Zelensky et al today. Still has a bad hand.
August 18, 2025
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–Yields a bit higher Friday with 10s +3.3 to 4.324%. For the past six months the ten year yield hasn’t deviated from the Fed Effective rate of 4.33% by more than about 17 bps either way, except for April’s Liberation day volatility, when the 10y yield briefly touched 4%, or 33 under. Since February, 10y has been betwen 4.62 and 4.00. Since May, between 4.60 and 4.15. Retal Sales about as expected (+0.5) with positive revisions. Import Prices were +0.4% vs 0.1 expected.
–2/10 edged to a recent new high at 56.7 bps, up 1.1 bp. 5/30 up to 108.1, a new high for the year, the low having been in February at 34. The 30y bond yield has been above EFFR all year, with the highest spread being 76 bps in May with 30y yield 5.09%. On the SOFR strip the lowest quarterly contract is SFRU5 at 9590, and the peak contract is SFRH7 at 9690, exactly 100 bps apart over 1.5 years.
–Zelensky summit today in Washington. FOMC minutes Wednesday, Philly Fed Thursday, Powell at Jackson Hole on Friday, coinciding with Sept Treasury option expiration. Current TYU5 is 111-25+ and 111.75^ is 34/64s which seems slightly cheap. (~ 8 bps).
–In the curiosity column, bitcoin is testing 115k this morning, considerably lower than last week’s ath 125k. As I have the chart drawn, the current price is below the upward sloping trendline which has been in place since the April low.
