20 year auction: $20 billion
May 20, 2020
–May 20, 2020 and the treasury is auctioning $20 billion of 20 year bonds. W/I was 1.22 late yesterday. Also today Fed minutes from the April meeting will be released.
–Yesterday’s QE operation was the largest of the week, a purchase of $9.5 billion of maturities under 2.5 years. Tomorrow the Fed buys 4.5b of 4.5 to 7 year and 1.5b in tips and on Thursday $2b 20-30 year and $3b 7 to 20. So effectively the Fed is taking about one fourth of the 20 year with Thursday’s buys.
–Not much of interest yesterday aside from a late stock sell off. This morning ESM has completely erased yesterday’s swoon, trading +30 at 2948.75 and climbing, essentially back at Friday’s closing level. Implieds remain subdued in rates. June treasury options expire Friday with TYM 138.75^ settling 29 yesterday. Euro$ curve took back a smidgen of Monday’s steepener with reds +1.625, greens +2.375, blues +3.75 and golds +4.0. Volume has fallen significantly. CME and ICE shares both fell over 3% yesterday while SPX was -1.6%.
–Silver has continued to skyrocket, with the July contract up nearly 20% from $15 to $18 oz in the past 11 sessions.
–In front of the Fed minutes there are now NO Fed Fund futures above 100. The market seems to be taking the Fed at its word that it’s not going that route. Perhaps the minutes will reinforce the message.
