Shifting into reverse
June 9, 2023
–Rates declined in a flattening trade as Jobless Claims came in at 261k, the highest level since Oct 2021. Two-yr note fell 2.7 bps to 4.517% as tens eased 6.6 to 3.714%. While SFRZ3 trades near 5% at 9503.5, easing in 2024 is still being significantly priced. For example, Jan’24 FF settled 9499.5, or almost 5%, while August’24 is 9598.0 or near 4%; there are five FOMC meetings between those two contracts.
–Headline from this morning’s WSJ: More Startups Throw in the Towel, Unable to Raise Money for [stupid] Ideas. Ok, the stupid part wasn’t in there, I took some editorial license on that one.
–China PPI was down 4.6% the most rapid drop since Feb 2016. Re-CLOSING?
–From ZH this morning regarding Commercial Real Estate: “According to real estate data firm Trepp, more than 4% of office loans packed into commercial mortgage-backed securities were delinquent in the last 30 days as of May, the highest level since 2018.” …“This is just the tip of the iceberg for office delinquencies as $35 billion in CMBS office loans are scheduled to mature this year and the refinancing market is effectively shut to this asset class.”
–Next week three and ten year auctions are Monday and the 30-yr is Tuesday. CPI is released Tuesday and the FOMC meeting is Wednesday.
