Yesterday’s push to lower yields fizzled. Today’s the day?
April 1, 2025
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—Flight to quality bid Monday evaporated as stocks stabilized. TYM5 posted an early high of 111-225 but came back to settle 111-07, up just 0.5/32. Trade of the day was new buy of 60k SFRZ5 9625/9650/9675/9700 call condor for 5.0. Settled 5.0 vs 9637.5. Max value occurs at settle between middle two strikes which would be consistent with FF target 3.25/3.5 vs current 4.25/4.5. The last FOMC projected two cuts for end-of-2025 to 3.875% mid, this guy is looking for four.
–Major data of the week will be Payrolls on Friday, looking for 130 to 140k, with the unemp rate unch’d at 4.1% (high rate over the past year has been 4.2%). Powell speaks on economic outlook post-payrolls. Today we have JOLTS expected 7655k vs 7740k. ISM Mfg expected 49.5 vs 50.3. Prices expected 64.6, likely skewed by tariffs. Employment 47.2 from 47.6. Tariff announcement tomorrow. Fed’s Kugler speaks Wednesday afternoon on “Inflation Expectations and Monetary Policymaking”. Given the current surge in expectations, versus relatively muted market indicators, it should be interesting.
–This morning the bond bid is back. with TYM5 currently 111-20+, near yesterday’s high even though ESM5 is nearly unchanged. Highest contract on the SOFR strip is SFRU6 which settled 9657.5. The highest this contract has traded since last October is yesterday’s high at 9666.5. Currently 9663. On a technical basis, it appears ready to break out for a move nearing 9700.
