Happy (real) New Year
December 31, 2021
–I called the restaurant down the block and ordered a turkey club yesterday. It was $15. The online menu had it posted at $11.95. It’s a local place, I am sure they don’t much bother to update the website. The point is that people are increasingly seeing price rises like that. So, it’s not too surprising that the ten year inflation indexed note (REAL) yield closed yesterday at -1.11%. It’s near the low of the year. The breakeven against the ten year treasury ended at just over 262 bps, a new monthly high, which is closing in on the high of the year set in November at 277. The year 2021 started with the b/e spread at 200. Gold seems to be sensitive to the tip yield, this morning GCG2 is 1821, the high for the month of December. Real price increases mean real yields are even more deeply negative than indicated by tips. I saw an email response the other day where the sender wrote, “I’m sorry I am not answering your email, I’ve lost control of the day.” I sort of feel like the authorities lost control of the day in 2021, on many levels.
–Rate trading was quiet. Back end of the dollar curve was slightly steeper. In dollars, whites +2.875, reds +2.75, greens +1.75, blues +1.0 and golds +1.125.
–Happy New Year….really
