Record Net Worth, Record Gov’t Debt
March 7, 2024
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–Curve continued to flatten (invert further) as Powell stayed on script, repeating that the Fed needs more confidence inflation is moving to target. At the end of January, 2/10 was -28, yesterday the spread was down 4 at -45.2, a new low for this year. The low in mid-December was -52.5. My opinion is that 2/10 will hold -55 to -50. Red/green SOFR pack spread edged to a new low near -33 bps, at the end of January it was +3. [red/green is second year to third year]. The easing schedule is being nudged further back on the calendar.
–Today brings Productivity and Unit Labor Costs, expected +3.1% and +0.7. Jobless Claims 217k. Powell in front of the Senate.
The Fed’s quarterly Z.1 report, which summarizes HH Net Worth and Debt metrics across sectors for Q4 is released. Given the end-of-year surge in stocks, household net worth will likely post a record high. Of course, Federal Gov’t Debt will also hit a new record.
–Employment report is tomorrow with NFP expected 200k from 353k.
–Yen getting a nice pop as the prospect of BOJ ending negative rates draws closer. $/yen was 150.50 on Monday and is now 147.80. Gold hit an all-time high yesterday at $2152. News about NYCB problems only underscores the likelihood of other banks struggling with similar issues.
–Large trades yesterday: +40k SFRM4 9493.75/9487.5/9475/9468.75 put condor for 1.5. Underlying SFRM4 settled 9493.
TYJ4 113c 14 paid for 15k, settled 11 vs TYM4 111-155.
TYK4 109/113 strangle sold at 54 about 7k, settled 51.
