Nobody likes data centers
November 17, 2025
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–Early Friday swoon in stocks was substantially reversed at day’s end. However, bonds closed near the lows of the day with TYH6 112-15 (-7.5) and USH6 116-05 (-19). Ten year cash yield ended at 4.146%, up 3.8. SOFR strip was -1.5 to -2.5 from H’26 through the next five years. Peak contract SFRH7 settled 9688, -1.5. So that’s 3.12%, only 75 bps lower in yield than current EFFR and just 50 bps below current 2y yield of 3.61%.
— Dec treasury options expire Friday. Treasury rolls will become more active this week. The large long in TYF 113.5c and 114c paid the equivalent highs of 1’58 in the 113.5 straddle and 1’61 in the 114 straddle. Friday’s settles: TYF6 113.5^ 1’54 and TYF6 114.0^ 2’06 ref TYH6 112-15. Futures are rebounding somewhat this morning and premium will likely be pressed lower. News this week includes Fed minutes on Wednesday, followed by NVDA earnings. Sept NFP released on Thursday.
–Worth a mention that Japanese yields are making new highs today: 10y JGB 1.731, up almost 10 from end of October and up 35 bps from beginning of July. 20y JGB 2.743%, up nearly 20 from the end of October.
–EFFR was one bp higher on Thursday at 3.88. SOFR Rate at 4.0 set exactly equal to the Standing Repo Facility. January Fed Funds settled 9624.5. If EFFR were 3.875, or 9612.5, then FFF6 is pretty much indicating 50/50 for a cut on Dec 10. This one could go either way. Anecdotal conversations almost always include complaints about high prices and job seekers seem extremely discouraged as well.
–Just a couple of additional items. The German gov’t agreed to subsidize energy prices for heavy industry (from end of last week) after having done everything else possible to ensure high green power prices for everyone else. Political races in the state of Georgia indicate concentrated resistance to high energy prices and data centers.
From Wired: A new report finds that local opposition to data centers skyrocketed in the second quarter of this year.
https://www.wired.com/story/the-data-center-resistance-has-arrived
“The number one issue was affordability,” he [Peter Hubbard] says. “But a very close second was data centers and the concern around them just sucking up the water, the electricity, the land—and not really paying any taxes.”
