A to Z
April 15, 2020
–AMZN new all-time high yesterday. So I guess everything’s fixed, from A to Z. Let’s just start with A: AA is Alcoa, and it’s down 64% from the high of this year. Close to Z is X, US Steel, which is down 41% from the start of year high. Z is Zillow…down 16% from the start of the year but down but down 40% from the high close in late February. The flow into AMZN isn’t that surprising in the Stay at Home environment, but other big tech stocks are a search for relative safety. In any case, stocks overnight are giving away gains with ESM currently 50 lower. Trump cut funding for WHO (reminds me of the Abbott and Costello routine ‘WHO’s on first’). There’s also a headline in the FT ‘Coronavirus shortages prompt Australia to bring manufacturing home.’ All over the world, countries will likely pay extra to manufacture domestic supplies of all types of goods. The US signaling further withdrawal from international institutions is likely to accentuate this trend.
–Eurodollar curve continues to show signs of healing. EDM0 was 9953 bid late in the day as the Fed’s CPFF was implemented. The EDM0 9950 straddle settled 18.5… and now all atm ED straddles are successively higher in premium further out the curve. It had been that the front EDM straddle was higher than the EDU 9962.5 (a sign of stress) but not any more. EDM0 9950^ 18.5, EDU0 9962^ 19.5, EDZ0 9962.5^ 23.5 and EDH0 9975^ 24.0. Little net movement in rates yesterday. In dollars, reds through golds closed +1 to +2. Ten year yield essentially unchanged as TYM hasn’t strayed far from the 138 strike in five sessions. TYM 138 straddle settled 1’60 yesterday from 2’10 one week ago. However, this morning TYM prints 138-25 having settled at 138-07 yesterday as stocks fade from yesterday’s high.
–Would have been tax day today, with funds flowing into the US treasury. Now it’s just an avalanche of t-bill sales to make up for lost revenue.
