National Debt Relief
July 10, 2024
**************
–I have to start with a story about the yawning gap between asset prices. No, I am not talking about Nasdaq vs Russell, but this example is stark as well. TheRealDeal.com reports that a 41 story office tower in NYC, 180 Maiden Lane, was bought in a short sale for $297m, by Carlo Bellini’s real estate firm 99c. Last trade in 2015 for $470m, partially financed by Blackstone with a $248m loan. Here’s the rich part: it’s 68% occupied, with one anchor tenant being National Debt Relief. At least we can be sure THAT business will remain strong….
(Blackstone’s relationship with Nat’l Debt Relief goes from landlord to client!)
The other story is on BBG: “A penthouse at Aman New York (Crown Building) has sold for $135 million, making it the most expensive home purchased in Manhattan this year.” The five-story unfinished space went for $10k sq/ft. “Priciest deal since 2022”.
https://therealdeal.com/new-york/2024/07/09/carlo-bellini-buys-180-maiden-lane-in-short-sale
–Powell in front of Senate Banking yesterday. He repeated that the Fed needs to see more good data on inflation before cutting. Could it come tomorrow with CPI? Monthly figures expected 0.1% with Core 0.2%. Yoy expected 3.1% from 3.3%. Overall, Powell’s tone was slightly dovish, with emphasis on the slowdown in labor markets; several Senators noted the outsized amount of government hiring in the last payroll data.
–There were several questions/comments about the prohibitive cost of housing, related to high mortgage rates. I thought it would have been appropriate for Powell to mention the rapid increases in insurance and property taxes; if he did, I missed it.
–Semi-annual testimony continues today in front of the House. Ten-year auction as well, which follows a solid 3-yr yesterday. Yields rose a few bps across the curve, with tens +3 to 4.298%. Worth a note is that several of the deferred SOFR calendars are edging to new recent highs. For example, SFRM26/SFRM27 settled -7.5 (9632/9639.5). The past month’s range has been -15.5 to -8.5. SFRM7 is currently the highest point (lowest yield) on the SOFR strip with a yield of 3.605%.
–Several large SOFR option trades yesterday (not covering all, just a few).
New buyer 35k SFRU4 9500/9506.25cs for 0.5 (SFRU4 settled 9487)
New buyer 10k SFRU5 9575/9525p 1×2 vs 9600 and 9599 for 2 bp credit. Settled -1.75 vs 9601.
Exit put buys
+50k 0QU4 9500p for 1.0 (100 bps out of the money with 66 dte).
+30k 2QZ4 9550p for 6.5, covered 9636.5, 15 delta. Underlying SFRZ6 settled 9638.
