Not over yet
June 23, 2020
–Nasdaq closed at a new high and is building on those gains this morning, despite a brief hiccup associated with Peter Navarro saying “it’s over” about the China trade deal. A quick plunge in stocks, as ESU fell 50 points, was quickly regained as Navarro and Kudlow rushed to cancel the comments. Other stock index futures aren’t yet at new highs, but are, of course, pushing in that direction. Gold has been going sideways in a fairly wide range of 1675 to 1775 for two months, but is now holding at the upper end with GCQ trading 1770. The attached chart is a spread of the ten year treasury vs inflation-indexed note which has made a post-corona high of 135 bps. A return toward normalcy in a world that is anything but normal.
–We again have Fed Fund futures at a slight negative yield with the Jan’22 contract at the peak of the curve settling 100.01. Sept’21 is the peak on the ED curve at 9979.5. Treasury yields on the whole were close to unch’d with the ten year glued to 70 bps. Take the same value and slap a minus sign in front and you have the ‘real’ yield as expressed by the 10-yr inflation-index note, -64.4.
–Markit PMI numbers today. New Home Sales expected 640k rate, up 2.7%. Treasury auctions twos into the waiting arms of the Fed, followed by 5’s and 7’s Wed and Thursday.
–A friend pointed out that yesterday was the 1986 anniversary of Diego Maradona’s Hand of God goal and the Goal of the Century. Link of the latter below. The Nasdaq sprint to new highs almost captures the spirit, without, of course, the poetic raw emotion of the announcer Victor Hugo Morales.
A long weekend
June 22, 2020
–Little change in rates on Friday and on the week as a whole. Ten year ended at 69.7 bps from 69.9 the previous Friday. Stocks took a late tumble but are back up this morning.
–A Reuters article notes a decline in the Fed’s balance sheet as swap lines to foreign central banks are not being rolled. The conclusion is that the dollar crunch has abated and is probably over. The eurodollar futures market concurs, with low straddle prices and a stable libor rate.https://www.reuters.com/article/us-health-coronavirus-fed-conditions-ana/global-dollar-crunch-appears-over-as-central-banks-rely-less-on-fed-backstop-idUSKBN23T0HP
–There’s been a reasonable amount of press about Wirecard, the German company where €1.9 billion has either gone missing or was never there in the first place. Deutsche Bank was the original lender of €150 million to the founder of the company Markus Braun. The loan was backed by shares which have now lost three quarters of their value and is being called due to breached covenants. In and of itself, this doesn’t seem like a big deal. However, the trend toward ‘covenant-lite’ loans which are now going bad IS a big deal. The article below (from February when stocks were at their peak) gives some background. “…breaches [of covenants] can act as an early-warning system and force equity sponsors to the table to discuss a turnaround plan.” Of course, if the Fed just buys these loans I guess it doesn’t really matter.
https://www.privateequityinternational.com/waiting-for-the-explosion-the-dangerous-game-of-covenant-lite/
| Waiting for the explosion: The dangerous game of covenant-liteWaiting for the explosion: The dangerous game of covenant-lite. Fewer covenants can provide greater flexibility in dealing with portfolio company difficulties, but they may also prevent lenders from negotiating rescue plans with borrowers and sponsors.www.privateequityinternational.com |
–In Chicago news from the Tribune, “At a Sunday news conference on the weekend violence, Chicago police Superintendent David Brown said at least 61 people had been shot in the city through Sunday, and as of Sunday morning, eight young people had been shot, four fatally.” Brown urged anyone with information on any of the cases to come forward. The dead included a three year old toddler and a 13 year old girl who was inside her home and struck by a random bullet. This is gang violence. I am not quite sure that community organizers are an adequate substitute for police. https://www.chicagotribune.com/news/breaking/ct-chicago-violence-shootings-20200621-dysixivfqrdgtlffeu3kopi3xy-story.html
| Neighbors outraged as toddler, 3 teens killed in weekend violence: ‘This is a horrific Father’s Day. This 3-year-old baby lost his life.’ – Chicago Tribune“A line was crossed,” said the Rev. Ira Acree of Greater St. John Bible Church. “This is a horrific Father’s Day. This 3-year-old baby lost his life. …www.chicagotribune.com |
Here’s a website with updated stats, https://heyjackass.com/
And another from a Chicago cop, http://secondcitycop.blogspot.com/
Barking dogs
June 21, 2020 – Weekly comment
In a daily piece last week I mentioned that bond (US) vol relative to five-year (FV) vol was as high as I have remembered seeing it. After that comment I received a call from a treasury market-maker friend who wanted to discuss this topic in more detail, so I created the chart below, and figured it’s worth a brief note. I generally keep an eye on the ratio between FV and US DV01 and the ratio between the two implied vols. Currently the DV01 ratio is 4 FVU0 to 1 USU0 ($54.40 in FVU vs $219.60 in USU). If the vol ratio was also 4 to 1, then if FV vol was for example, 1.7, bond vol would be 6.8. Typically though, bond vol is less than the DV01 ratio, because the belly of the curve is more volatile. That is, if FV vol was 2.0 then bond vol would run something like 7.5.
What I did on the chart below is make the assumption that the DV01 ratio over time is generally around 4, so the blue line is US vol -4x FV vol. If that level is zero, then bond vol is exactly 4x greater than FV. If it’s negative, then bond vol is less than 4x FV vol. Pretty crude construction, I know, but this is just a jumping off point. What we see is that since the March crisis, bond vol is relatively high compared to FV. On Friday I marked FVU0 1.7 and US 10.0, which puts the blue line a bit over +3. When the 5/30 cash curve chart is overlaid (green) it appears that as the curve steepens, bond vol perks up on a relative basis.
Makes sense I suppose, given discussions of yield curve control which is generally thought to encompass 3 to 5 years, combined with additional treasury supply in the long end (new 20’s). We could just leave the conversation at that…
But… I looked farther back with the same 1 to 4 relationship even though the DV01 ratio isn’t always constant. I thought it was somewhat interesting that the last time 1 bond vol was greater than 4 FV vol was in 2012/2013. (Represented by the blue line > 0). This was also a period of FF rate at zero, and an expanding Fed balance sheet due to QE. Note the sharp drop below zero in 2013. The TAPER TANTRUM. In May of that year, Bernanke appeared before Congress and hinted the Fed was considering tapering bond purchases. After the turmoil unleashed by that appearance, the Fed didn’t actually begin to taper until December. I’ll just mention a couple of other stats for the sake of comparison: After the GFC, unemployment topped at 10% in 2009, and began to consistently decline from late 2010 on. In 2013 the unemloyment rate started at 8.0% and ended at 6.9%. According to a Reuters article it was generally thought the Fed would move off the zero bound when that rate fell below 6.5%. In the middle of 2014 the U rate fell below 6.5 and continued its descent. The Fed’s first rate hike was in December 2015. Core PCE yoy deflator bottomed in April 2013 at 1.4%. It zigzagged higher in the next year, topping at 1.7% in May 2014, and then proceeded to decline fairly sharply, ending 2015 at 1.2%, and that’s when the Fed first hiked, surprisingly enough. By 2017 Core PCE yoy price had moved to 1.85%.
The unemployment rate now is 13.3% and the Core YOY PCE is 1.05%, the lowest is has been since 2011.
Another interesting side note regarding 2013 is that the IMF’s April release of its World Economic Outlook channeled Sherlock Holmes with a chapter titled “The Dog that Didn’t Bark; Has inflation been muzzled, or was it just sleeping?” This weekend, Reuters ran an article titled, “Inflation dog may finally bark, investors bet” noting heavy investment flows into gold, timberland and inflation-indexed bonds.
As can be seen from the above chart, 5/30 spread declined through 2014 following Bernanke’s May appearance in 2013 and the initial actual onset of tapering in December. However, this year, 5/30 has been rising. While actual inflation numbers are down, forward looking surveys such as U of M’s 1-year and 5-10 year inflation expectations are surprisingly strong (3.0% and 2.6%). The NY Fed’s May survey of consumer expectations had the one-year horizon on inflation rising 0.4 pct to 3.0% while the median 3-yr inflation expectation was unchanged at 2.6%.
My takeaways: I feel that bond vol is elevated on a relative basis because of 1) yield curve control expectations 2) increased supply 3) increasing inflation expectations. None of these factors is likely to change much in the near future. In the latter part of 2012 to early 2013 5/30 was around 225 bps, double the current 114.
I also think the back end of the euro$ curve is quite flat. For example, the chart below shows the one-year constant-maturity first green to first blue, the 9th to 13th contract spread. In late 2012 to early 2013 this spread was quite contained, averaging 40 to 45 bps. With the tantrum as catalyst it surged to 119 bps. Currently, 1st green to 1st blue is EDU’22 to EDU’23 at a spread of 15. It seems expensive in the moment, as the 1st red to 1st green is only 6 bps. But on a historical basis, risk/reward appears to favor buying back calendars. Timing is key. (No sh-t, Sherlock!)
Data this week may not be all that important, but on Friday we will get both PCE price data and U of M final inflation expectations.
| 6/12/2020 | 6/19/2020 | chg | ||
| UST 2Y | 18.9 | 18.5 | -0.4 | |
| UST 5Y | 32.5 | 32.5 | 0.0 | w/I 34 |
| UST 10Y | 69.9 | 69.7 | -0.2 | |
| UST 30Y | 144.9 | 146.6 | 1.7 | |
| GERM 2Y | -67.2 | -66.9 | 0.3 | |
| GERM 10Y | -43.9 | -41.5 | 2.4 | |
| JPN 30Y | 53.7 | 56.6 | 2.9 | |
| EURO$ U0/U1 | -9.0 | -8.5 | 0.5 | |
| EURO$ U1/U2 | 5.5 | 6.0 | 0.5 | |
| EURO$ U2/U3 | 15.0 | 15.0 | 0.0 | |
| EUR | 112.57 | 111.79 | -0.78 | |
| CRUDE (active) | 36.51 | 39.83 | 3.32 | |
| SPX | 3041.31 | 3097.74 | 56.43 | 1.9% |
| VIX | 36.09 | 35.12 | -0.97 | |
file:///C:/Users/alex%20manzara/Downloads/_c3pdf.pdf
Ring of fire
June 19, 2020
–Yields declined and the curve flattened on light volume. Tens back under 70 bps at 69.2, down 4 on the day. Two year note essentially unch’d at 19.3 bps. First two years of euro$ contracts net change of 0 to +0.5.
–Not too surprising that vol continues to slump. TYU atm straddle was above 2 points a couple of days ago, but yesterday TYU 139^ settled 1’47, 3.7 vol. As the attached chart shows, TY vol is back where it was at the end of last year as if March/April was just a bad dream, while VIX remains elevated. Amber line is TY vol. White is VIX, green is three-mo libor.
–This is the sort of summer day where the CME trading floor used to empty out by about 9:30 am to get a jump on the weekend. Sometimes thin conditions lead to volatile moves, but I doubt that happens today. However, it’s worth noting triple witching today.
–Ring of fire eclipse this weekend.
During Sunday’s eclipse, the moon will be near aphelion, the point in its orbit when it is farthest away from the Earth, creating an annular solar eclipse. “In an annular solar eclipse, the Moon is too far from the Earth to block out the entire Sun, leaving the Sun peeking out over the Moon’s disk in a ring of fire,” NASA explained.
Rise and Fall
June 18, 2020
But rather than finish his studies, XXXX became a gambling addict, lost all his tuition money, dropped out of school and suffered a nervous breakdown. It would not be his last.
–It might be added, that since school was now online, he didn’t think it was worth the same tuition money anyway, and the gambling addiction was related to stocks.
–Yields edged slightly lower yesterday, with tens -2.3 bps to 73.1. Treasury vol oozed out, with TYU 138.5 straddle moving from 1’63 at the open to 1’56 settle. USU 176^ settled 6’32 on Tuesday and 6’14 yesterday. However, bond vol relative to FV vol as a ratio is as high as I’ve seen it. The DV01 of US is exactly 4x that of FVU, yet the vol ratio is 5.9x higher in US. The ratio of the ratios is thus 1.47, previously it had been running around 0.7. The obvious trade is to sell US vol and buy FV, but with YCC it’s anything but obvious.
–Today’s news includes Jobless Claims, expected 1.3 million, Philly Fed expected -21 from -43.1 and Leading Indicators which is expected to improve…duh, 2 of its components are stocks and M2.
–The Turkish Lira is again on a path lower as Turkey launches bombing and ground assault operations in Iraq against Kurds.
–In spite of the SEC taking issue with the Hertz plan to extract $1 billion from Robinhooders to transfer to creditors, HTZ still finished a touch higher at 2.00. If you’re in the market for a used car, look here: https://www.hertzcarsales.com/used-cars-for-sale.htm?geoZip=33060&geoRadius=1000
–The gambling addicts that have driven some stocks to outlandish levels have yet to suffer nervous breakdowns. ‘Bro, it might be better to get out of HTZ and buy NKLA’. The latter, by the way, was at $10 per share in early Feb (pre-Covid) but shot up to nearly ten times that value and is now 64, giving the company a market cap of $23 billion. My bloomberg terminal says the company has 4 employees and no revenue.
–By the way, the initial quote above refers to none other than Nikola Tesla.
https://www.smithsonianmag.com/history/the-rise-and-fall-of-nikola-tesla-and-his-tower-11074324/
HTZ ended lower?!
June 16, 2020
–Powerful stock rally off yesterday morning’s open continues. Reuters headlines tell the story: Fed launching new Main Street lending program; Treasury eyes $1T infrastructure plan to spur recovery; Fed buying corporate bonds. There’s a swirling negative conversation about Robinhood traders being swept into the vortex of social media investing, but at the Twitter open Davey daytrader (DDTG) said (paraphrasing) “What’s going on here is that the suits are trying to scare everyone about a second wave pandemic so they can scoop up stocks cheaper. That’s all it is.” It sounds like he was spot on. Treasuries settled modestly lower but lost further ground in the afternoon as stocks surged. Leon Cooperman was also on CNBC yesterday pointing out that stocks were fully valued at a 20 multiple, and warned that it would end in tears for the Robinhood crowd, but it seems as though stimulus is overwhelming all other investment decision inputs.
–EDZ0/H1 notched a new recent low at -9 bps. On the FF curve, Aug’20 to Jan’21 spread settled -4.0. This latter spread prices odds of an ease into the end of the year. I guess that’s what it prices these days… Powell speaks today in front of Congress, I’m sure we’ll be treated to many insightful questions from the Committee. On the long end of the curve I marked USU vol at a new recent high if 10.8 as the curve maintains a small steepening bias after Thursday’s drubbing.
–Retail Sales this morning expected +8%.
Mere anarchy…
June 12, 2020
The best lack all conviction, while the worst / Are full of passionate intensity.
–All about stocks yesterday as SPX fell 5.9%, almost perfectly retracing 50% of the recent leg up from 2751.50 (May 14) to the high of 3220.50 (June 8). I am using ESU contract. 50% is 2986.0 and yesterday’s low 2985.25. DJIA was down 6.9% and Naz -5.3%.
–With the Fed having more or less dismissed negative rates, the front end didn’t move much, but the back end went into semi-panic mode with tens dropping another 8.6 bps in yield to 65.3. Powell refers to the amazingly rapid move in unemployment from historic lows to historic highs within a couple of months. We’ve had an equally dramatic move in the curve from last Friday’s highs; the steepening completely reversed. On Friday 2/10 spread closed at 57 and yesterday at 31.5, a plunge of 25.5 bps. On the eurodollar curve the red/green pack spread closed at a new low of 5.75. Perhaps that shouldn’t be surprising with the Fed indicating rates on hold for three years. The EDM21/EDM22 spread which settled 12 on Friday collapsed to 2.0 yesterday. –Just after futures settlement in rates, the NY Fed posted an implementation note raising the repo rate by 5 bps. EDU0 immediately cratered by 4.5 bps (Which should accentuate flattening).
https://www.newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/repo-reverse-repo-agreements/repurchase-agreement-operational-details
Beginning next week the o/n repo will be IOER +5 and 28 day term IOER +10. While the Fed tweaked the short end, deferred FF futures again trade over 100, indicating the possibility of negative rates. For example, FFQ21 settled 100.005.
–It’s becoming difficult to make sense of the markets or anything else…the phrase “the center cannot hold” keeps running through my head.
I have posted the poem below. It’s by Yeats from 1919, ‘The Second Coming’. According to wikipedia it describes post-WWI Europe and the onset of the Irish War of Independence, and, ironically enough was written at the time of the Spanish Flu pandemic. Perfectly poignant 100 years later.
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Surely some revelation is at hand;
Surely the Second Coming is at hand.
The Second Coming! Hardly are those words out
When a vast image out of Spiritus Mundi
Troubles my sight: a waste of desert sand;
A shape with lion body and the head of a man,
A gaze blank and pitiless as the sun,
Is moving its slow thighs, while all about it
Wind shadows of the indignant desert birds.
The darkness drops again but now I know
That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
Slouches towards Bethlehem to be born?
Beaten down
June 11, 2020
–Stocks are sliding with several news sites attributing the fall to a downbeat Fed while Bloomberg creatively points to fears of a second virus wave. Might as well add social unrest and bombs being launched at the US Embassy in Baghdad. ESU currently down 45 at 3130.50.
–Yields fell yesterday with the ten year down 9 bps to 73.9. The curve flattened with 2/10 down 6 to 56.4 and red/gold pack spread in dollars down nearly 5 to 47.625. Implied vol sank with TY back to around 4%. The atm TYU straddle went from 2’14 on Tuesday to 1’63 yesterday (138.5 strike). The Fed’s dot plot indicates FF rate at 0-0.25 through 2022. Just a fantastic forecast for the euro$ product! (NOW do you understand why there are no market makers in FF options?) The good news is that the Fed’s forecasts are pretty miserable, and Powell pointed to last Friday’s blockbuster employment report as an example of current uncertainty. The EDM1/EDM2 one-year eurodollar was subserviently pounded back to settle 3.5, having peaked Friday at 12.0. In a way, there’s no reason for any one-yr ED calendar to deviate much from zero. Indeed EDM0/EDM1 is -9.5 all the way out to EDM22/EDM23 which is +15. The only one that’s priced “right” is EDH21/EDH22 at -0.5. In terms of ED vol, week-over-week changes: EDZ0 9962^ 16.5 to 14.5, 0EZ 9975^ 19.5 to 17.0. 2EZ 9962.5^ 27.5 to 25.0. You get the picture.
–Maybe the Robinhood crowd will discover the long bond as an investment thesis, or maybe they already have. After all, they seem to like heavily indebted companies on the verge of bankruptcy with costs that far exceed revenues. You get your chance this afternoon as Uncle Sam issues 30s; not much of a yield at 1.5%, but consider the growth… May budget deficit released yesterday at $399 billion.
Inconceivable and Irrational
June 10, 2020
–Yields fell and the curve continued to pull back from Friday’s new highs. For example, 2/10 which ended Friday just above 69 bps was 62.5 at futures settlement. The one-year euro$ calendar EDM21/EDM22 settled back at 7.0, having been 12 on Friday (there is a large core long of >100k contracts in that spread from ~6.5). The ten year yield fell 5.3 bps to 83 bps.
— Implied vol exploded on bonds. USN 174^ vs 174-02 was 3’04/3’07 before the open. End of day USU settled 174-10, and USN 174^ 3’28s while 174.5^ 3’24s. Up about 20 ticks from morning in front of today’s FOMC. I calculate 174.5^ premium equivalent to a bit over 16 bps with just two and a half weeks to go. Let’s compare that with July midcurve straddles which expire in 30 days (2 weeks later). 0EN 9975^ settled 5.5 bps vs EDU21 9974.5. 2EN 9962.5^ settled 10.5 vs EDU22 9964.5 and 3EN 9950^ settled 14.0 vs EDU23 9946.0. What does this mean? To me, it means the market has bought into the Fed’s yield curve control rhetoric whether it’s overtly implemented or not. Straddle levels indicate that contracts out to three years are barely expected to move, while the long end, as exemplified by the bond, has plenty more room for play. 5.5 for a one-month straddle on the second red? Inconceivable.
–The tacit acceptance of YCC is one structural aspect of the market: the front end is thought to be more or less cemented in place, likely comforting to the Fed. What is increasingly uncomfortable is the speculative froth in equities, which of course, reminds me of the late 1990’s dot.com frenzy. I had noticed then, that on national holidays, when stocks were open but many businesses were closed, that equities inevitably rallied, as people with a day off would sit home and buy shares. Now, as many commentators have pointed out, we have an entire population sitting at home looking for “cheap” stock plays. As a paper from HSBC pointed out, there are no sports to wager on, might as well open a Robinhood account for some action. The volatility in some of these stocks is enormous. It’s here that I should re-tell my early 2000 story about ECNC, but I don’t have the time…will re-post later. In any case, this new speculation, even though it’s driven by “main street” retail investors, creates the appearance that the Fed has once again helped “Wall Street” at the expense of main street. A bloomberg piece notes unharnessed buying activity in shares of bankrupt companies, even as their bond prices telegraph that the equity portion of the capital structure will be wiped out. We’ll see today how (and if) the Fed responds to this. Recall that Greenspan’s famous “irrational exuberance” speech initially sparked selling, but that didn’t last for long.
From Greenspan’s speech, Dec 5, 1996
But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? And how do we factor that assessment into monetary policy? We as central bankers need not be concerned if a collapsing financial asset bubble does not threaten to impair the real economy, its production, jobs, and price stability. Indeed, the sharp stock market break of 1987 had few negative consequences for the economy. But we should not underestimate or become complacent about the complexity of the interactions of asset markets and the economy. Thus, evaluating shifts in balance sheets generally, and in asset prices particularly, must be an integral part of the development of monetary policy.
They knew
June 9, 2020
–Many years ago I worked at Refco and covered a guy at a well-known hedge fund. I can’t recall the exact conversation, but we were talking about some type of legislation that could possibly have an impact on interest rate markets. What I do specifically remember is that he said this relating to the topic: “Our guys in Washington are telling us this…” Right then I found myself thinking, most people will never have the kind of information that these guys have, so it’s probably best to just watch how the markets trade and go with the flow. Often, I’ve heard (and used) the phrase, “We’ll find out later what the news was that caused this move.” That thought is crystalized by another old floor local friend who often observes when a big odd trade is going through: “They know something.”
–Well, in November and December, there was huge buying of EDU0 and EDZ0 9875/9925 call spreads and 9887/9937 c spreads. This was at the time when those futures contracts were around 9840 and FF were in the target range 1.50 to 1.75%. When the virus news was starting to really circulate in late January and February, my floor friend said, “those call buyers must have already known about the virus”. I replied that they couldn’t have, because the news wasn’t really known until January at the earliest. [Have I learned NOTHING?] Now there’s a news story that supports the idea that they DID know. From ABC news:
Using techniques similar to those employed by intelligence agencies, the research team behind the study analyzed commercial satellite imagery and “observed a dramatic increase in hospital traffic outside five major Wuhan hospitals beginning late summer and early fall 2019,” according to Dr. John Brownstein, the Harvard Medical professor who led the research.
Brownstein, an ABC News contributor, said the traffic increase also “coincided with” elevated queries on a Chinese internet search for “certain symptoms that would later be determined as closely associated with the novel coronavirus.”
“Something was happening in October,” said Brownstein, the chief innovation officer at Boston Children’s Hospital and director of the medical center’s Computational Epidemiology Lab. “Clearly, there was some level of social disruption taking place well before what was previously identified as the start of the novel coronavirus pandemic.”
Though Chinese officials would not formally notify the World Health Organization until Dec. 31 that a new respiratory pathogen was coursing through Wuhan, U.S. intelligence caught wind of a problem as early as late November and notified the Pentagon, according to four sources briefed on the confidential information.
If the Pentagon knew in November, then these guys knew in October, and probably sooner. https://abcnews.go.com/International/satellite-data-suggests-coronavirus-hit-china-earlier-researchers/story?id=71123270
–Anyway, we have the makings of a turnaround Tuesday after the recent fierce stock market rally. Bloomberg leads off with: Speculative fervor in US stocks surges to ‘stunning’ levels. (yes, I’ve noticed that).
Nasdaq closed at new all-time highs and SPX is around flat on the year. The dollar index is seeing a small bounce, as are treasuries, while stocks are paring back due to profit taking. The ten year fell 2.3 bps yesterday to 88.2 in front of today’s auction. FOMC is tomorrow, but the Fed already announced yesterday that lending support for smaller businesses will be expanded. And…North Korea severed the hotlines to South Korea. “Our guys in Pyongyang are telling us…”
