Game over
May 17, 2024
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–Pressure continues on both the curve and vol. New recent low in 2/10 spread at -41.4 (2y 4.789, +5.5 and 10y 4.375. +2.1). Red/green SOFR pack spread also edged to a new low at -31.25 (reds 9585.875, -7.375 and greens 9617.125, -4.5). With Fed officials throwing cold water on the prospects of near-term ease in the context of a slower economy, price action makes sense, in the short term anyway.
–Continuous efforts to support the Chinese economy (new plan to buy unsold homes) has rocketed the Hang Seng from 16k to 19.5k in just the past month. On the other hand, the flash rallies in GME and AMC have likely already run their course, perhaps a sign that the speculative public doesn’t have the same firepower that it did following gov’t stimulus checks. Not much pullback in copper though; critical inputs to the economic industrial machine probably deserve more attention than meme stocks
–Waller speaks today on payment innovations at 9:15. Probably no policy pronouncements, though if there are, no reason to suspect he’d change his HOLD STEADY stance. Kugler and Powell speak at commencement addresses this weekend.
