Round trips
October 16, 2024
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–The Columbus round-trip: On Monday ESZ4 sailed, with a range of 5850.0 to 5918.50, settling 5908.25, +48.50. Tuesday’s range was almost exactly the same in reverse, testing the high early at 5915.50, with a low of 5850.0 and settle of 5962.75, -45.50. Weakness in semis was sparked by a 4-letter stock ASML, on a forecast of reduced sales. Today LVMH, another 4-letter acronym, is carrying the torch, as the luxury goods company, “…unexpectedly reported lower sales in the third quarter, primarily due to the pullback in Chinese luxury demand. It reported organic revenue of -3%, missing the BBG consensus of +0.39%” (ZH)
–Curve was flatter in the wake of Waller’s speech on Monday where he tamped down on the speed of rate reductions from the current “restrictive level”. Slight new recent low settle in SFRH5/SFRH6 at -60 (9607.5/9667.5). FFX4 is gravitating to a cut of 25. On Monday the contract settled 9533.0, but as stocks sold off, it popped up to 36.5 bid before settling at 9536. On a 25 bp cut at the Nov 7 FOMC (with a new EFFR of 4.58%) the contract should settle at 9536.2.
–Saw an interesting line from FFTT (Luke Gromen). “Incredibly, the Cayman Islands (pop 68k) is now the 5th biggest US foreign creditor in the world.”
[due to basis/ repo trades by hedge funds]
Misty echo of Bill Clinton’s famous quote in response to his economic team: “You mean to tell me that the success of my program and my re-election hinges on the Federal Reserve and a bunch of fucking bond traders?” [we might add today, “..and the robustness of the repo market”]
Here’s a link:
https://www.nbcnews.com/id/wbna8064271
The article adds: “The president-elect’s outburst captured an essential truth that he had not yet seized upon. The consuming task of his presidency would be to staunch a flow of budgetary red ink that had grown to some $290 billion a year.”
–I would note that Clinton was the only president to have ultimately run a budget surplus with an estimated surplus of $220b in FY2000. “…on track to pay off the entire debt by 2012.” Sort of fun to reminisce given today’s MONTHLY expected deficit of $61 to $70 billion.
