noted separately following the release, the PCE-relevant categories were mixed, with a jump in airfares the standout but fairly benign readings in other areas.
EU-BOND SYNDICATION: New 3-year / 30-year tap: Priced
Jan-14 14:46
New 3-year:
- Reoffer: 99.999 to yield 2.628%
- Spread set earlier at MS+17bps (guidance was MS + 19 bps area)
- HR 105% vs 2.20% Apr-28 Bobl +32.4bp (ref 99.675 / 2.304%)
- Tranche size set earlier at E6bln (guidance was E5bln, MNI expected E5-7bln)
- Books closed in excess of E82bln (inc E5.75bln JLM interest)
- Maturity: 4 July 2028
- Coupon: 2.625%, short first coupon
- ISIN: EU000A4D5QM6
3.375% Oct-54 Tap:
- Reoffer: 94.8089 to yield 3.664%
- Spread set earlier at MS+127bps (guidance was MS + 130 bps area)
- HR 91% vs 2.50% Aug-54 Bund + 82.0bp (ref 93.15 / 2.844%)
- Tranche size set earlier at E5bln in line with guidance (MNI expected E4-6bln)
- Books closed in excess of E115bln (inc E5bln JLM interest)
- Highest book for a tranche since 2021
- ISIN: EU000A3K4EY2 (Immediately fungible)
For both:
- Settlement: 21 January 2025 (T+5)
- JLMs: Barclays, BNP Paribas, J.P. Morgan (B&D/DM), LBBW, NatWest Markets
- Timing: TOE 14:29GMT / 15:29CET. FTT immediately
