When there were journalistic standards
April 20, 2023
–Markets just weren’t that interesting yesterday. So I have taken the liberty of attaching an old news story below, which can probably be considered in some way relevant to the business of futures and options.
–If there is something worth mention in yesterday’s activity, it’s that SFRM’24 and U’24 continue to be the weakest contracts, both settling -9 yesterday. Last Thursday M4 settled 9659, and yesterday at 9622, a slide of 37 bps in 4 sessions. U4 went from 9688.5 to to 9652.5, so 36 bps. The ten year yield rose 3.5 yesterday to 3.595%. New recent low in 2/10 at -66. On the SOFR curve all one-year calendars from H4/H5 back made new recent lows. Red/green pack spread settled just under -36 down 4.625 on the day. New buyer of 30k SFRN3 9450/9425ps for 2.0; settled there ref SFRU3 9508.5. New buyer 28k 0QU3 9600/9575ps for 7.25, settled 7.0 ref SFRU4 9652.5.
–Stock futures making new lows on the week with ESM -30 currently at 4148.50.
–If I were the Fed, I would NOT hike in May, even though the market is currently providing a nearly free pass. Signs of economic weakness are becoming more prevalent and tightened credit conditions have yet to work through the system. Rather than face criticism for tipping the economy into inevitable recession and be forced into rapid easing, the Fed should HOLD rates but continue to jawbone for hiking in the future. It might be the difference between being able to keep rates relatively high throughout 2023 versus being forced into cutting.
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