July 30. Sugar high?
–In spite of a 4.1 GDP print, rates eased slightly on Friday with tens -1.5 bps to 296.0 as stocks fell. SPX was down only 0.7%, but Nasdaq dropped nearly 1.5% and Russell 1.9%. Curve slightly flatter with reds -0.125 while blues and golds ended +1.5. Of course, the eurodollar strip is nearly completely flat from the first red back with only 5.5 bps difference from the highest contract (EDU19 at 9698) to the last gold (EDM23 at 9692.5). Somewhat interesting trade on Friday was a block buyer of 15k FFV8/FFF9 spread for 19. New position which reflects significant faith in the idea of a hike at the December FOMC meeting. Not sure if related, but there was also sizable selling of EDZ18/EDM19 at 27.0 (30k). Fed to hike in December and then stop? New highs posted in EDU18 spreads with Sept/Dec at 24.5 and Sept/Sept 59.0.
–Plenty of news out this week with focus on Tuesday’s BOJ meeting which may include changes in yield curve control policies and ETF purchases, both of which translate into less accommodation. Also on Tuesday, Personal Income and Spending report which includes the Fed’s preferred measure of inflation, Core PCE, expected right at the 2% target. FOMC announcement on Wednesday. Payrolls on Friday. AAPL reports Tuesday after the close, with TSLA on Wednesday.
–Trump’s budget director Mulvaney said Friday’s Q2 GDP report was “not a sugar high” resulting from tax cuts, but was rather a continued response to deregulation efforts. At the same time, the White House’s OMB adjusted the 2019 deficit up by $100 billion to $1 trillion. I’ll have a dozen Krispy Kremes with that. And a diet Coke.
–Interesting oil chart? Low after the 2008 bust, 12/19/08 to the April 2011 high was 840 days. Low after the 2015 bust 1/20/2016 to the recent high this month is 895 days, though the move is obviously of less price magnitude. Another leg up?
