Repo Man
December 19, 2022
–Both Daly and Mester made hawkish comments about the Fed’s resolve to beat inflation, yet front SOFR contracts closed higher on the day, with H3 +5 at 9519.5, M3 +8 at 9520.5, U3 +8.5 at 9540.5, and Z3 +6.5 at 9575.0. The Fed’s just released dot plot suggests a FF target over 5% in 2023, which is being dismissed by the market. The highest rate on the curve is March’23 at 4.805% and projections are obviously lower going forward.
–An article on Reuters suggests Japan is getting ready to drop its deflation-fighting policies “…after a new BOJ Governor is appointed in April.” Ten-yr JGB has been pegged at 25 bps. JPY is 136.07, currently just above the 200 DMA.
–Articles about auto repos have been cropping up more frequently. The trained Chicago observer is able to distinguish between the repo man, carjackers, and towing services impounding cars on snow routes. It’s not always easy. A piece from NBC notes: “The percentage of auto loans that were 30 days delinquent was at 2.2% in the 3rd quarter, compared with 2.35% delinquent over the same period in 2019, according to Experian. By contrast, just over 4% of auto loans went into default in 2009.”
