Rate futures trying to stabilize
May 19, 2026
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–SOFR contracts pressed lower Monday. The nadir on the strip is SFRM7 which settled at a new low 9597.5, -1.5, just above 4%. 2y note was essentially unch’d at 4.08% while tens were up 1 bp to 4.604. A late announcement by Trump that he was postponing an attack on Iran hit oil and supported stocks and bonds, but while current CLN6 price is lower by 1.28 to 103.10, ESM is -28.75 as of this Tues morning note at 7397.00. Yest low 7373.50. (So at least the oil side of the trade worked out for the tipped insiders).
–A bit of otm call buying on SFRZ7, which settled 9602.5, -3.0. Z7 9750/9800cs 4 paid 6k. SFRM7 and SFRZ7 c fly bought as package: 9650/9725/9800 17 for 6k, M7 fly 8.0s and Z7 fly 9.25s. Upside on SFRZ6 was substantially exited as prices fell; the 9650 strike in M7 and Z7 still requires perception of modest easing.
–Home Depot Q1 sales fell short. Comparable Sales +0.4% in the US vs 0.9 estimate, not too great in the context of 3.5% inflation, though housing is lackluster. HD was 390 in February, now 300, nearing the low of late 2023 when the bond yield had put in its high of 5.11 (now 5.14). Clearly some stocks are reacting to higher rates…
