Auction concession or something more?
April 8, 2024
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–Friday’s higher than expected payrolls at 303k with an unemployment rate of only 3.8% contributed to a jump in US rates. Tens rose 5.8 bps to 4.373%. The SOFR curve flattened with reds leading the way lower. Red pack (M5, U5, Z5, H6 avg) ended -11 bps at 9597.0. close to 4%. Greens were -7.875 at 9621 (rounded) and blues -6 at 9622.5.
–Near one-year calendars made new highs with SFRM4/M5 at -93.5 (9483.5/9577.0) +6.5 on the day, and U4/U5 at -86.0 (9507.5/9593.5) +4.5 on the day. This was a spread Bill Gross had highlighted as a long a couple of months ago when it was sub -100.
–Treasuries have continued lower this morning with TYM down half a point at 109-05 and USM down a full point at 116-17. Ten year yield now 4.45%, well through the 50% level from last October’s high of 4.99% to December’s low of 3.795%. Next yield resistance should be the 61.8 level of 4.53% which should equate to price support around 108-18 to 108-20 in TYM4. Note to self, total eclipse is bearish.
–Dollar/yen near 152 (151.90 last) pinned at recent highs and near the high print in 2022 of 151.95. It’s the highest level since the early 1990’s.
–3, 10 and 30 year auctions this week. CPI is on Wednesday, expected 3.4% yoy from 3.2% last with Core 3.7% from 3.8% last. FOMC minutes also on Wednesday.
