April 5, 2023
–JOLTs sub-10m sparked a stunning SOFR rally. SFRH4 and M4 led the way, both +20.5 to 9638.5 and 9677. On March 30 the 2y yield was just over 4.12%, ending yesterday at 3.82%; a drop of 30 bps in three days, after Bullard just told us short rates need to be over 5%. May FF settled 9507, just slightly favoring the ‘no hike’ camp. April FF settled 9518.25, just a small premium to the current EFFR of 483. However, Aug FF rallied 14 yesterday to 9527.5 or 472.5, indicating an ease could occur as soon as the June 14 or July 26 FOMC.
–ISM Services today expected 54.5 vs 55.1 last. Two things have been stressed by Powell: one is the number of job openings per available worker, i.e. JOLTs, which fell yesterday. The other is strength in service sector pricing, as disinflation has been cited in both goods and housing rentals. Today’s release could figure bigly! ADP is expected 210k. Then we get the employment report on Friday’s shortened illiquid session. What could go wrong?
–This past weekend I posted the Gundlach indicator copper/gold ratio vs the 10y yield. Decent timing as gold vaulted to a new recent high, with GCM3 2039 late, +38.60. May Silver +1.08 to 25.10, new high for the year.
–On March 27, the CFTC released a notice of civil enforcement against CZ and Binance. Doomsberg highlighted some of the issues yesterday. This topic may carry a bit more weight given the war against crypto, as evidenced by the shuttering of Signature Bank.
https://www.cftc.gov/PressRoom/PressReleases/8680-23
The CFTC action hasn’t dented the price of bitcoin, which this morning is near its recent high at 28.7k. Bitcoin supporters appear to be more worried about the financial architecture of the world than the CFTC, as USD dominance is eroded. Worth noting that Chas Schwab closed at a new low settle of 50 (down 3% though not quite at the month’s low print of 45). A friend (thanks Joe) mentioned that Canada’s Toronto Dominion is one of the most-shorted banks [reported as well on BBG today], in part due to a large position in SCHW. TD was -1.8% yesterday. Wealthion tweeted “US corporate bankruptcies are rising in 2023 with the first two months of the year registering the highest since 2011.”
–New lows in SFRM3/M4 at -158 (-8.5; 9519.0/9677.0) and SFRU3/U4 at -149 (-1.0; 9555.0/9704.0).
