Nasdaq or gold

June 24, 2020

–Once again muted price action in fixed income with implied vol slipping.  Curve had a slightly steeper bias.  Tens rose 0.5 bp to 70.7, while the thirty yr rose 2.7 to 1.486%.  July treasury options expire Friday with TYN 138.75 straddle currently 22/24 vs 138-23.  Five year auction today.

–Yesterday the Nasdaq made a new high, but SPX, DJIA and RTY are lagging significantly, and profit-taking sellers were apparent at the close.  There is additional downside pressure this morning which could be due to several factors: an increase in COVID cases, news articles highlighting increased bankruptcies, an FT headline this morning ‘Record numbers of US companies seek relief on loan terms’.  I would also note that Carnival Cruise (CCL), a favorite of the V-shape crowd, was downgraded to junk by S&P late yesterday and is down 5% pre-open.  Mnuchin touting a new $1T stimulus package has lost its luster. 

–Volume in rates is anemic, but gold is at a new high this morning with GCQ0 up $12/oz at 1794.00, the highest level since September 2012. Below is a chart of Nasdaq priced in gold. As you can see, since gold made its all-time high in 2011 around $1900/oz, Nasdaq has wildly outperformed.
Wildly? Well, no. Wildly would be the great bubble. Below is a longer time frame chart…

now THAT was a bubble!

Posted on June 24, 2020 at 5:57 am by alexmanzara · Permalink
In: Eurodollar Options

Leave a Reply