Conditions getting tighter
April 22, 2024
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–New high copper this morning even as other metals and oil are lower. SFRZ4 is threatening to get above 5% (9503 last) while USM flirts with the 113 handle (114-04 last). Treasury auctions of 2s, 5s and 7s this week ($69, 70 and 44 billion). Ten year up about 4 bps from Friday at 4.652. The 2yr is printing 5%. That’s up about 75 bps from the start of the year, though last October’s high was 5.22%. Earnings reports include TSLA on Tuesday, META on Wednesday and MSFT, GOOGL Thursday. PCE prices on Friday.
–$/yen nearing 155, now 154.75. CNY also weaker, new low for the year at 7.2437. I read a blurb that China is stockpiling base metals in anticipation of devaluation. Or perhaps a move on Taiwan is imminent. The House passed a bill opening the door to transfer Russian assets to Ukraine (still needs Senate approval) and Congress also gave more aid to Ukraine. Not sure why anyone would think the Fed has to tighten. Treasury has a LOT of paper to sell while the US undermines property rights, and spends as if there’s a bottomless pit. Hardly encouraging for foreign buyers. Let financial conditions tighten at the long end.
