Common Prosperity and Jackson Hole
August 23, 2021
–Bitcoin back above 50k. WTI is showing a strong bounce today from oversold levels last week. CLV1 is now above $64/bbl, having put in an overnight low of 61.74. Friday’s range has been engulfed this morning. Other commodities also seeing bounces, with gold +6 at 1790. Stock futures stronger, with ESU +12 at 4449, not all that far from last Monday’s all-time-high of 4476.50. Treasuries showing slight weakness.
–Yields ended modestly higher Friday with tens up 1.6 to 1.258%. New recent low 5/30 just under 109 bps. Ten year note to tip breakeven also posted a new recent low of 228. In the depths of Covid in March 2020 this spread reached 55, in May of this year it peaked 200 bps higher at 256. Since June it has been a sideways affair from 225 to 242.
–Interesting column in BBG notes “Xi Doubles Mentions of ‘Common Prosperity’, Warning China’s Rich”. I checked google trends for ‘wealth inequality’ and it’s near the lowest level of the past five years. Of course, the region with the highest level of interest in this topic is the District of Columbia. A paper from 2018 notes that DC has the highest income inequality in the country; the political class (and Fed) wants to focus on the problem that it most acutely creates.
–Jackson Hole at the end of this week. Sept treasury options expire Friday, with TYU 134 at-the-money straddle trading 35/64.
