Flatter
November 22, 2021
–CME Nasdaq 100 futures are at a new all-time high this morning. I saw somewhere that there have never been as many stocks within the Nasdaq Composite making new lows as the index is making new highs. The attached chart shows the number of stocks making new lows in blue (about 10% of the components). Deterioration typically works from the edges toward the center, though big tech seems impervious to any damage given dual attributes of both growth and liquid repositories of flight-to-quality flows.
–Two and five year auctions today, sevens tomorrow. PCE prices and FOMC minutes on Wednesday. Possible announcement of Fed Chair, which could add a bit of drama to Friday’s December treasury option expiration.
–Friday featured a flatter curve, with the 2y yield essentially unchanged at 50 and tens down over 5 bps to 1.536%. 5/30 edged to a slight new low at 70 bps, as did red/gold euro$ pack spread at 58.75. Red/gold is down over 120 bps from the high set early in the year (182) while 5/30 is 93 off the year’s high. High inflation prints would ordinarily be expected to steepen the curve, and the added tailwind of an accelerated taper should also have an impact, but the market appears to be forecasting a rapid economic slowdown as soon as stimulus wears off. More immediately, Covid lockdowns are a concern.
