NATGAS: Natural Gas End of Day Summary: Henry Hub Down 9.5%

• Block, 5,000 SFRM5 95.87/96.00 call spds, 1.5 vs. 95.765/0.08%
• Update, over -15,000 0QH5 96.62/97.12 1x2 call spds, 0.75 vs. 96.145/0.05%

• Fed Funds implied rates see a modest climb on the FOMC statement, to extend the day’s increase, mainly helped by the removal of the reference to inflation making progress line.
• Odds of a cut next meeting are further trimmed to 6.5bp vs 7.5bp prior and a next 25bp cut tilts a little more towards July over June (June to 24bp vs 26bp prior).
• There are 45bp of cuts priced for 2025 vs 47bp pre-release and 50bp this morning (which had aligned with the median dot last month).

See below for a comparison of the new FOMC Statement to the previous one released in December.

• The new Statement contains a hawkish-leaning surprise.
• While it was somewhat expected that the language on the labor market would change to reflect recent stabilization in conditions and the unemployment rate, we did not see many expectations that they would change the language characterizing inflation.
• They removed "has made progress toward the Committee's 2 percent objective", while retaining language saying that it "remains somewhat elevated".
• Arguably this is the most hawkish the language has been on inflation since "In recent months, there has been a lack of further progress toward the Committee's 2 percent inflation objective." (May 2024). In the meetings since then, they have noted "progress" on the inflation front, but not this time. The Statement introduced the "has made progress" toward 2% in November's statement, so that lasted for two meetings.
• This will be a key question for Powell at the presser.