Big tech and big Central Bank week
July 24, 2023
–Rates little changed on Friday. Ten year yield down 1.2 bps to 3.84%. 2/10 spread just under -100 bps.
–This week features FOMC meeting Wednesday. FFQ3 is priced at 9468.5 or 5.315%, indicating a lock for 25 bps hike. The lowest contract on the FF curve is November at 9459 or 5.41%; this contract captures two more meetings Sept 20 and Nov 1. It’s unlikely that odds move to more than 50/50 for another hike, so I would suspect a floor of 9452-54 on this contract. On the other hand, Powell will still maintain hawkish rhetoric to leave the option open.
–ECB on Thursday. BOJ on Friday. $/yen a bit lower this morning at 141.27. BOJ trying hard to manage expectations.
–GOOGL and MSFT on Tuesday. META on Wednesday. 2y auction today with 5s tomorrow.
–Interesting link by Praetorian Capital poses the question, what if US bond yields trade HIGHER in the next recession.
