RBI hikes 50. Yen at new low
June 8, 2022
–Yields fell yesterday, reversing much of Monday’s rise. Tens down 6.4 bps to 2.97% in front of today’s 10y auction. The curve was flatter; in euro$’s reds +3, greens +4.5, blues +7.75 and golds +9.125.
–Today’s activity so far includes a 50 bp repo rate increase by India’s central bank. New low in yen at 133.80. Turkish lira nearing its spike low at the end of last year, now 17.15.
–A couple of indicators were released yesterday, Atlanta Fed’s GDP for Q2 at 0.9, down from 2.5 in mid-May. Also, consumer credit for April, which came in at up $38b, while March was revised down from a gargantuan $52b to $47b. These are big numbers, but consider that revolving credit was 1.017T in 2017, and now it’s 1.103T, a change of only $86 billion or 8.5% OVER 5 YEARS. The big blaring headline is that revolving credit was up at a 19.6% annualized rate. Even so, credit card debt isn’t really the issue, though the recent surge probably indicates consumer stress…it’s non-revolving for cars and school loans. What to do if one thinks education loans will be forgiven? Anyway, non-revolving sits at $3.463T, about 23% higher than 2017 at $2.814. Chart attached is credit card rates, now at 14.5%…never got much below 12%.
https://www.federalreserve.gov/releases/g19/current/default.htm
–July crude oil is hanging right near $120 bbl. I paid $6/gallon for regular gasoline yesterday afternoon. E-mail received from CME yesterday indicates a change in margins for energy products effective June 8 “to ensure adequate collateral coverage”. Squeezing out the weak players before something like the nickel market happens. July NatGas is 9.39 this morning.
–In eurodollar options some large conversions occurred. Example, approx 100k EDZ2 9750 vs futures at 9750, paid 0.5 for call. Open interest fell 100k in the put and 65k in futures. Cleaning up positions prior to quarter end.
