Grande to pequeño
September 7, 2021
–Friday’s lower than expected NFP of 235k caused a brief knee-jerk rally which faded, counterbalanced by yoy wage growth of 4.3%. Tens closed +3.7 bps at 1.32%. The red eurodollar pack closed +0.875 with all following contracts down on the day, leading to a recent new high in red/gold pack spread of 115.375. Gold pack, 5th year forward, -3.625 on the day.
–The NY Fed suspended its GDP Nowcast as volatile data wreaks havoc on the model, but Goldman is downgrading future growth. Perhaps the end of employment and other benefits is a factor which will reveal dependency on fiscal largesse. Or perhaps job openings will now begin to see more applicants.
–Moody’s cut China’s Evergrande, which has now been shut out of repo markets. Not much reaction to the developing game of credit dominoes, though US stock index futures went from positive on Monday to negative this morning. Gold is getting hammered, down $21 as of writing to $1812/oz (a victim of sales to raise liquidity?). On the other hand, aluminum marches on to new highs, up over 38% ytd.
–Treasury kicks off auctions with $58b in 3s today, followed by $38b tens on Wednesday and $24b thirties on Thursday.
