Outlining the Obvious
May 24, 2022
–Hey Raphael, I loaded up on some Sept call spreads in eurodollars, how about a little something, you know, for the effort? Maybe something like a pause in the hike cycle?
Powell makes intro remarks at an economic summit at 12:20 today.
–SNAP warned of a deteriorating macro environment, and the share price was immediately shaved by 30% (which, for some reason, appears to be spilling over this morning). CEO Spiegel warned of “rising inflation and interest rates, supply chain shortages, labor disruptions, platform policy changes, the impact of the war in Ukraine, and more.” I.e. IT WASN’T MY FAULT. A NewsNation poll notes that nearly half of those surveyed said they are worse off financially than they were a year ago” and that inflation is the top problem. While a summary of Esther George’s comments at an Ag symposium only noted that she thinks FFs should be 2% by August, a report by Karen Braun of Reuters says that “US corn planting is running at the second-slowest pace in more than a quarter century and spring wheat planting is the slowest on record, and the full acreage potential has rightfully come into question.” July Wheat is back above $12/bushel this morning, having started the year around 760.
–Yields rose yesterday as stocks rebounded further from Friday’s early plunge. Tens up 7.4 bps to 2.855%; the curve was slightly steeper with twos up only 4.3 to 2.622 in front of today’s auction (5s and 7s Wednesday and Thursday). Large trades yesterday included buys of USU 125 and 124 puts 19 and 17. Settled 20 and 17 vs 139-11 with open interest up 17k and 19k. Large buyer TYN 120.5/122 cs for 20… settled 30 and 11 with OI +11k/+15k. DXY easing; was 102.07 late from a high of 105 on May 13. New Home Sales today.
