May draws to a close
May 30, 2025
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–Thursday featured outside day ranges and closes near extremes. For example, TU, FV, TY, US, WN all made new lows early in the session (relative to Wednesday) and closed near the highs. Cash tens eased 5.2 bps to 4.425% and 30s fell 5.1 to 4.924%, having been back above 5% early yesterday morning. In eleven sessions starting 14-May TYU5 has 7 lows between 109-12+ to 109-26. Low settle is 109-16. Large support area. A close below 109-16 would be bearish.
–Stock index futures also posted outside days on large ranges but still closed positive.
–SOFR strip featured slight steepening from reds back. Reds +6, Greens +5.375, Blues +4.5, Golds +3.625.
–On May 15 ERIS swap futures had a banner day, with block buys of 50k 5y swaps and 62k 10y (YIWM25 and YIYM25). Yesterday these positions were exited on blocks.
https://erisfutures.com/volumeopeninterest
–Financial press is focused on Section 899 in the tax bill:
(RTRS) The U.S. House of Representatives has approved a sweeping tax and spending bill that includes the possibility of imposing a progressive tax burden of up to 20% on foreign investors’ passive income, such as dividends and royalties.
Obviously the implication is less foreign demand for US assets, contributing to pressure in US stocks.
–News today includes PCE inflation data:
m/m expected 0.1% from 0 last, with Core also 0.1 from 0. Yoy expected 2.2% from 2.3% and Core 2.5% from 2.6%
