Rate futures pare early losses
March 4, 2026
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–On the day rate futures showed little net change. Weakness at front end with SFRZ6 -4.0 (9677.5), but every contract from SFRZ7 out to the next three years was unch’d to +1. 2y yield rose nearly 1 bp to 3.492, 10s and 30s nearly unch’d at 4.05% and 4.698. However, intraday action was more dynamic. For example, TYM6 low was 112-165 which was down 18; settle was 113-005. The early bearish driver was a new high in oil, with CLK6 spiking to 76.75, about $10/bbl higher than the previous week’s price.
–2/10 edged to a new recent low 55.8, a new low for 2026 as the Fed is considered to be on hold for the near future. In the last half of 2025 2/10 ranged from 42 to 62. In Jan and early Feb the range shifted higher, 60 to 72, but now we’re back in last year’s box.
–KOSPI Korean index has crashed over the past couple of days, following a precious metals-like rally from December. Start of Dec was around 3990. Close on 27-Feb was 6244, a gain of 57% in three months! Today’s price is 5093, a drop of about 20% but still well above 2025’s close. Nikkei is similar though more muted, down about 8.5% from the high after a blistering rally. Meteoric market moves tend to correct hard.
–I don’t think odds are high, but what if Iran falls and a US friendly gov’t is put in place much more rapidly than thought? Hard drop in oil prices and risk-on?
–ISM Services expected 53.5 from 53.8. Beige Book (FOMC is 18-March)
