Rates soar
March 19, 2026
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–Rate futures crushed yesterday as oil prices continued to rise and Powell emphasized economic and inflation uncertainty. Fed dots regarding FF were same as last, projecting one ease this year and one next year. PCE inflation for 2026 projected 2.7 from 2.4 at the Dec meeting, with 2027 up 0.1 to 2.2 from 2.1. GDP Growth also projected higher: 2.4 from 2.3 for 2026 and 2.3 from 2.0 for 2027. Powell noted there’s been zero growth in private payrolls, but zero might be equilibrium given immigration trends. “Zero employment equilibrium might feel like a downside risk”.
–Near SOFR contracts are in freefall. SFRZ6 settled 9647.5 yesterday, -9.0 bps at 3.525%. That’s not even reflecting ONE ease this year. This morning the contract prints 9640 or 3.60% vs EFFR of 3.64%. Ten year yield rose 5.5 bps to 4.255%, with a new recent low in 2/10 at 50.7 (2y 3.748%, +8.1). SFR settles yesterday: Z6 9647.5, -9, Z7 9665.0, -7.5, Z8 9657.5, -6.5.
–Carlyle’s Jeff Currie yesterday on BBG highlighted the disconnect between physical energy prices and ‘paper’ prices reflected by futures. He noted that the spread between Singapore and Rotterdam prices for jet fuel has collapsed, now both around $230/bbl. (no excess supply). Energy infrastructure damage will take a long time to rebuild. Currie’s summary: “You can’t PRINT molecules.”
–The other truly amusing X post is NY Gov Hochul asking high-net worth individuals to come back to NY to support generous social programs. (She says she ‘needs’ them). She notes that NY is in competition with other states and that remote work changed everything. Wow. Stunningly belated recognition of what everyone else knew several years ago.
–Worth a note that Micron (MU) blew estimates away yesterday (revenue nearly tripled yoy). However, the stock which closed 461.73 is 435 this morning, a somewhat ominous signal going into the biggest option expiry ever tomorrow.
–Today’s news includes Jobless Claines expected 213k, Philly Fed and New Home Sales (Powell mentioned weakness in housing during presse
