Bonds at Inflection Point
September 2, 2025
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–It’s not escaping the press that gold is making new highs, with GCZ5 currently +31 to 3547; most newsclips cite the likelihood of rate cuts. On August 22, just before Trump fired Fed Governor Cook, GCZ was 3381. Of course Trump’s moves to get a rubberstamp Fed are having an effect on both precious metals and bonds, with many now fretting over the February 2026 cycle for regional Fed President appointments.
–Curve steeper on Friday with 5/30 up 3.7 bps to a new high of 121.6. 2/10 ended 60.5, up 3.3 but off the week’s high of 61.7.
–New buyer Friday of 100k TYV5 114c for 13 covered 112-165 to 112-16, 18 delta. As mentioned yesterday, downside breakeven is 111-12. This morning TYZ5 is 112-04, down 12 and USZ is 113-13, -27. Current 30y yield is 4.975 (from 4.915 Friday). 5% should be around 113-02 in USZ5. Technical picture pointing to higher global yields at the long end.
–Chgo Tribune headline: Mayor Brandon Johnson to Labor Day crowd: ‘No federal troops in the city of Chicago!’ Apparently murders are down, with just 384 so far this year according to https://heyjackass.com/2025-homicide-map/ Johnson’s goal is to have less than 500 this year. I guess that’s fine. I went to a wedding Saturday which was on Michigan Ave just across from the Art Institute. Left plenty of time but was very nearly late due to south Mich Ave, (a crown jewel of Chicago) being closed down for protests. I have no idea why the city allows it. My immediate reaction is : Avoid downtown. My suggestion for a protest route, sanctioned by the city, is right along Jackson Blvd, from Sacramento to Kostner, where the map is red. Maybe some of the city’s blight will give the protesters a deeper sense of purpose. Of course those folks also might feel put out by the disruption….
