NFIB and Russel
May 10, 2022
–Curve steepened as stocks fell to new lows on the year with SPX down 3.2% and Nasdaq Comp -4.3%. The two year note plunged 10 bps to 2.616%.EDM3 is up 40 bps from the pre-FOMC low of 9619, currently printing 9661 (still the lowest contract on the strip). 2/10 and 5/30 both posted new recent highs, with the former +5.8 to 46.3 and the latter +4.7 to 22.5. The most aggressive hiking scenarios have been scaled back; a string of 50 bp hikes is no longer being priced. The theme in eurodollars was mostly put spread sales.
–Bitcoin was hammered and is down over 50% from the high. Interesting tweet from CryptoWhale: “The recent price crash has put every single one of MicroStategy’s positions at a loss.” The issue of course is leverage, as pledged collateral loses value against a backdrop of rising rates. A Doomberg piece yesterday outlined the possibility of spiraling margin calls.
— Three year auction today. Speakers include Bostic, Williams, Kashkari, Waller and Mester. CPI Wednesday…a sigh of relief on signs that inflation has peaked? Biden to exacerbate the problem by giving a speech today addressing high prices (by leaning into the microphone and using his homespun whisper to blame the Russians).
–NFIB Small Business Optimism this morning expected slightly lower from 93.2 last. This is the lowest level since the Covid plunge in early 2020. This survey has a decent correlation to the Russell 2000, which was down 4.2% yesterday and is off 28% from the high last November.
