Not over yet
June 23, 2020
–Nasdaq closed at a new high and is building on those gains this morning, despite a brief hiccup associated with Peter Navarro saying “it’s over” about the China trade deal. A quick plunge in stocks, as ESU fell 50 points, was quickly regained as Navarro and Kudlow rushed to cancel the comments. Other stock index futures aren’t yet at new highs, but are, of course, pushing in that direction. Gold has been going sideways in a fairly wide range of 1675 to 1775 for two months, but is now holding at the upper end with GCQ trading 1770. The attached chart is a spread of the ten year treasury vs inflation-indexed note which has made a post-corona high of 135 bps. A return toward normalcy in a world that is anything but normal.
–We again have Fed Fund futures at a slight negative yield with the Jan’22 contract at the peak of the curve settling 100.01. Sept’21 is the peak on the ED curve at 9979.5. Treasury yields on the whole were close to unch’d with the ten year glued to 70 bps. Take the same value and slap a minus sign in front and you have the ‘real’ yield as expressed by the 10-yr inflation-index note, -64.4.
–Markit PMI numbers today. New Home Sales expected 640k rate, up 2.7%. Treasury auctions twos into the waiting arms of the Fed, followed by 5’s and 7’s Wed and Thursday.
–A friend pointed out that yesterday was the 1986 anniversary of Diego Maradona’s Hand of God goal and the Goal of the Century. Link of the latter below. The Nasdaq sprint to new highs almost captures the spirit, without, of course, the poetic raw emotion of the announcer Victor Hugo Morales.
