We all see the prices
April 10, 2024
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–CPI expected +0.3% on the month, with yoy 3.4 from 3.2 last and Core 3.7 from 3.8. ZeroHedge this morning leads with an article about scandal within the BLS regarding technical discussions with ‘super-user’ economists about specific calculations relating to CPI. The intimation is that some market participants have ‘non-public’ info. My working assumption is that someone always has better information and probably has the final number. His name is Clarence Beeks.
–There was a block buyer of 75k SFRZ4 yesterday at 9532.0 (settled 9533.0). New position, as open interest rose 55k. That guy have it? Maybe, But maybe the fact that Yellen is warning about another wave of cheap Chinese deflation has something to do with the SOFR bid, as the yuan is slowly depreciating. Maybe the Fitch downgrade of China’s outlook has something to do with it. $/yen also pinned near 152.
–There was also a buyer of 24k FFN4 at 9481 or 5.19%, Settled 9482.0. Current Fed Effective is 5.33% or 9467. There’s an FOMC May 1, and FFK4 settled 9468, so the market is assigning very little chance of a cut at that meeting. Then there is a meeting June 12. That’s the one FFN is pricing. Assuming May is a no-go, then FFN at 9482 indicates 60% chance of an ease. There’s another FOMC on July 31. FFQ4 settled 9492.0 or 5.08%, exactly 25 bps lower than the current EFFR.
–Yesterday also featured the softest Small Business Confidence (NFIB ) number since 2012 at 88.5. Inflation was cited as a top concern. In many ways, inflation has helped the largest US companies and their stocks. Smaller businesses, not so much. It seems as if today’s CPI is expected to come in soft, but I’m not sure that’s a sustainable positive for SPX from here.
–Ten year auction today, yesterday’s 3-yr was poorly received with a 2 bp tail, 4.548% actual vs 4.528 at cut-off. Tens ended at 4.364%, down 6 bps on the day. FOMC minutes this afternoon.
