June 19. Summer’s here, turn up the heat
–So the strategy is to turn up the pressure until the other side buckles… it worked with N Korea right? Might not be so easy with China. CNY at five month low 6.4754. SHCOMP well below 3000 support level (2907). ESU -33 as of this writing and TYU above the 120 strike. (Trump floats another $200 billion of tariffs on China, with immediate vow of retaliation).
–It was a quiet day in rate futures Monday with almost everything closing within 1 bp of Friday. Continued buying in EDZ8/0EZ 9750 call spread for flat (+EDZ). There was also buying of Sept midcurve premium, for example 0EU 9700 straddle bought for 22.0 and 2EU 9687p 10 paid vs 9694.5 in size 50k with open interest +38k (27.0 in straddle). Also a large buyer on the day of 2EZ 9775/9800c spread just under 1.5 (settled 1.25), appears to be rolling short to higher strike.
–Will trade and EM stress cause steepening of front end? EMB, emerging mkt bond etf, closed at a new low yesterday. There was a buyer of 6k EDM0/EDM1 for -0.5, settled -1.0. Ought to snap back to positive…
–Interesting snippet by Keith Weiner, CEO Monetary Metals, “Social Security will begin tapping into its trust fund this year. This happens as the Social Security Board of Trustees states antiseptically, ‘four years earlier than projected in last year’s report.’ In other words, the economy is growing by every conventional measure, yet Social Security is spending more than its tax revenues years earlier than projected. According to those same inaccurate projections, the trust fund won’t run dry until 2034.”
–Another mass shooting, 56 hit and 9 dead, according to the Chicago Tribune. Just another Chicago weekend. Sometimes your intended targets fire back….
