Fat Finger Economy
August 7, 2025
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–Just a quick indication of depth in the most liquid markets in the world. At 11:40am, USU5 printed 115-00. Just 33 seconds later, the day’s low at 114-11 occurred. At 11:41, 115-00 printed again. They’re blaming it on a ‘fat finger’. Maybe that’s what the whole payroll report was: just a fat finger. Certainly, equity index investors are shaking it off. In a way, if I were in the administration and tasked with the job of making data and markets look good going forward, I’d make a note of thin midday conditions just hit the BUY button. (We can stick the losers into the ‘sovereign wealth fund’).
–On Friday, someone paid 1.0 for 50k 0QZ 9787.5/9800cs and 0.5 for 50k or more 9837.5/9850cs Yesterday, he bought 50k 0QZ 9800/9837.5/9850c fly 1x1x1 for 3 (and sold the 9837.5/9850cs at 0.25).
SO…he’s left with LONG 9787.5c by my calculations….net price a bit over 4. Settled 4.25 vs 9696.5. Long an outright call makes more sense if looking for (or hadging against) something bad
–Russia deadline supposedly August 8…but late reports yesterday indicate a Trump/Putin meeting is in the works.
–Bank of England expected to cut. Yesterday SFIM5 settled 9587.25 and SFIU5 at 9611.5, so there’s your 25 bps.
–Thirty year auction today. CPI is August 12. Going into Jackson Hole on August 21-23. It’s ironically titled, “LABOR MARKETS IN TRANSITION”. Because WHEN YOU CAN’T GET THE DATA RIGHT it’s hard to make POLICY. It’s a bit late for this note, but yesterday I was pulled down the rabbit hole of reading old Greenspan Jackson Hole speeches. Super interesting. From 1999: (more in subsequent notes)
Doubtless, valuations are shaped in part, perhaps in large part, by the economic process itself. But history suggests that they also reflect waves of optimism and pessimism that can be touched off by seemingly small exogenous events.
