More bonds
January 17. 2020
–Stealing Bernie’s thunder: We’ll issue more bonds to pay for a middle class tax cut…
–Tens are unchanged this morning while USH contract is down 20/32 as the US says it will begin to auction 20-yr bonds to help fund the deficit. Yesterday tens rose 1.4 bps to 1.802% on solid retail sales and Philly Fed. In eurodollars there continues to be accumulation of EDU0 9887 and 9900 calls (3.0 and 2.0). With EDU0 settling at 9840, the 9825p are 15 away and settled 3.25. The 9887c are 47.5 away and settled 3.0. The market is projecting the possibility of forced, aggressive easing…due to what? A violent reversal in stocks? The need to keep funding low in order to place the avalanche of bond sales? A deluge of Trump tweets calling for lower rates just before the election (with new Fed nominees Shelton and Waller as compliant doves)?
–Euro$ one-year calendars over 2020 continue to indicate one ease. EDH0/EDH1 settled -22.5 and FFF0/FFF1 -20.75.
–Stocks continue to power to new highs with ESH now 3324. This contract is now about 4.5% higher than the low after the US eliminated Iran’s general Soleimani.
–China’s annual growth was reported at 6.1% but Q4 shows signs of improvement. –Today’s news includes Housing Starts, Industrial Production -0.2 expected, U Mich Sentiment.
