Consumer warning
December 8, 2020
–Friday’s sell off in longer dated interest rate contracts was mostly erased yesterday. For example, TYH settled 137-21 on Thursday, 137-12 on Friday and back to 137-23 yesterday. EDZ3 went from 9947 Thursday to 42 on Friday and back to 46.5 yesterday. There was however, a new buyer of 30k 2EH 9950p for 1.5, settled there vs EDH3 9969.5. Overall activity was lackluster, apart from a lustrous move in gold, where GCG rose $26 to 1866 in a continuing reversal of late November’s sell off.
–There was a big miss in the Consumer Credit report. Revolving (credit card) debt in October fell at an annualized rate of 6.7%. Total consumer credit which includes non-revolving auto and student loan debt, still managed an increase of 2.1%. This report typically isn’t all that important, but it captured the month when a large portion of stimulus ended and coincided with many financial institutions tightening limits on credit cards. According to the St Louis Fed website, the delinquency rate on credit cards in Q3 was at a historic low of just 2%. That’s likely to move higher.
–Today brings NFIB small biz optimism, expected to pull back to 102.5 from 104 last. This data series correlates with Russell, which has been on a tear, so I wouldn’t be surprised to see a stronger than expected number. Final Q3 nonfarm productivity expected 4.9%. Treasury auctions $56b in three year notes today, followed by tens and thirties Wed and Thursday.
