Nasdaq or gold
June 24, 2020
–Once again muted price action in fixed income with implied vol slipping. Curve had a slightly steeper bias. Tens rose 0.5 bp to 70.7, while the thirty yr rose 2.7 to 1.486%. July treasury options expire Friday with TYN 138.75 straddle currently 22/24 vs 138-23. Five year auction today.
–Yesterday the Nasdaq made a new high, but SPX, DJIA and RTY are lagging significantly, and profit-taking sellers were apparent at the close. There is additional downside pressure this morning which could be due to several factors: an increase in COVID cases, news articles highlighting increased bankruptcies, an FT headline this morning ‘Record numbers of US companies seek relief on loan terms’. I would also note that Carnival Cruise (CCL), a favorite of the V-shape crowd, was downgraded to junk by S&P late yesterday and is down 5% pre-open. Mnuchin touting a new $1T stimulus package has lost its luster.
–Volume in rates is anemic, but gold is at a new high this morning with GCQ0 up $12/oz at 1794.00, the highest level since September 2012. Below is a chart of Nasdaq priced in gold. As you can see, since gold made its all-time high in 2011 around $1900/oz, Nasdaq has wildly outperformed.
Wildly? Well, no. Wildly would be the great dot.com bubble. Below is a longer time frame chart…
