But I have a reservation…

September 8, 2021

–Curve continues to grind steeper in the face of both corporate and treasury supply.  Today treasury auctions $38b in tens, with yesterday’s yield climbing 4.7 bps to 1.368%.  2/10 spread rose 3.3 to 114.8, a new recent high.  In eurodollars, reds (2nd yr) -2.5, greens -4.75, blues -5.375 and golds fell 5.5.  So the red/gold pack spread was up 3 to a new recent high 118.625.  Just as a point of comparison, at the start of April, the then gold pack settled as low as 9772.5, yesterday the gold pack (5th year forward) settled 9833.75

–Today’s news includes JOLTS expected slightly over 10 million.  The jobs are apparently out there…  Fed releases the Beige Book summary for the Sept 22 meeting.  Ten year auction and Consumer Credit.

–Large trades yesterday included an early buyer of 50k TYV 133.5/134cs for 10/64, settled 9 vs 133-00; new position.  Exit of 30k 0EH 9937/9912ps at 4.75 vs 9949, settled 5.0 vs 47.  

–Fitch downgraded Evergrande, and Reuters reports the company plans to suspend interest payments on loans to two banks on Sept 21.  The article further notes the company may suspend all payments on its wealth management products starting today, September 8.  See, when payments are stopped on “wealth management products”, then they don’t really contribute to wealth.  You know how to take the money.  You just don’t know how to manage the money.  And that’s really the most important part of the wealth management product.  Managing the money.  And that’s when BlackRock steps in.  Their prowess has already been on display in buying vast numbers of homes in the US, which they can do at even lower financing rates than current rock bottom mortgage rates.  Essentially shutting out core homebuyers.  Yes, you should do quite nicely in China. Of course in the US Blackrock has huge influence with the Fed and Treasury. The price to pay in China may be that you’re forced to buy some worthless assets at inflated valuations as an entrance fee. Manage that.

https://slate.com/business/2021/06/blackrock-invitation-houses-investment-firms-real-estate.html

Seinfeld car reservation
https://www.youtube.com/watch?v=4T2GmGSNvaM

Reuters:

Property developer China Evergrande Group plans to suspend interest payments due on loans to two banks on Sept. 21, financial intelligence provider REDD reported on Wednesday, citing four sources briefed by bankers.

Evergrande has delayed payments to several trust firms, REDD reported, adding that the company may suspend all payments to its wealth management products starting Sept. 8.

Posted on September 8, 2021 at 5:31 am by alexmanzara · Permalink
In: Eurodollar Options

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