Waller unintentionally takes himself out of the running for top job
August 29, 2025
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–Waller says he favored a 25 bp cut in July and wants to ease in Sept. No surprise there. He is squarely focused on weakness in the labor market. A couple of lines from the speech:
After accounting for these revisions and what we will learn in a couple of weeks, the data are likely to indicate that employment actually shrank over those three months.[May, June, July]
Based on the median of FOMC participants’ estimates of the longer-run value of the federal funds rate, neutral is 125 to 150 basis points lower than the current setting.
https://www.federalreserve.gov/newsevents/speech/waller20250828a.htm
–So if neutral is 1.375% lower then FF should go to 3%. Well what do you know? Red SOFR pack (1 year forward) settled yesterday at 97.005, or 3%. I suppose that takes him out of the running for Fed Chair because Trump wants a 1% FF rate.
I was going to avoid saying anything more about the Lisa Cook dismissal, but here’s an amusing headine from FT:
‘Lisa Cook, the Fed Governor battling Trump’ (with a flattering picture of Cook as if she’s a beacon of hope against evil).
There’s a video of her calling Trump a fascist and she doesn’t deny committing mortgage fraud. You’re fired. Duh.
I don’t know how many times in this business I have heard: ‘Don’t do anything that might even APPEAR to be a conflict of interest’. The old membership rule at the CME was ‘don’t do anything that might damage the reputation of the exchange.’ There’s no ‘battle’. Just removal.
After having steepened Wednesday, the curve was flatter in light trade yesterday. 2y yield rose 1.2 bps to 3.633% and tens fell 3.3 to 4.205%. New low in SFRZ5/Z6 one-year calendar to -80, down just 0.5 (9621.5/9701.5).
–PCE Prices today expected 0.2 m/m and 2.6% yoy from 2.6. Core expected 2.9% yoy from 2.8%. Inflation is second fiddle. Employment is JOB 1. (note on German employment below)
Frankfurt (Germany) (AFP) – German unemployment topped three million in August for the first time in over a decade…
Over 110,000 jobs have been lost in German industry in the past year alone, a report released Tuesday by consultancy EY said, with about 50,000 of them coming from the car industry.
If intellectual property is worth less, isn’t the stock market as well?
August 28, 2025
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–Large trades include buy of 40k SFRH6 9675/9725cs for 8.5. Recall August 20 a buyer of 60k SFRH6 9725c 6 to 6.5. I had thought the call spread was a roll, but open interest went up in both strikes (less in 9725). In any case, longs in SFRH6 upside continue to build. Future settled 9650.5 (3.5%). Call spread settled 8.5 (15.0/6.5).
–New buyer of 28k FVV 108.5p cov’d 109-1425 to 1475, 18d, paid 6.5. Settle 6.5 vs 109-1425. Long puts in front of today’s upcoming 7-year after unspectacular 5y? Also a late buy of 14k FVZ5 111c for 18.
–With treasury rolls ending, total open interest in treasury futures plunged yesterday. FV net lost 302k, and TY down 287k. Across all treasury futures, 1.4 million positions disappeared. Yields generally lower, though 30y was up just slightly. 10y -1.6 bp at 4.238%. In SOFR, new lows in near calendars with SFRU5/U6 -105 (9590/9695) down 1 on the day. SFRZ5/Z6 -79.5, down 1.5 (9623.5/9703). Reds thru golds +2 to +4. Peak contract is SFRH7 at 9705 (+2.5) essentially equal to the high settle of any SOFR contract this calendar year. On the treasury curve, new highs in 2/10 at 61.7 (the lower yield of the new 2y partially responsibe), and new high in 5/30 at 120.8 (3.705/4.913). Also worth noting is a new high in 10y treasury/tip breakeven at 244.6. Yes, inflation concerns are growing. No, it won’t stop the Fed from easing because jobs are more important.
–Today’s news includes Q2 GDP expected 3.1 from initial estimate of 3.0 Jobless Claims 230k.
–I found this snippet from the Deep View missive interesting:
The Association of American Publishers noted that “AI can’t exist without using human authorship” — yet the industry’s response has been taking that authorship without permission or payment. Whatever Anthropic paid in settlement is almost certainly less than proper licensing would have cost upfront.
The tech industry is substantially built on the pillars of intellectual property and its legal protection. AI is “stealing?” much of that property and massaging it for (potential) profit. Ramifications?
Steepening
August 27, 2025
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–Call it the Lisa Cook steepener. New recent high in 2/10 at 58 bps, up about 3 bps. New ytd high in 5/30 at 117, up 6.6. With the new, just auctioned, 2y yield of 3.643, 2/10 should be about 3 higher tomorrow. The high in April (Liberation Day month) was around 64. The high in 2021, post-Covid easing, was 157. 5/30 is much closer to the 2021 high of 163.
–Yesterday was the first time since April that the peak SFR contract, SFRH7, settled above 9700, at 9702.5. The highest settle of any contract all year was SFRU6 at 9706 on 30-April; the high was 9728. New lows in several near SOFR calendar spreads. SFRU5/U6 -104, down 7.5 on the day (9589/9693). SFRZ5/Z6 -78, down 5 (9622.5/9700.5). Both Z5/H6 and H6/M6 settled at new lows of -26.5.
On Monday I noted that FFV5/FFV6 was exactly -100, with Oct’25 trading very close to certainty of a 25 bp ease next month. Yesterday that spread settled -105, 9590 and 9695. (9592 is a 25 bp cut).
–One trade of note: SFRZ6 9650/9750 risk rev cov’d 9700, 0.60d, paid 4.5 for call 6k. Settles 17.75/22.5 vs 9700.5. This is near peak part of curve (H7 is 9702.5). Grind lower or explode higher.
Midcurve same strikes: 0QZ5 9650p 3.0 and 9750c 6.75.
–I added a chart gleaned from Thoughtful Money podcast where Melody Wright was a guest…she noted that median New Home prices have fallen below below Existing….i.e. home builders are offering incentives/rebates to move product but existing home sellers are clinging onto the idea that prices are strong.
–News today includes NVDA earnings. 5y auction. NVDA close 181.77. Friday’s 182.5^ is around 11.70. Bloomberg reports that Xi ousted nearly a fifth of generals that he appointed. Desperate hold on power? Probably more important than Trump firing a Fed Gov for (mortgage fraud) cause.
That’s what makes this so difficult
August 26, 2025
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–News this morning is all about the firing of Fed Governor Lisa Cook. Will another Trump appointment change the Fed’s path? I doubt it. However, bonds and stocks have come under modest pressure. Yesterday featured flattening with red sofr contracts -4.25, greens -2.625, blues -1.125 and golds unch’d. This morning spreads are closer to Friday’s levels as a potential Fed re-make undercuts support for longer maturities, as if haphazard Presidential policy announcements aren’t enough. 10y ended yesterday +1.5 at 4.273%.
–Early in Biden’s term in 2021 there were delays in filling appointments. From google: “The slow pace of nominations and confirmations in the Senate was widely understood to be a key reason for the vacancies. Progressive Democrats and other critics used the situation to push for the appointment of officials who would support different policy goals.” From Reuters: Sept 9 2021 (Reuters) – As U.S. President Joe Biden assesses whether to reappoint Federal Reserve Chair Jerome Powell and nominate as many as three others to the central bank’s powerful board, he has the opportunity to revamp a leadership team long criticized for being too white and too male.
The Fed still raised rates aggressively to combat inflation beginning in 2022.
–Early buyer adding, +25k TYV5 113.5c 15 cov’d 112-005, 19d. 113c settled 20 and 113.5c settle 13 ref 112-00. Open interest gained in 113.5 and fell in 113’s suggesting a roll.
–Late seller 15k SFRH6 9650/9725cs vs 9575p vs 9644.5, 38d sold 15k at 13.0. Settles: 19.75, 5.75 (14 in cs) 1.0 in put vs 9644.0
–Interesting steepener: sold 0QH6 9650p vs 9696, 22d vs bot 3QH6 9612.5p vs 9656 22d 1.0 paid 8k for +3QH. So this is a red/blue steepener with a hedge. Good timing if the Cook steepener starts running, though I suspect Senate confirmation for new appointees is unlikely to be a cakewalk.
Settles are 9695.5, 9650p 9.0 and 9656 9.5. Futures spread settled +40.5, strike difference 37.5.
–FFV5/ FFV6 settled exactly -100. 9588.5 vs 9688.5.
–NVDA reports Wed, 2/5/7 auctions with 2’s today. Data includes Philly Fed Services, Durables, Consumer Confidence.
–Bitcoin weak…saw it printing 111,111 late! This morning snapshot 110,182.
Crypto Canary
August 25, 2025
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–In his final Jackson Hole speech Powell sent a strong signal that an ease will occur in Sept. From the speech, “…the balance of risks appears to be shifting.” “…the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” “…allow us to proceed carefully as we consider changes.”
–Rate futures surged, with the red SOFR pack (2nd year forward) settling +11.0. However, no contract settled above 9700 or 3%. The peak contract, SFRH7 settled exactly at 9700, which was up 10 on the week. The ten year yield fell 7 to 4.258%. Shorter maturity yields fell hardest, with twos down 9.6 bps to 3.692% (down just 6.5 on the week). While Powell’s comments indicate easing, the backdrop – with rates not all that far from neutral, and inflation concerns still bubbling – suggest a soft cap on forward SOFR contracts.
–Before the speech there was a buyer of 60k TYV 113.5c for 18 covered from 112-04 to 03, 23d. These calls settled 17 vs 112-055. The trade adds to similar size buys of TYV 113 calls, which are now max call open interest at 227k. TYV 113.5c have 103.5k open.
–Crypto, we have a problem. Though equities surged at week’s end, with DJIA at a new record high, bitcoin is down this morning. testing 111k, lowest in two months. Down around 11% from the mid-month high. 200 DMA is 101k, which looks like a near term target.
–New Home Sales today expected 630k, +0.5% m/m. From a Redfin summary (July):
“On average, the number of homes sold was down 2.1% year over year and there were 473,987 homes sold in July this year, down 484,141 homes sold in July last year.”
Ease Concession
August 24, 2025 – Weekly comment
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Starting with a couple of excerpts from Powell’s Jackson Hole speech:
With inflation above target, our policy rate is restrictive—modestly so, in my view.
Putting the pieces together, what are the implications for monetary policy? In the near term, risks to inflation are tilted to the upside, and risks to employment to the downside—a challenging situation. When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate. Our policy rate is now 100 basis points closer to neutral than it was a year ago, and the stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance. Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.
I wrote this last week:
There is plenty of cover for Powell to ease 25 at the next FOMC. Funds are above neutral. Any uptick inflation can be explained away as a ‘one-time’ tariff response. Labor conditions are softening. All Powell has to say is that the Fed is taking a small step towards bringing policy closer to neutral as an insurance policy against weakening labor conditions at a time of AI angst. …If the next employment report is awful, then a 50bp cut could occur.
A 50 bp cut in September is now a very high bar, but 25 is a lock. Let’s consider a few market signals from 1) Jackson Hole 2024, 2) Sept 18, 2024 initial 50 bp cut, and 3) Jackson Hole 2025. In 2024 Powell was explicit:
The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data…
On Friday the wording was hedged:
… the shifting balance of risks may warrant adjusting our policy stance.
Here are just a couple of market prices (SFR6 is the rolling first red, currently SFRU’26):
SPX 10Y SFR6 FED MID
Friday, August 23, 2024 Jackson Hole
5634 3.80 9678 5.375
Sept 18, 2024 (FOMC)
5615 3.705 9708 4.875
Friday, Aug 22, 2025 Jackson Hole
6467 4.255 9689 4.375
So, in the one year between Jackson Hole speeches, SPX is up about 15%. The ten-year yield is up 45 bps. The first red SOFR is +11 bps (down in yield). FF are down 100 bps. Note that the high in the red SOFR pack coincided with the Sept 2024 rate cut. The red pack high in Sept’24 was 9717 or 2.83%. That was still 200 bps lower than the new FF target of 4.875%, a HUGE spread! If the Fed cuts 25 next month, target will be 4.125%. I think it would make sense for the one-year forwards to be about 100 bps lower, perhaps a bit under 9700, which is exactly where the red pack is NOW (on Friday red pack = 9696 or 1.04%). In the past several months, the Fed Effective rate of 4.33% has been a magnet for the 10y yield. I would forecast 10s to gravitate to 4.0-4.12% after the September ease, with a slight downside bias. 10/30 spread ended Friday at a new high of 62. I would expect a move towards 70 as the 10y yield falls a bit more than 30s. (30y Friday was 4.884%).
After the September 2024 cut, rates exploded HIGHER. But as alluded to above, pricing going into that meeting was stretched. The new target midpoint was 4.875%. The 2y was 3.55% or 132 bps lower. Tens were 3.60% or 127 bps lower. In September the new midpoint in FF will be 4.125%. Tens on Friday were 4.26% or 14 bps higher. 2y at 3.69% is 43 lower. There’s a lot of sideline hand-wringing that an ease will pour gasoline on the inflation embers. With equity indices running hot, that’s certainly a concern. However, it’s the forward and longer-term rates that should have more of an influence on stocks. The AI spending boom is showing signs of slowing. And there are data points like this one from Redfin:
Roughly 58,000 U.S. home-purchase agreements were canceled in July, equal to 15.3% of homes that went under contract last month. That’s up from 14.5% a year earlier and marks the highest July rate in records dating back to 2017.
On the week, FFV5 settled -0.5 bp from 9589.5 on 8/15 to 9589.0 on Friday. 3 bps away from a 25 bp ease. FFF6 settled 9624. 9642 represents cumulative 75 bps of ease by the end of the year. On 8/15 FFF6 settled 9622.5. Two-year yield was 3.757, now 3.692, a decline of 6.5 bps on the week.
Below is a chart of the SOFR red pack. To me, the formation suggests an upside breakout, though I believe it will be modest (capped below 9750) absent a large catalyst. Also, I would mention for those who think the Fed simply can’t ease with inflation this much above target, in 2007-early 2008 CPI was right around here and moving higher. Inflation takes a back seat when labor fundamentals are quickly deteriorating. The other thing I would note is that the 2% inflation target is going to lose its mythical status. For Powell, the 2% target was a mantra. In the new regime we’ll be moving to 2.25 to 2.75%. When you can’t hit an explicit target, change it. The US needs higher inflation and nominal growth to change the debt trajectory.
As a nod to the ‘run-hot’ theme, Lawrence McDonald @Convertbond posted this on X. I am long GDX and URNM but was actually a bit surprised at these ytd gains (and MAG7 lag):
2025 Jr Gold Miners GDXJ +78%
Silver Miners SIL +74%
Rare Earth Metals REMX +50%
Nuclear NUKZ +43%
Silver SLV +34%
Copper Miners COPX +25%
Steel SLX +21%
Mag7 MAGZ +10%
*As we have moved closer to central bank-driven financial repression, markets are speaking.
Below is an interesting link on rare earths.
“All the critical minerals the US needs annually for energy, defense and technology applications are already being mined at existing US facilities. ..These minerals …are currently being discarded as tailings of other mineral streams like gold and zinc…
https://phys.org/news/2025-08-critical-minerals-theyre-thrown-analysis.html
This week brings 2, 5, 7 year auctions T, W, Th. Conference Board Consumer Confidence on Tuesday. That data set includes this point: Labor Differential Index (Jobs easy or hard to get). Last was 11.3, which is the low of this cycle but reasonably high on a historical basis. Absolute high was in 2022 at 47.1.
PCE prices Friday expected 2.6% yoy from 2.6 last. Core 2.9% from 2.8
OTHER THOUGHTS/ TRADES
So what do we do? Buy stocks up here? After the initial ease in 2024 reds got a little below 3%, thus the discount for forward earnings was lower. Now, we’re around 3%. That’s NOT a new tailwind, maybe there will be a little bit on forward rates as yield curve control is instituted. Is that going to engender confidence? I don’t think so. Is hotter nominal growth going to bail us out? I don’t think so. Immigration policies have detracted from growth. The AI spending boom is likely to come to a screeching halt in terms of acceleration.
New high 2/30 119 bps. Low of year in Feb was 40. New high 5/30 to 112.5. Feb low 34.5.
Big trades:
+60k TYV 113c covered 111-26, 23 paid (wed). Settled 26 vs 112-05+
+60k TYV 113.5c cov’d 112-04 to 03, 18 paid (fri).Settled 17 vs 112-05+
Market tends to gravitate towards peak open interest. Sept expiry TYU 112.5c were peak. TYU5 settled Friday at 112-04+.
+60k SFRH6 9725c 6.0 to 6.5 (wed). Settled 6.25 vs 9649.0.
+100k SFRV5 9650c 3.25 (mon). Settled 3.75 vs 9623.0
| 8/15/2025 | 8/22/2025 | chg | ||
| UST 2Y | 375.7 | 369.2 | -6.5 | wi 365.9 |
| UST 5Y | 384.3 | 375.9 | -8.4 | wi 375.9 |
| UST 10Y | 432.4 | 425.8 | -6.6 | |
| UST 30Y | 492.4 | 488.4 | -4.0 | |
| GERM 2Y | 197.0 | 194.5 | -2.5 | |
| GERM 10Y | 278.7 | 272.0 | -6.7 | |
| JPN 20Y | 256.1 | 266.4 | 10.3 | |
| CHINA 10Y | 174.3 | 178.4 | 4.1 | |
| SOFR U5/U6 | -90.5 | -100.0 | -9.5 | |
| SOFR U6/U7 | -2.5 | -3.5 | -1.0 | |
| SOFR U7/U8 | 24.5 | 25.0 | 0.5 | |
| EUR | 117.05 | 117.18 | 0.13 | |
| CRUDE (CLV5) | 61.98 | 63.66 | 1.68 | |
| SPX | 6449.80 | 6466.91 | 17.11 | 0.3% |
| VIX | 15.09 | 14.22 | -0.87 | |
| MOVE | 76.66 | 78.10 | 1.44 | |
Powell today. Stronger data causes rethink on easing
August 22, 2025
***
–Data Thursday stronger than expected with S&P Composite PMI 55.4 vs expected 53.5. However, Philly Fed was -0.3 vs 6.5 expected and 15.9 last. Continuing Jobless Claims at 1972k is at a NEW HIGH for the cycle. Hammack said that given the data, she wouldn’t see a case for a September ease, which helped shift the front end lower. Weakest SOFR contracts was Z5 which settled -7 at 9614.0 SFRU5 ended -3.5 at 9586.0. The market is cutting odds of a Sept cut in front of Powell’s Jackson Hole speech today. High in SFRZ5 post-NFP was 9632.5. Yesterday’s close was the lowest since that data.
–Bitcoin late yesterday at 112k…close to making a new low for August.
–September option expiration in treasuries. TYU5 111.5^ settled 19 vs 111-175. Seems low.
From BBG article on private credit:
“A major selling point of private credit is the low default
rates,” Bukhari wrote in a report this month. “This reputation
hinges on a narrow definition of default.”
If actions such as maturity extensions and conversions of
interest payments from cash to PIK — so-called selective
defaults — are added to the calculation, the rate at which
borrowers are failing to meet debt obligations is much higher,
according to S&P.
Defaults may have been “disguised by significant amendment
activity,” as lenders can tweak credit agreements to forestall
defaults, according to a report this month by valuation firm
Lincoln International.
Lincoln’s “shadow default rate” for the market, which is
calculated by looking at “bad” PIK investments as a proportion
of total investments, stood at 6% in the second quarter,
compared to 2% back in 2021.
AI unprofitable. Who knew?
August 21, 2025
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–Several large upside bias trades yesterday in rates. Early buyer TYV5 113c covered 111-26, 23 paid 60k (prem > $16m). Settled 23 ref 111-28 in TYZ5. Delta is 28, open interest in that call strike is highest of any TY call, now at 243k, up 84k on the day (bought heavily Tuesday as well). Ten year yield ended at -0.5 bp at 4.295%. TYU5 options expire Friday so this trade might be partial replacement of long TYU 112.5 calls.
Late buyer 10k USV 119c for 16. Settled 14 ref USZ 114-00.
SFRH6 9725c 6.0 to 6.5 paid for 60k (used futures for synthetic prices from 9646 to 47.5). Settled 6.25 vs 9644.0. SOFR straddles firmed by 1 -1.5 bps as a result of this trade. SFRH6 9643.75^ settled +1.5 at 46.25.
SFRZ5 9618.75/9631.25/9650/9662.5c condor 3.0 to 3.25 paid for 50k. This trade targets three 25 bp eases by year end. Max value at expiry is 12.5 between middle two strikes 9631.25 to 9650. Current EFFR is 4.33% or 9567. Cuts totaling 75 bps would be 3.58% or 9642. Lower call spread settled 4.5 and upper at 1.75 for 2.75s.
–Headlines regarding FOMC minutes were slightly hawkish (BBG: Majority of FOMC saw inflation as greater risk) but that was prior to NFP report. Powell tomorrow.
–All sorts of press stories about an AI bubble. MIT released a study saying 95% of companies see zero return on AI investement. (WSJ) META is instituting a hiring freeze for AI.
–Today’s news includes Jobless Claims, S&P PMIs, Existing Home Sales.
Butter, not guns
August 20, 2025
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–Rates edged lower as tech stocks encountered profit taking pressure. Nasdaq Comp fell 1.46%. 2y yield fell 1.7 bps to 3.752% while tens dropped 3.5 to 4.30%. Bitcoin’s weakness was a major feature, having run a round-turn so far in August. The low on 3-Aug was around 112k. By 14-Aug it had surged to 125k. Late yesterday it was 113,200.
–UK inflation on the high side at 3.8%. Going into Powell’s speech at Jackson Hole on Friday, some are expecting a hawkish tone due to inflation concerns in the US. However, given the employment data and shift within the FOMC I would expect a balanced message leaning toward ease. Aside from inflation concerns, loose financial conditions are often cited as a reason to hold the line. On the year, SPX up around 9% and Nasdaq just over 10%. Strong but not crazy. Financial asset prices can be fickle as shown by bitcoin. PLTR was down over 9% just yesterday, and MSTR down 7.4%. Bessent noted that student loans are the largest asset of the US government, and the NY Fed reports “… the delinquency rate for student loans stands out: it surged from below 1 percent to nearly 8 percent, as the pause on reporting delinquent federal student loans ended. …Among borrowers who were required to make payments, nearly one in four student loan borrowers (23.7 percent) were behind on their student loans in the first quarter of 2025.”
On the one hand, financial asset speculation, though worrisome, seems to be reaching limits, while labor market warning signs are increasing. Powell has no reason to press the hawkish case and risk a completely split Fed when he can probably find consensus with a 25 bp cut. Waller speaks this morning at 11:00. Fed minutes in the afternoon.
–Was the Trump summit a possible watershed moment? I have seen several reports noting that European defense stocks are now under pressure. The idea of EU financing $100 billion in arms for Ukraine would likely be offset in part by access to cheaper Russian energy. Potential upside for US, EU, Ukraine and Russia. Possible negative effects on India and China.
Upside
August 19, 2025
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–Early buying in Treasury calls appeared to be exits as open interest declined
FVU5 109.25c 2 paid 30k
TYU5 112.5c 2 paid 40k
–Later in the day, buyer on BLOCK, 95k SFRV5 9650c for 3.25. Market maker immediately bought 60k back on the box for 3.0, settled 3.25 vs 9619.5. A few people noted this trade as a likely buyback of the short strike of a call fly, however, open interest rose 95k (looks new). Need some pretty heroic assumptions for this strike to be in play as it expires Oct 10, 3.5% vs current FF target 4.25 to 4.5%. SFRZ5 underlying settled 9619.5 (3.805%)
–Back in 2019, when news of covid was just starting to come out of China, there was a consistent buyer of 25-50k call spreads on EDU20: 9875/9925cs and 9887.5/9937.5cs for around 4.0 At the time, EDU0 was around 9840, and the FF target was 1.5 to 1.75%. Of course, these call spreads paid as covid ran rampant.
–Now there’s a guy who has accumulated huge size in SFRU5 9612.5/9625cs 1.0 to 1.5; added small for 0.75 yesterday. And buyer +95k SFRV5 9650c for 3.25. Seems like someone who ‘knows something’ about the prospects of a 50 bp cut at the Sept FOMC. Beeks.
But maybe not. A couple of weeks ago there was a buyer of 60k SFRV5 9618.75/9643.75 cs for 4.5. These were substantially exited at 10 the other day… let’s just call it a profit of 5.5 * 60k or 330k bps. If just rolling into the 9650 then 3.25 * 95k is just under 309k bps. Simple roll? Also been a buyer of SFRZ5 9618.85/9643.75c 1×2, 1.25 settle. SFRV 9650c as cheap protective wing for trades similar to this?
–New high in 30y Gilt yesterday 5.61%. German 30y is same picture…pegged to new high yield of 3.34%. US rate trading was subdued; yields up about 1 bp across the curve, with tens at 4.335%, once again glued to the 4.33% Fed Effective rate. US 30y edging toward 5%, 4.938% yesterday.
–From @GlobalMktObserv:
The history of financial markets has NEVER seen this before: The S&P 500 Technology Sector Price-to-Sales ratio hit 10x, the highest EVER. Even at the 2000 Dot-Com Bubble peak, the ratio was ~7.8x. The median ex-tech P/S ratio is just 3x.
–From NY Fed’s Business Leaders Survey:
Business activity continued to decline in the region’s service sector in August, according to firms responding to the Federal Reserve Bank of New York’s Business Leaders Survey. The survey’s headline business activity index was little changed at -11.7. The business climate index remained negative at -39.3, suggesting the business climate remained worse than normal. Employment held steady, and wage growth was modest. Supply availability continued to worsen. The pace of input price increases remained moderate, and selling price increases remained significant. Firms turned pessimistic about the outlook.
