The Ides
March 15, 2021
–Strong China economic data due to low base year-ago data. Industrial output +35% and Retail Sales +33.8%. In the US Goldman has raised its GDP forecast to 8% in 2021, and calls for an unemployment rate of just 4% by the end of the year. It’s little wonder that analysts are expecting the Fed to increase projections on growth, and for the ‘dots’ to reflect a more aggressive timetable for a hike.
–On Friday, tens jumped 10.9 bps to 1.632%. The new red/gold pack (using June as first contracts) surged 8 bps to nearly 163.5, as the gold pack sank 11.625. The thirty year bond yield ended at 2.4% having doubled in yield since August. Fortunately, mortgage and corporate yields remain tight, because a doubling of interest servicing costs could send some shivers through financial markets…at some time in the future. Implied vol surged in treasuries, with atm TYJ 131.75^ settling 1’10, just over 6.1 using 12 dte.
–Retails sales tomorrow expected -0.7%. I’ve seen a bunch of headlines citing Stripe’s valuation at $95 billion. This is an online payment processing company, and that valuation puts it in the neighborhood of American Express ($120b) and about triple DFS (Discover). Of course, V, AXP and DFS are all at all-time highs.
–RIP Jack Sandner, former CME Chairman. That picture shows the ED pit, from the options (at left, cut off) to reds, greens and blues all the way in back. As it’s close to St Patrick’s Day, I’ll never forget when Jack was giving a floor tour to the Irish Prime Minister, (I believe Mary Robinson) and the O’Callaghan brothers got a picture with her. One of their acronyms was IRSH, short and jovial with thinning sandy reddish hair. Don’t think I’ve ever seen anyone happier in a photo op!
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