July 16. If the Fed stops hiking buy stocks. Right?!?!
–Nasdaq creeping to a new high this morning, currently +16 at 7409. However, China stocks were a bit lower as data shows GDP +6.7% as expected. WTI also moving lower. Today’s US news includes Retail Sales, expected +0.5% and the Trump/Putin lovefest.
–New lows in the curve to wrap up the end of last week. 2/10 just under 25 bps. Last week EDZ19/EDZ20 became the nearest one-year euro$ spread to settle negative, ending Friday at -2 bps. Red/green pack spread also finished at a new low of -2.125. It appears as if stocks like the prospect of an end to the Fed’s tightening campaign as telegraphed by the curve, but the fact that long rates are easing means economic growth is suspect going forward. All topics that Powell should address during tomorrow’s testimony. Greens remain pivotal on the curve, reds +2.875, greens +3.75 and blues +3.50. July midcurves expired between strikes; I would expect replacement buyers of red midcurve puts early in the week.
