June 7. US Big Tech the beneficiary of safe haven flows?
–Rates pushed higher Wednesday with the US ten year yield up 5.7 bps to 297.4 as stocks soared, with the ECB signaling intent to discuss an end to bond buying at next week’s meeting. Red through gold eurodollar contracts settled -4.5 to -5.0. Implied vol up across the board as rates rose, with the G7 starting Friday, the FOMC meeting Wednesday, followed by the ECB. According to some analysts, the hard stance by the ECB is meant as a pointed signal to Italy. Although the euro has had a moderate rally the last couple of days, it almost feels as if the US tech sector is the true beneficiary of global ‘safety’ flows, with the Nasdaq making new highs, having jumped 4% in the past week. US fixed income is being weighed down by QT and treasury supply, with the added bearish outlook by the ECB. EDM9 is down over 30 bps from the high print just six sessions ago. With just over a week until midcurve June expiration, 0EM 9712^ settled 9.0, 2EM 9700^ 11.0 and 3EM 9687.5^ 11.5.
–Worth noting as well that copper has had a blistering rally, with HGN7 rising from 3.06 to 3.28 in a week.
–Today’s news includes Jobless Claims expected 220k and Consumer Credit $14b. The Fed also releases the quarterly Z1 report which will likely show a new record high in Household net Worth even though stocks were flat to slightly lower over Q1. This report also summarizes debt levels and flows of the various sectors.
–Large trade yesterday includes a new buyer of 25k EDU8 9750/9737p 1×2 (3.0s) vs sell 9775c (1.5s). EDU8 settled 9752.5.
