Are you sure?
September 12, 2024
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–In the old days on the floor, when asking the pit for quotes by way of hand signals (and not realizing exactly where prices should be in active markets) there were times when quotes would be wrong. So, you might quote a call diagonal and get 4 bid/at 5 and it was really 4 ask. I always appreciated the client who would say, “Are you sure of that?” And of course, rather than get buried I would say, Nope, not sure, please give me a second to double-check that quote.
–Yesterday’s slightly stronger than expected CPI boosted the market’s certainty for a 25 bp cut next week rather than 50. SFRU4 sank 6 bps to 9505.25, and FFV4 fell 5 to 9495.5, nearing the 9492 price that should be the ultimate settle on 25. Are you sure about that? What I am definitely not sure about is stocks, where NQU4 traded lower early and then surged like a rocket into the end of the day, closing up 2% (+407) on a range of nearly 750 points. NVDA? Really?
–In any case the curve flattened. 2’s were up 3.4 bps in yield to 3.641% while tens and thirties added only 1 bp to 3.65% and 3.963%. 30yr auction today. On the SOFR strip, while U4, Z4 and H5 fell 6, 9 and 7, 2027 contracts were down only 0.5. Near 1-yr calendars made new lows, with U4/U5 below -203 (9505.25/9708.5) Z4/Z5 at -132, down 6 on the day (9585/9717) and H5/H6 -68, down 4.5 (9652.5/9720.5). The peak contract is currently SFRM6 at 9721, just 2.79%.
–Today’s news includes PPI expected 0.1 and 0.2 for Core m/m, with yoy 1.7 and Core 2.4.
Jobless Claims 227k
Household Net Worth and other data from Fed’s Z.1 quarterly report. HH net worth will be at a new high as S&P added a few percent last quarter.
