Halister News

(Bloomberg) -- Risks remain that the Fed could postpone planned policy actions in September as potentially contentious debates around a government shutdown and debt ceiling will both occur during the same month, TD Securities strategists Michael Hanson and Priya Misra say in note. 

• May be a “noisy and divisive” process to raise the debt ceiling, which in the past has “led the Fed to become more cautious in its language and actions,” especially if markets appear concerned
• Debt limit contributed to the Fed’s decision to not hike in Sept. 2015 and delayed the Fed’s taper in 2013
• There’s a technical issue since Treasury has to issue debt to let the Fed run off its portfolio, “and a lack of resolution of the debt ceiling can jeopardize that plan”
• Debt ceiling concerns have already seeped into the bill market; yields on Treasury bills maturing Oct. 19 have risen by about 9 bps since Wednesday, exceeding those on bills maturing later in the year
• SEE EARLIER: Game of Twister Awaits T-Bills as Debt-Ceiling Anxiety Deepens

To contact the reporter on this story: Alexandra Harris in New York at aharris48@bloomberg.net To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net Brian Chappatta

(Bloomberg) -- Societe Generale is fined EU5m by France’s banking regulator after on site review in 2015 of bank’s measures to report suspicious transactions to the French anti-money laundering supervising body known as Tracfin.

• Autorite de Controle Prudentiel et de Resolution says average delay in 2014 of about 145 working days to report suspicious transfers is “excessive”
• Societe Generale says in statement “fighting anti-money laundering is an absolute priority for the group to which it has always allocated important human, technical and financial resources”
• “Since the period under review, the bank has significantly enhanced its suspicious transactions reporting systems and strengthened its controls and procedures as acknowledged by the ACPR’s sanctions committee,” Societe Generale says
• Full ACPR decision (in French): https://tinyurl.com/yb3hq72t
• SEE: BNP Fined Over Flawed Terror- Funding Controls by French Watchdog

To contact the reporter on this story: Gaspard Sebag in Paris at gsebag@bloomberg.net To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net Christopher Elser

--DEREK WALLBANK

(Bloomberg) -- Chancellor Philip Hammond had a meeting with Goldman Sachs’ board in London on June 29 to discuss implications of Brexit, Sky News reports, citing a source close to the Treasury.

• Hammond offered private reassurances to Goldman that he is pushing for a lengthy transition deal to help the city prepare for Brexit, the report says, citing insiders
  • The assurances were not apparent from Hammond’s public attempts to reassure the business community that the government is aware of its concerns
• A treasury spokeswoman said the Chancellor regularly meets with businesses to hear their views, most recently participating in the PM’s business advisory group and hosting a roundtable with asset managers: Sky
• Goldman declined to comment on its meeting with Hammond
• Hammond has also met JP Morgan CEO Jamie Dimon in the last few months; he held talks on Thursday with senior fund managers and Investment Association CEO Chris Cummings

To contact the reporter on this story: Huang Zhe in San Francisco at zhuang37@bloomberg.net To contact the editors responsible for this story: Sarah Kopit at skopit@bloomberg.net Rita Devlin Marier

(Bloomberg) -- UST 3s7s curve bear steepens “in every simulated scenario” where the market is shocked by a higher terminal Fed rate, and 3s7s steepeners should also benefit if Fed balance sheet runoff “has a larger impact on mortgages than initially suspected,” Bank of America strategists Shyam Rajan and Carol Zhang write in July 21 note.

• “Given our belief that we are already near peak pessimism on the terminal rate, the shock to markets from here will likely be a shift higher”
• After advocating 5s30s bear flattening “for some time now,” BofA says “it’s time to shift focus”
• Favored expression is 2y forward 3s7s conditional bear steepener
• Trade “should expire out of the money in a rally in case the terminal rate is shocked lower” and “benefit in any shift to the right” on their terminal rate grid

To contact the reporter on this story: Anna Windemuth in New York at awindemuth1@bloomberg.net To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net Elizabeth Stanton

--DEREK WALLBANK