It’s a league game Smokey
October 3, 2024
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–Given all the other things going on in the world, I hadn’t thought much weight would be placed on tomorrow’s payroll data. The Boeing strike and longshoreman strike and effects of Helene will probably make this data volatile over the next few months. However, they were happy to use stronger than expected ADP (143k) as an excuse to sell rate futures. Red SOFR contracts settled -4.0 and the ten year yield rose the same amount, to close at 3.783%. 30y was up 5 bps to 4.13%. The ten year breakeven (treasury yield – tip) edged to a new recent high of 222 bps, coming off a low of 203 in early September. It seems to me that the long end has an undercurrent of weakness related to inflation concerns, supply in the context of unsustainable spending, and a possible lack of foreign sponsorship. Days of QT are numbered.
–Slight new high in SFRZ4/H5 at -51.5 (9596.5/9648) up 1 on the day. The next 3-m spread is H5/M5 at -30.5, and then M5/U5 at -15.5. Fair amount of fluidity represented by these spreads, dependent in large measure by the pace of easing. FFV4/FFG5, Oct/Feb which covers the next three FOMCs, is hanging around -100, yesterday at -100.5 (9518/9618.5). If inflation expectations flare up (evidenced by the 10y breakeven continuing to move up), it’s possible that pricing of near-term easing will reset to a slower pace.
–Several articles about depositor balances at BofA being marked at ZERO. (“Mark it zero dude”). Bloomberg headline today: Warren Buffet sells $338 million of BofA stock as spree slows.
Coincidence?
–And a nod to fellow conspiracists worried about a global monetary order controlling and reviewing all flows, here are the one-year futures calendars:
SFRZ4/Z5 is -1.045 (9595.5/9701)
ERZ4/Z5 is -1.025 (9718.5/9821)
SFIZ4/Z5 is -1.020 (9550.0/9652)
All the same price. Why OF COURSE I own gold. And tin, for my foil hat, which is why tin is near ytd highs.
–Today:
Jobless Claims expected 222k.
S&P services PMI 55.4 and Composite 54.3
ISM Services 51.7 from 51.5
Payrolls on Friday, NFP expected 140-150k with a rate of 4.2%
