Maybe a little caution?
October 7, 2025
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–Tens up 4.3 bps to 4.16% Monday in slow trade. New highs in stocks, bitcoin, gold. However, a yellow flag warning for unrepentant bulls in Applovin (APP) as the stock plunged 14% late with the SEC said to be investigating data collection practices. Huge range 664 to 545, closed 587.
–Vol continues to compress to new lows in treasuries. TYX5 112.5^ was sold 4.5k at 56; settled 0’55 ref 112-125, vs 1’11 the previous Monday ref 112-165. TYZ 112.5^ went from 1’51 to 1’33 on the week (4.8).
–Consumer Credit is a Fed number and likely to be released. Last at +$16b and expected +14b, but various factors like the end of electric vehicle credits and consumers running out of money might have pulled credit demand forward.
–News highs in a couple of the near SOFR one-yr calendars. For example, SFRH6/H7 settled -40, +1.5 on the day (9652.0/9692.0). Low in early Sept -55.5. The first six months of this spread is SFRH6/U6 which settled -34.5 (9652/9686.5), while U6/H7 is only -5.5 (9685.5/9692). I have been focused on H6/U6 as it brackets the end of Powell’s chairmanship in May. The original thought was that BIG eases might come over this time period, but the market is obviously fearful of inflation and is paring back the idea of aggressive forward easing (red pack settled -3.5). SFRH7 is the peak point on the SOFR strip (now tied with Z6 at 9692). I would bet that we see 9722 before 9662; I would be inclined to fade the strength of near calendars.
–Student loan debt is one of the largest assets of the US gov’t at around $1.7t. It’s a receivable that’s not likely to be received in full. Given the clumsy efforts of the Biden admin to dismiss this debt, I’m not even sure if that matters. But renewed collection efforts and garnishments are likely to cast a cloud on consumer spending.
–Bowman at 10:05 and Miran on a discussion panel at 10:45.
