May 4. Employment day. NFP expected 165k
Employment report today with payrolls expected 165k and rate of 8.2%.
–Going into the data, implied vol in treasuries at the lows. Eurodollar calendar spreads in euro$’s also on the lows. Yesterday there were short dated put buyers and other trades for protection in case of a bearish number. That’s an easy trade from these levels, either placing a small bet on a big NFP or unwinding some longs. What is difficult is finding something to buy to protect against a surge higher. I looked at US1K 144c yesterday and they were 5-7, more than a point out of the money. I was able to buy calls half point out of the money with two days left for 2 last week. In any case, my personal bias is for lower rates. Even if the data is stronger than expected I think there will be aggressive dip buyers. But you never know with this data. What is certain is that oil started the month at 106 and has plunged to 101.50. Gold is off $30 in the past few days and at low end of range. Silver made new recent lows yesterday and is in a two month downtrend. Copper has been trying to rally but has faded back in the last couple of days. The inflationary signals that bond bears have been counting on seem to be sputtering. And geopolitical events that could create safe haven buying aren’t abating.
