Summer Solstice
June 21, 2022
–On Friday EDU2/EDU3 made a new low settle of 43.5 from 87 the previous Friday; down 2 on the day. The euro$ curve continues to flatten in the face of the Fed’s inflation fighting resolve. EDZ2/EDZ3 settled -28.5, indicating that by next year, the Fed will be back to an easing bias.
–Bitcoin traded sub-18k over the weekend, but is now back around 21k as the crypto army regroups. The problem now is that companies like MSTR issued bonds to buy bitcoin. Whenever leverage is involved, there is more of a chance for forced sales that spiral, and the low rate environment encouraged borrowing. Higher rates create a hurdle, especially when the collateral is volatile.
–Crude oil is rebounding this morning, with CLQ2 up 2.50 over 110.50/bbl. Biden is floating the idea of a gas tax holiday which Yellen inexplicably endorsed; the Federal gas tax is 18.4 cents a gallon.
–News today includes Existing Home Sales and a Barkin speech. Existing Home Sales expected at 5.4 million rate from 5.6 last. The high in 2020 was over 6.5m; the range from 2016 to 2020 was mostly 5.2 to 5.5, so today should put us squarely back into that range. Powell begins semi-annual testimony tomorrow.
