NFP today but USD weakness dominates
December 4, 2020
–Employment report today with NFP expected 460 to 480k. Yields at the long end declined going into this data, with tens down 3 bps to 91.8. Stocks continue to respond to stimulus being “within reach”, while the dollar made fresh lows yesterday. CNY new high this morning vs USD at 6.53. This morning copper is at a new high for the move with HGH1 at 3.52. Crude oil is also at a new high, CLF1 at 46.29, up 65 cents. Ten year note to tip breakeven notched another new high at 188.7. Trade balance is also released today.
–While many news articles suggest faltering economic growth, dollar weakness projects a global easing of financial conditions, supporting prices of economically sensitive commodities.
–Large trade over the past two sessions: Buyer of about 90k 3EH 9925/9912 put spread vs 9962/9975 call spread for 1.5. Settled 1.25 vs 9946. This trade represents a strike roll from the original position taken in mid-October: +9912/9900ps vs -9975/9987cs. Rolled the 9912p to higher strike and the 9975c to lower strike. Expiration is March 12, 2021.
–Interesting tweet below suggesting increased shipping costs from Shanghai:
https://twitter.com/Steen_Jakobsen/status/1334761362967437313
