Payrolls Friday
July 8, 2022
–Yields pressed higher going into today’s payroll report, with treasuries all ending above 3% (2y 3.037, 5y 3.051, 10y 3.002 and 30y 3.19). NFP today expected 268k from 390 last. Avg Hourly Earnings yoy expected 5.0% from 5.2% last. Bullard and Waller continued to make the case for policy front-loading; FFQ2 fell 1.5 bps to 9770.0, placing high odds on another 75 bp hike at the July FOMC, which would take EFFR up to 233 bps and thus FFQ2 to 9767.0. FFF3 settled 9666.5 or 333.5 bps, so if the Fed were to hike 75 in July, the market has about 100 bps more penciled in for the final three meetings of the year. Dollar Index DXY is at a new high 107.51 this morning, with ECU2 (eurofx future) at a new low 1.0160.
–EDH3/EDH4 is the lowest one-yr eurodollar calendar on the strip at -65.5, so there’s almost as much of an ease priced into that one-year period as there is a hike being priced for July’s FOMC.
–Next week’s auctions will kick off with Monday’s $43b 3-yr, followed by $33b 10s on Tuesday and $19b 30s on Wednesday. CPI is released on Wednesday morning.
–CLQ2 is 102.17 this morning, well down from the June high over 120, but stabilizing after Tuesday’s plunge to nearly 95. MNI yesterday cited John Kirby in reporting that Biden will meet with MBS this month; perhaps in the absence of a pledge to supply more oil KSA is simply pressuring the market as a goodwill gesture.
From Reuters on July 5
HOUSTON (Reuters) -More than 5 million barrels of oil that were part of a historic U.S. emergency reserves release to lower domestic fuel prices were exported to Europe and Asia last month, according to data and sources, even as U.S. gasoline and diesel prices hit record highs.
from a post by MNI July 7
US: White House Confirms Biden Meeting With Saudi Crown Prince MBS
US National Security Council Spokesperson John Kirby has confirmed to an on-the-record virtual press briefing with the White House press pack that President Biden will meet Saudi Crown Prince Mohammad Bin Salman (MBS), the de facto leader of Saudi Arabia, during his upcoming trip to the Kingdom.
