Black market for bread
July 20, 2023
–Quiet session in rates Wednesday. Curve became more deeply inverted with 2s essentially unchanged at 4.751% and 10s down 5 bps to 3.74%, bringing 2/10 spread just below -1% (-101 bps).
–Buying continues in SFRH4 9600/9700cs, 9 paid for 10k with total accumulation about 100k. Settled 9.25 (16.0/6.75) ref 9499.5.
–As next week’s FOMC meeting nears, market sentiment tilts to ‘more hiking now means more easing later’ (next year). Today’s news includes Jobless Claims expected 242k from 237k and Philly Fed, expected -10.0 from -13.7. Russia yesterday announced that since the Black Sea Grain Initiative was no longer valid, all cargo ships sailing to Ukrainian ports will be regarded as potentially carrying military cargo. Yesterday Sept Wheat closed up 57 cents to 727 3/4. CME reported that vol was sharply higher, closing at a 12 year high. Currently up another 15 cents.
–WSJ flags declining workweek hours today as a possible sign of recession. Last at 34.4 hours, doesn’t look particularly ominous.
