Psychology shift
August 3, 2023
–.Interesting steepener yesterday. 2y down 2 bps to 4.887 while tens were up 3 bps to 407.3. New recent high in 2/10 to -81.4. Just before the July 26 FOMC it was -105. Lowest SOFR one-yr calendar is now SFRH4/H5 at -126 (9487.5/9613.5) while SFRZ3/Z4 is -125 ((9464/9589). Recent low in Dec/Dec was -162.5. 30y new yield high 4.16%, Note: I mistakenly referred to last year’s high in 30y as 4.245%, it’s actually 4.40%. The ten-year high last October is 4.245%.
–Stocks fell with SPX -1.4% and Nasdaq Comp -2.17%, partially in response to the Fitch US downgrade, with the avalanche of treasury supply and the BOJ yield tweak likely contributors. In the four months from March, SPX has run from 3900 to 4600, approximately 18%, just to put yesterday’s pullback to 4500 into context. However, the oxygen supply of liquidity seems to have turned which will spark a ‘sell rallies’ mindset rather than ‘buy dips’. Three, ten and thirty year auctions next week raising $18b in new cash, according to TBAC schedule.
–ADP surprising beat, with 324k jobs added vs expected 190k.
Today’s news includes Productivity expected +2.3%. S&P Composite PMI was 52.0 last
Factory Orders, Durable Goods and ISM Services
AAPL and AMZN after the bell
