Molecule crisis?
February 8, 2022
–This morning tens are back at late 2019 levels at 1.94%….pre-covid. The ten-yr swap is right at 2%. As of late yesterday, yields were a bit lower, with tens 1.916%. Today we have the three year auction, followed by 10s and 30s Wednesday and Thursday. CPI is Thursday, expected yoy 7.3%, and the WASDE grain report is Wednesday. From a BBG interview yesterday with Jeff Currie, Goldman’s head of commodity research, “I’ve been doing this 30 years and I’ve never seen markets like this. This is a molecule crisis. We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it we’re out of it.”
–US curve ended slightly flatter yet again. In eurodollars, the spreads from reds back made slight new lows (reds are 2nd yr, greens are 3rd yr, blue are 4th and golds are 5th). Red/green new low at just 13 bps, red/blue new low 14.875, red/gold new low 17.625. Two/ten treasury spread finished at 62. –Feb eurodollar midcurve options expire Friday. At-the-money straddles: 0EG 9825^ 12.5, 2EG 9787.5^ 11.5 and 3EG 9787.5^ 10.5. The fact that red straddles have the most juice shows that the fear is related to near-term central bank policy.
–NFIB Small Biz Optimism expected 97.5 from 98.9. Tends to correlate with Russell 2000, which this year decisively broke through 2021’s tight sideways range.
–Here’s a nice story from the Chicago Tribune, ‘Chicago’s carjacking task force to be staffed 24 hours a day amid a rise in violent crime’. There’s actually a carjack task force. That would be a good name for a band. How about no bail and jail?
