Bonds surge
November 26, 2024
*********************
–Huge bond rally with 10s down 14 bps to 4.267%. 2/10 spread re-inverted, now just under zero, though yesterday’s 2y auction was stellar (wi ended 4.252). Back calendar spreads on the SOFR strip made new lows, for example, SFRM5/M6 fell 6.5 to -32.0 (9592.5, +5.5 and 9624.5, +12.0). The peak contract on the SOFR strip keeps moving farther back in time, now it’s SFRH8, up 14 on the day to 9633.5. The catalyst was apparently the Scott Bessent as Treasury Sec’y announcement, though I’m not quite sure that’s based on solid reasoning. Gold was crushed, with GCZ4 down 94 to 2616.80, Bitcoin futures have pulled back from 100k and currently are just under 93k (Nov), CLF5 fell 2.30 bbl to 68.94. The dollar weakened.
–We’re now three weeks from the Dec 18 FOMC and for now, it’s a 50/50 proposition. Trump’s tariff announcements on Mexico, Canada and China were absorbed by the equity market, though NVDA yesterday erased all of November’s gains and closed just above 136, off about 11% from Thursday’s high print of 152.89.
–5yr auction today and FOMC minutes this afternoon.
