Nikkei and NVDA

February 22, 2024

–Two dominant stories this morning are Japan’s Nikkei finally surpassing the high from 1989, and NVDA soaring to new highs after hours.  I suppose a natural comparison to make is how the Nikkei looked in 1989 compared to NVDA now.  At the end of 1988 NKY was around 30159 and in December 1989 topped, at around 38600, a blistering gain of 28%.  NVDA jumped 13% after yesterday’s close, adding about $225 billion in market cap.

–I suppose the other linked question is what the central banks are going to do about it.  In the late 1990’s irrational exuberance era, Greenspan didn’t really lean into it, suggesting instead that the Fed would just clean up after the winners and losers were shaken out.  In the case of the Fed, yesterday’s minutes said members expressed caution about easing too quickly.  Does the BOJ look to ‘normalize’ funding rates in April, following year-end?  

–In US rates, fives and tens both saw yields rise by 4.8 bps to 4.295% and 4.321%.  On the SOFR strip reds fell 5.75 to 9610.25 (~4.9%) and greens -5.0 to 9630 (4.7%).  One interesting trade in SOFR was a new seller of 35k SFRZ4 9475/9525 strangle at 69 covered 9558.5.  Open int in both strikes up >20k so trade is new, settled 11.0 in put and 57.25 in call, so 68.75 ref 9557.0s.  Obviously the call is in the money, but if the Fed holds steady, then SFRZ4 should roll down to SFRU4 which settled exactly at 9525.  Same strangle in SFRU4 settled 40, with calls 30.5s.

–News today includes Chgo Fed National Activity, Jobless Claims, expected 215k, PMI Composite expected 51.9 from 52, and Existing Home Sales.

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Posted on February 22, 2024 at 5:49 am by alexmanzara · Permalink
In: Eurodollar Options

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