Bonds wobbly
December 27, 2024
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–In the last two sessions, Tuesday and Thursday, USH5 contract made new lows (113-06 and 113-03) but then closed near the highs of the day (113-28, 113-30). Yesterday was an outside day with a higher close. This price action suggests that selling pressure is becoming exhausted, HOWEVER, this morning’s low is 113-08 and the cash bond yield is again over 4.80, testing the year’s high of 4.813 set in April. A close below 113 would suggest a test of 5%. The high yield in 2023 was 5.115%. The front bond contract at that time reached 107-27. On the opposite end of the world China’s 10y continues to make new low YIELD at 1.70.
–TYH5 settle 108-20. Jan treasury options expire today. Late mkt in Jan 108.5/108.75 strangle was 6/8, indicating a quiet Friday, but the contract currently prints at the lower strike. There are 55k open in the Jan 108.5p strike and 45k in the 108.25p. Not really enough to cause panic, but in a market with fewer participants, maybe an opportunity for a washout. On the call side, just 26k 108.75c and 43k 109c.
–ABC news has this snippet:
Retail sales climbed 3.8% from Nov. 1 to Dec. 24 compared with the same period last year, Mastercard SpendingPulse data showed. The boost in spending exceeded a Mastercard SpendingPulse estimate of 3.2%, while outperforming last year’s growth of 3.1%. The retail sales data excludes automotive purchases.
“Solid spending during this holiday season underscores the strength we observed from the consumer all year,” Michelle Meyer, chief economist at the Mastercard Economics Institute, told ABC News in a statement.
Not much in excess of inflation, but I suppose it goes in the win column.
