Soft landing for asset prices?
May 9, 2022
–ESM at ytd low 4053.75 this morning, down 65.75 as of this writing, with TYM also at a new low -15.5 at 117-10. The front end of the dollar curve is unchanged to a bit higher as flatteners continue to be exited after Powell’s dismissal of a 75 bp move. On Friday, there was a block buyer of 60k EDU2 at 9731 as the contract on screen traded 9729. The price quickly moved to 9733 and never looked back; now 9735. Open interest fell by 50k. Another block of 10k EDZ2 was purchased as well, OI fell by 17k in that contract.
–The Fed’s job is suddenly becoming a lot harder. For all the Volcker comparisons it’s difficult to stand aside and watch both bonds and stocks crumble, but the die has been cast. New recent highs in a lot of curve measures with red/gold pack at -17, up 11.75 on the day, having started April at -87. 5/30 is 18, having been -12 in early April. Auctions of 3s, 10s and 30s this week. At least five Fed speakers slated for comments tomorrow, including Bostic, Williams, Kashkari, Waller and Mester. Biden also scheduled to address inflation tomorrow, just prior to Wednesday’s release of CPI, which is expected yoy 8.1% from 8.5%.
