January Resolutions in Turmoil
January 13, 2025
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–January 10 was Quitter’s Day. The second Friday in January is apparently when most resolutions go out the window. If the resolution was ‘support financial assets’ then indeed, it seems to have crumbled.
–Yields soared on Friday’s blowout +256k payroll number. Curve flattened, giving back some of the steepening seen over the previous several sessions. On the treasury curve, 5s were weakest, jumping 12.7 bps in yield to 4.59%. Tens rose 8.1 to 4.772%. On the SOFR strip, reds were weakest, down 18.625 to 9583.625, greens -16.375 to 9574.88. blues -12.875 to 9569.125. Peak contract is now SFRZ5 at 9588.5, a yield of 4.115% which is less than one-quarter percent lower than the current SOFRRATE of 4.30%. I.e, not much easing being priced going forward.
–The lowest most inverted one-yr calendar is SFRH5/H6 at -12.5, up a whopping 13 bps Friday with SFRH5 down 5 to 9575 and H6 down 18 to 9587.5. In mid-September, just before the ease of 50 at the FOMC meeting, the Sept’24/Sept’25 spread was -203 bps. Of course, there was an actual reduction of 100 bps since then. (At the time, on 9/11, SFRZ4 was 9585 and SFRH25 was 9652.5.
–Starting out Monday with a lot of volatility. CLH5 up 1.25 at 77.00. On a continuous chart it’s around the high of early October, with press reports citing renewed sanctions on Russian oil. The British pound is in freefall, now 1.2124 (high at end of Sept was just over 1.34. Starmer said ready to sack Reeves). ESH5 is down 47, a new low for the move and testing early Nov low of 5796.5. Bitcoin is around 91k, a slight new low with prices appearing to have formed a head & shoulder formation which should target 74k, right at the 200 dma of 73569. SOFR contracts marginally lower, TYH5 printing a new low 107-09, down 3/32’s.
–Economic news includes the Fed’l Budget expected -$73.8b. CA wildfires will be a drain on the budget going forward, with current estimates of damage >$150b.
Luxury watch market in continuous decline, down about 15% over the past 2 years
https://watchcharts.com/watches/price_index
