Don’t forget the ‘Industrials’
December 12, 2025
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–The attached chart that’s going vertical? Nope, not silver. It’s the Dow Jones Industrial Avg. Record close 48704. Since the low in 2009 it’s up 7.5x. It’s also near a record gap to the 200 month moving average (now 105% above the 200 MA). In Dec 2021 the price was 109% of 200ma prior to the pullback associated with Fed hiking.
–Yields pressed lower in the wake of the FOMC. Peak SOFR contracts are SFRZ6 and H7 now tied at 9685.0 (+4.0 and +5.0 net chg). For some time, SFRH7 has been the peak contract. In early Sept, a couple of weeks prior to the Sept 17 ease, the high print was 9719.5. H7 pulled back post-Fed to around the current level and then in mid-Oct, again a couple of weeks prior to the Oct 29 ease, rallied to 9717. So, this contract is now about 30 bps lower than it was in September, even after the Fed has cut 75 bps. Clear change in sentiment, which is also reflected in 10s: down 2 bps to 4.139% yesterday, but still 20 bps higher in yield than the mid-Oct low.
–Star performers were SFRM7, U7, Z7, all up 5.5 to 9683, 9679.5, 9675. These contracts all had curious new deep-in-the-money call buying:
SFRM7 9650c +56.5 (55.0s, OI +8.3k)
SFRU7 9650c +58.5 (57.0s, OI +5.9k)
SFRZ7 9650c +60.0 (57.75s, OI +10.7k)
SFRH8 9637c +67.5 (65.25s, OI +9.6k) Breakevens on all are just above the 9700 (3%) strike.
In conjunction with these trades, 2/10 treasury spread edged to a slight new high, 61.3 bps, near the peak of this calendar year, which I have marked at 66 bps.
–ORCL continues to act like a big canary, down 11% yesterday. This morning, it’s Broadcom (AVGO) which popped post-earnings, but is called 6% lower now. In China, property developer Vanke is trying to restructure debts with BBG saying it has now lost state support.
–Speaking of state support, DonMiami3 notes in an X-post that discount window borrowing has hit a new high for 2025. Trivial amount compared to the SVB fallout and Covid prior to that, but still worth a footnote.
https://x.com/DonMiami3/status/1999376804381868402/photo/1
