Sell gold and buy Argentine pesos. BRILLIANT
October 22, 2025
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–Precious metals crushed Tuesday with GCZ5 -244 late to 4115.0 (-5.6%) and SIZ5 -3.64 to 47.74.(-7.0%). Staggering moves. Stocks nearly unch’d and rates edged a little lower.
–Ten year yield down 2.5 bps to 3.956%. 2/10 treasury spread has been in a long sideways range, but edged to a recent new low of 50.6 (3.453 / 3.959). Range since the start of September is 61.7 to 50.6. SOFR contracts had slight flattening bias as well. New recent low SFRZ5/Z6 at -70.5. Z5 -0.5 at 9637.5, Z6 +1.5 at 9708, Z7 +2.5 at 9698.5, Z8 +2.5 at 9679.5.
–The spread between SERX5 and FFX5 was -9.5/-9.0 late, a new low. (One-month SOFR to Fed Funds). Settles 9605.0 and 9614.0. I think this spread is indicative of tight reserves. I would note the spread is moving down as TGA (Treasury General Account) is replenished. Since July the TGA has steadily risen from $300b to $800b. QT likely ends at the October FOMC. (charts below)
–Settles of first 4 SOFR contracts: Z5 9637.5, H6 9664.5, M6 9687.5 and U6 9702.0…first three pegged to the eighth strikes, 25 apart.
–One new trade caught my attention: +6k 0QU6 9800c for 8.0 covered 9710, 5d. Settled 7.5 vs 9703.0. It’s not that this trade is large, but it’s perhaps notable that the 9800 strikes in red midcurves (2%) have attracted consistent buying interest even though red futures have been capped around 9725. These are peak open interest (OI) strikes.
SFRZ6 9708.0s 0QZ6 9800c 1.0s OI 183k (peak, next closest is 9700c with 127k open)
SFRH7 9708.5s 0QH7 9800c 3.5s OI 92k (this isn’t peak, the 9750c has 124k open)
SFRM7 9706.5s 0QM8 9800c 5.5s OI 55k (peak)
SFRU7 9703.0s 0QU7 9800c 7.5s OI 41k (peak)
