Consolidation after end of week explosions
Nov 14, 2022
–New lows in near one-yr ED and SFR calendars. Lowest is now EDM3/EDM4 at -114.5. Lowest outright SOFR contracts are H3 and M3 at 9514.5 and 9517…not quite to 5%, but close. Stocks built on Thursday’s spectacular rally on Friday, but bonds have retreated slightly. Even with the collapse of FTX, SFRZ2/EDZ2 spread has retreated from highs in the lower 50’s, having settled Friday at 47.5.
–Heavy selling in SFRU3 9550 and 9537.5 straddles 84 to 83. As mentioned over the weekend, EDU3 9512.5^ settled 83.0 on Friday. One month ago just prior to the release of CPI (Oct 11), EDM3 9512.5^ was 96.5 and the EDU3 9525^ was 118.5.
–Cathie Wood is turning up the volume on warnings about the Fed being too tight, saying a 1929 Great Depression era could ensue. Lighten up Cathie. It is true though that severe curve inversion is also sending the signal the Fed is going to force job losses and further reduce economic activity.
–CLZ2 currently trades around 87.80. Now that elections are over, and the entire world knows the US is short due to SPR releases, watch out if CLZ closes above 95/96.
