TU (2yr) calls for earthquake insurance
July 23, 2024
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–Quiet Monday. Early weakness in curve and treasury futures abated. Tens closed up 2.1 at 4.26% while twos were up 1.6 to 4.521% (new twos being auctioned today). Though some had considered next week’s FOMC to be in play for a longshot ease, near contracts closed a couple of bps lower. SFRU4 9491.5s, down 2. FFV4 settled 9491 (-1.5) or 5.09%. First time that contract has settled below 9492 (which is exactly one 25 bp cut) since the July 11 CPI data. FFQ4 settled 9468 or 5.32%.
–Biden was supposed to meet with Netanyahu today, but the meeting was cancelled (and possibly pushed back) in midair. There is talk that Harris would not meet with Netanyahu in Biden’s stead. I would point up the risk of a change in policies (foreign and otherwise) with the new presumptive nominee. Issues might be compounded if Biden is in the midst of a more serious health problem. Uncertainties are perhaps underpriced. Even treasuries might see some shading around their “risk-free” status.
–From Matt Taibbi (regarding Biden’s letter of withdrawal)
The letter wasn’t posted on the White House briefing room site, even as lesser news (including a statement purporting to quote Biden at length on “climate pollution reduction grants”) was posted yesterday. It was furthermore written neither on presidential stationery nor under campaign letterhead and appeared rushed, thanking Vice President Kamala Harris for “being an extraordinary partner,” but not endorsing her.
–Two-year treasury options aren’t particularly active, but in case the Dem Convention turns into a disaster (August 19-22) it’s almost worth considering buying TUU 103c which settled 3.5 ref 102-14. Sept treasury opts expire Aug 23. These are around one-quarter pct otm. [THIS IS NOT A RECOMMENDATION. IT IS ONLY TO NOTE THAT SEPT TREASURY OPTIONS CAPTURE THE CONVENTION. TO MY KNOWLEDGE, NANCY PELOSI DOES NOT HOLD A POSITIION IN THESE OPTIONS]
