Hard for yields to ignore oil shortage + wealth effect
May 10, 2026 – weekly comment
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Jeff Currie of Carlyle: What happens when you run out of inventories?…Oil is the same thing. From a price perspective and a share of GDP it doesn’t matter, but you pull it out of the system, it matters. …I like to emphasize, that volumes matter. We in commodities, how do we quote things? We say millions of barrels per day or millions of metric tonnes or millions of bushels per day. We don’t quote in notional. Macro people quote in dollars. Financial people quote in dollars. And that is a very important distinction. I remember it was very similar during COVID. We were going, “you guys, you have a problem and it’s coming your direction.” Every commodity guy said “you’ve got a big problem”. Every macro guy, every finance guy, said no, no, no. Boom! inflation’s up over 10% year over year. It’s because they do not respect the idea of volume metric change.
From Doug Noland Credit Bubble Bulletin:
One of my favorite economic indicators, the ISM Services Index, slipped marginally in April to a still robust 53.6, with 14 industries reporting expansion versus only three in contraction. The ISM Services Prices Paid component was unchanged at 70.7, matching the high back to October 2022.
At 3.64%, New York Fed Inflation Expectations was reported at the highest level since September 2023. Surely boosted by high gas prices, Consumer Credit popped in April to $24.9 billion (est. $13.7bn), the strongest gain since November 2022. Also stronger-than-expected: March Factory Orders (up 1.5% vs. 0.6% forecast) and March New Home Sales (682k vs. 652k).
I would add that NFP was stronger than expected 115k with the unemp rate steady at 4.3%. Solid data, inflationary pressure.
CPI is released Tuesday, expected +0.6 m/m and 3.7% yoy (from 3.3 last). Core yoy expected 2.7 from 2.6. In mid-April 2025, front WTI (CL) contract was around $65. By mid-April of this year it was around 90, up about 38% (range in April 113 to 84). While many CEOs bemoan the lack of final consumer demand, the general price level is heavily influenced by energy.
The rates market has clearly focused more on the negative effects of inflation rather than a slow-down in growth. Not much change this week in rates: 10y -1.2 bps to 4.365%. 2y +0.4 to 3.89%. SFRM7 (one-year forward SOFR) settled 9626, down 0.5 on the week. However, since Feb 27, the start of the Iran attack, 2y yield + 51 bps, 10y + 42.5 bps and SFRM7 +80 bps (in yield).
With regards to employment, it seems that gov’t payrolls (includes state and local) have been declining. I created a chart (which I believe to be an accurate measurement) of govt payrolls / private payrolls as a ratio. Current level is 17.2%, near an all-time low. Looking at the long-term chart, it reminded me of long-term US yields, so I added the 10y yield. Quite similar, except the employment ratio is still moving lower while yields have obviously popped. My original view of Trump 2 was that government payrolls would decline, in a hopefully smooth transition to an increase in private payrolls. While that might have occurred to some extent, gov’t deficit spending is rampant, which is more of an explanation for the rate increase.
The obvious focus of markets has been chips. SOX index up 65% since the end of March! SMH up 55%. Sandisk is up from 237 at the end of the year to a new high 1562 on Friday!
Here are eight selected stocks (in SOX) with prices at end of March and current (JUST 1.5 months later) and current market caps:
SNDK 522 1562 $231B (up 3x)
INTC 41 124 $628B (up 3x)
WDC 251 480 $165B
MU 322 746 $842B
AMD 200 455 $742B
QCOM 129 219 $231B
AVGO 300 430 $2,0T
AMAT 323 435 $345B
Just these eight companies have added $2.33 trillion in market cap in a month and a half.
By way of comparison, in the dot com bubble, from Oct 1998 to late Jan 1999 (~4 months) Nasdaq 100 (NDX) nearly doubled from 1129 to 2127. Then, from October 1999 to March 2000 (the top) it doubled again, from 2362 to 4704. The current NDX move from late March 22953 to 29234 (27%) currently seems almost tame, although the change in market cap is a whopping > $9 trillion.
Given numbers of this magnitude, the gov’t auctions this week seem almost small: $58b 3y on Monday, $42b 10y on Tuesday, $25b 30y on Wednesday.
Worth noting is that in June 1999, CPI was 2%. It had been 1.5 to 1.7% in the last half of 1998. By March of 2000, the ‘wealth effect’ had kicked in and CPI was 3.8%. It stayed between 3.8 and 3.1 for a year. The US 10y yield was 4.4% in September 1998, about where it is now. By the end of 1999 it was 6.4%, up 200 bps. TY futures below par? Last time that happened was in 2000.
| 5/1/2026 | 5/8/2026 | chg | ||
| UST 2Y | 388.6 | 389.0 | 0.4 | |
| UST 5Y | 402.0 | 401.3 | -0.7 | |
| UST 10Y | 437.7 | 436.5 | -1.2 | wi 437.4 |
| UST 30Y | 496.5 | 494.7 | -1.8 | wi 494.5 |
| GERM 2Y | 264.0 | 259.4 | -4.6 | |
| GERM 10Y | 303.5 | 300.4 | -3.1 | |
| JPN 20Y | 337.4 | 335.1 | -2.3 | |
| CHINA 10Y | 174.8 | 175.9 | 1.1 | |
| SOFR M6/M7 | 8.0 | 10.0 | 2.0 | |
| SOFR M7/M8 | -16.0 | -12.5 | 3.5 | |
| SOFR M8/M9 | 9.5 | 7.0 | -2.5 | |
| EUR | 117.21 | 117.87 | 0.66 | |
| CRUDE (CLM6) | 101.94 | 95.42 | -6.52 | |
| SPX | 7230.12 | 7398.93 | 168.81 | 2.3% |
| VIX | 16.99 | 17.19 | 0.20 | |
| MOVE | 70.41 | 67.25 | -3.16 | |
She was SHAKin’
May 8, 2026
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–Seen on X: “Minnesota Democrats have voted UNANIMOUSLY to BLOCK a requirement to remove DEAD PEOPLE from the voter rolls, per @GrageDustin“
–Chicago politicians breathe a nervous sigh of relief. Speaking of counting and polling, the big event of the day is nonfarm Payrolls, expected 65k from 178k last, with an unchanged rate of 4.3%. In this particular case, we’ll de-emphasize the ‘death’ part of the birth/death plug factor. After all, Trump tweeted yesterday that jobs were booming, and as he said regarding the December 2025 jobs data: “They gave me some numbers. When people give me things, I post them.” : – /
Bloomberg headline: Consumers Are ‘Running Out of Money’ and Cutting Back, CEOs Warn
–So… you go to Planet Fitness for your monthly workout and, feeling exhilarated, go to Shake Shack to treat yourself:
Planet Fitness runs about $25 month, and a burger, fries and milkshake at Shake Shack is right around the same price.
Both stocks (PLNT -30% SHAK -28%) were crushed on earnings reports, which sort of fits with the CEO warning. Even McDonalds has been under heavy pressure (of course part of the reason for that is that CEO Kempczinski disdainfully took a bite of a McD burger and in a lukewarm assessment said it was good (March 6. Lower ever since). In any case, here’s his view of the economy: “He said higher-income consumers are spending normally, while lower-income shoppers are cutting back more.”
–Maybe consumers are running out of money, but not credit: March Consumer Credit up a whopping $24.8 billion vs expected $13.7b. Last time there were similar increases was in 2023. Not quite $500 million per month in interest given bank credit card rates of 21% (according to St Louis Fed). Um…what happened to the Bernie/Trump 10% cap?
–Rate futures gave away Wednesday’s rally. SFRM7 which was up 10 Wed to 9628.5 settled -7 at 9621.5. Ten year yield rose 3.8 bps to 4.39%. Slight new low in 2/10 at 47.6 bps. Another 70k 0QZ6 9750/9800cs spd sold on exit 2.5 and just under synthetically…140k in two days. TYM6 110p 9 paid 40k, settled 16 with open interest up 26k, There was also some profit taking sales in TYN 109.5p (peak open interest strike in July puts at 150k). In any case, TY futures open interest jumped 113k, which I would think are hedges/specs related to today’s data.
Consumer staples, healthcare, and utilities now reflect just ~15% of the S&P 500 market cap, the lowest on record, per Augur Infinity.
CONAGRA (CAG) [I own] has a mkt cap up just under $7 billion and a (current) dividend yield of 9.75%. $7 billion is just a wiggle in Alphabet’s stock price. Do yourself a favor, buy yourself some Slim Jim’s which will give you energy to protest the new data center near you.
They saw YOU coming…
May 7, 2006
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–This is an astonishing story a friend mentioned to me:
He has family with a farm near Morris, Illinois. The Dresden nuclear power plant is in this area, about 62 miles southwest of Chicago, near the DesPlaines river. Units 2 & 3 of the Dresden power plant are over 50 years old, and according to Google, generate 1800 MW powering approximately 2 million homes.
Farmland in the area goes for about $13000 per acre.
Here’s the amazing part (Google AI):
Based on January 2026 reports, Denver-based developer Tract acquired 343 acres of land near Morris, IL—located in Grundy County near the Dresden power plant—for approximately $51.5 million. [1]
- Price Per Acre: The transaction breaks down to roughly $150,000 per acre ($51.5M / 343 acres), which is higher than the $135,000 mentioned in your query but aligns with the surge in local prices for prime, high-power-access land.
So, this data center builder paid over 10 TIMES to get a contiguous parcel of land. Supposedly, the data center will require something like 75% of Dresden’s output (and they are planning other data centers in the same area!!). So, $50 million is a drop in the bucket compared to CAPEX spend plans, but still…
So, residents may be crowded out by high and reduced electricity availability, but of course additional power generation facilities will be forthcoming, right? Again, according to Google: The company [GE Vernova] has a $100 GW gas turbine backlog expected to sell out through 2028-2030, with over 55% of the total backlog in long-term services.
No turbines, no additional power….
From Robert Bryce:
Over the past seven months, it’s become apparent that people all across the US are pissed off. They don’t like the super-rich tech oligarchs, they don’t trust Big Tech, and they are ready and willing to fight to stop AI data centers from coming into their cities, towns, and rural areas.
Broad coalitions of people from Indianapolis to Independence, Missouri, have organized to stop data center projects, and, as I noted a few weeks ago in “AI Rejected: Tracing The Great Data Center Revolt,” there have already been more than 70 rejections or restrictions in the first four months of 2026. That’s more than occurred in all of 2025. And remember, the rejection numbers for 2026 don’t include projects canceled or withdrawn due to local opposition. For instance, last month, Compass Datacenters withdrew plans for an 800-acre project in Prince William County, Virginia, after facing “intense pushback from local residents.”
https://robertbryce.substack.com/p/rage-against-the-data-center
ANOTHER thing I don’t understand: “An actor out on loan” ??
May 7, 2026
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–Oil lower, stocks to new record highs. What more is there to say? Nice bounce in rate futures yesterday with SFRM7 leading, +10 on the day to 9628.5. approaching the current EFFR of 3.64 or 9636. Tens down 6 bps to 4.353. Worth a mention is that the S&P dividend yield is at a new historic low at 1.08%, last around this level in 2000. There’s an Annual Dividend Future listed on CME, settled yesterday at 82.70 for Dec’26. ESZ6 settled 7504.75 so that’s 0.7%. Of course, I am not trying to imply that dividends are actually IMPORTANT in the AI world. Just a sidebar where I would also note that Fed Funds went from 6.5% at the start of 2001 to 1.75 by end of year as dot.com imploded.
–Exit seller of 70k 0QZ6 9750/9800cs from 2.75 to 2.5. Buyer of front June SFRM6 9631.25/9625ps for 0.25 (SFRM6 settled 9636).
–Of course, earnings ARE growing, hard to argue with THAT:
With 63% of S&P 500 companies have reported so far, blended EPS growth is +27.1% year-over-year (up sharply from earlier estimates around 13–15%). This would mark the highest quarterly growth since Q4 2021 and the 6th consecutive quarter of double-digit growth.” (source Grok).
–From FT: SpaceX is planning to float an initial $75bn of stock against a $1.75tn valuation — a mere 4.3 per cent of the company. Under the old Nasdaq rules, such a tiny free float would rule out index inclusion. But the new rules eliminate minimum free float criterion for new listings. The new rules would also allow SpaceX to join the Nasdaq-100 index after only 15 days, requiring funds that seek to track the index to buy the stock at their next rebalancing regardless of price.
Let’s just loosen the rules and makes sure these tech stocks maintain altitude. Support from passive index funds…
–But, from Doomberg’s latest: “DeepSeek has slashed prices on its artificial intelligence models, including its latest V4 which now costs 97 per cent less than OpenAI products, potentially triggering a price war in the highly competitive AI market…
–Remember when DeepSeek actually jolted the market?
Into this house we’re born
Into this world we’re thrown
Like a dog without a bone
An actor out on loan [??]
Riding out the storm….
If Iran settles, then oil and inflation expectations wither
May 6, 2026
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–Yields edged a bit lower Tuesday as stock indexes continued to make new all time highs. 2y down 2.6 bps to 3.936%. Tens -2.8 bps to 4.414%. SOFR contracts +1 to +3.
–This theme has been covered on X, but in case you missed it: yesterday the SOX index closed 51% above the 200 day moving average. From its low on March 30 it’s up 53%. At the same time Home Depot (HD) is down 20% from the high in February. Berkshire is down 8.4% from the Feb high. MCD is down 17%. All notched new lows for the year yesterday. Since 3/31 DJIA is up 6% and SOX +45%.
–This morning CLM6 prints under 95/bbl, down over $7 and a clear rejection of last week’s surge to 110. DXY is testing last month’s low, currently prints 97.83 with $/yen 156 as fears of intervention remain. June Gold is +145 to 4715, right in the middle of April’s range. TYM is up half a point to 110-26, having printed a new recent low Monday of 110-005. I have been highlighting SFRM7 as it’s one year forward and close to the lowest SFR contract on the strip. Settled at a new low of 9615.5 Monday, almost ½ pct higher in yield than EFFR and SOFRRATE, but this morning it’s 9628.5.
–In short the market sees an end to Iran’s Hormuz closure, which should alleviate inflation pressure and therefore pressure on rates, weakening USD and allowing rate futures to bounce.
–ADP this morning expected 120k from 62k, while NFP tomorrow expected 65k from 178k. Quarterly Refunding Announcement.
Relentless pressure on SFRM7
May 5, 2026
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–One year forward SFRM7 made a new low Monday at 9611.5 and settled 9615.5 (-11 on the day). From the Feb 27 settle of 9706 this contract has now fallen 90.5 bps! And it is near the lowest contract on the strip, an honor now held by SFRH7 at 9613.0 or 3.87% vs EFFR 3.64%. Near SOFR calendars posted new recent highs, with M6/M7 now +19.0 (9634.5/9615.5) but M7/M8 actually made a new recent LOW of -19.5 (9614/9645) which shows that weakness is concentrated in near reds. Worth a mention is vol bid: on Friday SFRM6 9625^ settled 79.5 vs 9626.5. Yesterday the 9612.5^ settled 85.0 vs 9615.5.
–As a comparison, in early August 2022, the first red was also just above 9700. The tightening cycle of the time had taken FFs to 2.25-2.5%. By November the first red neared 9500 as the Fed continued hiking; 3.75-4.0 on Nov 2. FF now 3.5-3.75% with hiking odds growing.
–Treasury curve flattened slightly. 2y yield rose 7.6 bps to 3.962% with tens +6.5 bps to 4.442%. The thirty year bond is now above 5%, 5.01 this morning ref USM6 112-12. High yield was 5.11 in October 2023.
–Large trade SFRZ6 9637.5/612.5ps 11.75 for 25k, exit, settled 11 vs 9620.5.
–0QU /3QU 9612.5 call calendar 3.5 to 3.75 paid for 5k to buy 0QU. A bit more synthetic curve stuff going thru, mostly countertrend. This one is interesting as SFRU7/U9 settled -0.5 (9622.5/9623). Premium outlay as red midcurve straddles are nominally much better bid than deferred. 0QU6 9625^ 54.5s (9622.5), 2QU 9637.5^ 46.5 (9633.5), 3QU 9625^ 42.0 (9623).
–JOLTS Is ikely the most important data today. Expected 6850 from 6882. Would pretty much be the lowest since 2021.
–ISM Services expected 53.7 from 54.0 Trade Balance.
–New Home Sales peaked over 1 million in 2020. Since 2023 the level has been a little over 600k to around 750k. Today expected 660k.
–Quarterly refunding announcement tomorrow. Payrolls Friday expected 65k.
Long Shots
May 3, 2026 – Weekly comment
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…the last shall be first.
Amazing Kentucky Derby run by 23 to 1 long shot Golden Tempo and jockey Jose Ortiz. From dead last, at least 18 lengths behind the leader at the half-mile mark, Golden Tempo turned on the burners but still had to fight through the pack. Finally Ortiz pulled him to the outside after the turn, losing a step but gaining an open straightaway. All heart from there in a blazing sprint.
And complete class by Jose Ortiz in his immediate victory comments.
https://www.youtube.com/watch?v=IsFsnLjQXCc
The fastest Derby ever was Secretariat at 1:59.40. This race time was 2:02.27 but Saturday had to be close to the fastest last ¾ mile ever.
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US inflation data seems to be accelerating as well. For example, prices paid in the ISM Mfg survey were the highest since 2022 at 84.6. Jobless Claims of just 189k just edged out the low from 2022. Capital Goods Orders nonDefense exAir at +3.3% was the strongest since 2020.
The market is clearly more focused on the inflation risk than growth worries. On the week the US 2y was up 10.7 to 3.886%, 5s rose 9.7 bps to 4.02% and 10s added 7 bps to 4.377%. More dramatic was action on the SOFR strip. SFRM7 was the weakest contract, tumbling 18.5 bps on the week from 9645 to 9626.5. At the end of the previous week, 9645 still indicated a lean towards ease, as the rate of 3.55% was below the Fed Effective of 3.64%. However, by Friday, the move toward a hiking bias became clear.
There are many analysts forecasting much higher spot oil prices as the strait remains closed and reserves run low. On the next page I plot the ten year treasury minus ten year inflation-indexed note in the top panel (breakeven) and the SFRM6 – 2*SFRM7 + SFRM8 butterfly in lower panel. These two have tracked quite well since mid-Janaury, and visually display concerns regarding inflation. As mentioned during the week the breakeven has had a soft cap at 250 bps since 2023, and is now testing that level again. (high in 2022 was 303.6). The constant maturity butterfly (1st, 5th, 9th contracts) is currently SFRM6/M7/M8 at +24.0. On Feb 27 this fly was -69. SFRM7 has led the move lower, selling off by 79.5 bps from 9706 to 9626.5 over the timeframe from Fed 27 to now. Again, the sentiment completely shifted to concerns about inflation and renewed growth with the need for possible hikes. Three FOMC dissents favoring less of a bias toward ease established the lagging imprimatur of the Fed.
It’s worth noting that in 2022, the constant maturity butterfly (1st, 5th, 9th) rallied from 0 in late 2021 to a high of 200 by early April. Of course this was as red SOFR contracts neared 9500 or 5% by late 2022.
The exploding tech wealth effect further supports consumption. This week the focus may turn towards labor with JOLTS Tuesday and the Payroll Situation on Friday. JOLTS expected 6850 which would equal the low from the end of last year, which was the lowest since 2020. NFP expected +62k from +178k last.
April 3 was the last payroll data, with NFP +178k. TYM6 settled 110-24 vs 110-205 Friday. USM settled 113-18 vs 113-03 on Friday. Term premium, as defined by 10/30 treasury spread, has been well contained. Current 10/30 is 59. Since last August the range has been 55 to 70.
OTHER THOUGHTS / TRADES
There’s been a recent buyer of high gamma TY puts. On Friday he paid 7 for 50k TY Wed Wk1 (May 6) 110.25p, and added another 27k for 5. Settled 7 vs 110-20+. This expiry captures JOLTS and ADP but not NFP. By comparison FRIDAY 110.25p settled 11.
Also on Friday: buyer 50k TYM 112c cov 110-28, 15d, paid 8.
TYM6 111.75c covered 110-23, 17d, paid 9 for 50k. TYM6 option expiry is 22-May.
| 4/24/2026 | 5/1/2026 | chg | ||
| UST 2Y | 377.9 | 388.6 | 10.7 | |
| UST 5Y | 392.3 | 402.0 | 9.7 | |
| UST 10Y | 430.7 | 437.7 | 7.0 | |
| UST 30Y | 495.3 | 496.5 | 1.2 | |
| GERM 2Y | 254.1 | 264.0 | 9.9 | THUR LEVEL |
| GERM 10Y | 299.2 | 303.5 | 4.3 | MAY DAY HOL |
| JPN 20Y | 328.4 | 337.4 | 9.0 | |
| CHINA 10Y | 175.2 | 174.8 | -0.4 | |
| SOFR M6/M7 | -11.0 | 8.0 | 19.0 | |
| SOFR M7/M8 | -10.0 | -16.0 | -6.0 | |
| SOFR M8/M9 | 13.5 | 9.5 | -4.0 | |
| EUR | 117.22 | 117.21 | -0.01 | |
| CRUDE (CLM6) | 94.40 | 101.94 | 7.54 | |
| SPX | 7165.08 | 7230.12 | 65.04 | 0.9% |
| VIX | 18.71 | 16.99 | -1.72 | |
| MOVE | 66.97 | 70.41 | 3.44 | |
Inflation signal from ISM?
May 1, 2026
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–May Day. I like Commandment in the Derby.
–News today includes ISM Mfg expected 53.2 from 52.7. Prices Paid was a new high 78.3 last and is expected 80.0, which would be the highest since the aftermath of the COVID cash giveaway in 2022, High for June 2021 was 92.1. 10y breakeven edged to new high 247.7 bps yesterday.
–Curve bounced slightly with reds +5.25 to 9636, greens +4.125 to 9639.5 and blues +2.75 to 9628.125. Every SOFR contract is clustered around the current EFFR of 3.64 and SOFRRATE which has been 3.63 to 3.66. In treasuries, 2y yield fell 4.9 bps to 3.881 and 10s fell 2 to 4.388%.
–Numbers in market cap are getting overwhelming. According to BBG GOOGL added $421b in market cap yesterday, up $860b on the year to total $4.65T. Russell 2000 has market cap $3.83T. BOJ supposedly spent $35b intervening yesterday.
–Interesting trade noted by Art Main:
+25k 0QU6/3QU6 96.00 put spread covered 96.33 delta .30 and 96.295 delta .30 from 3.25 to 3.75 (bear flattener +0QU6 -3QU6)
0QU put 14.5s, 3QU put 10.5s
So bought puts on SFRU7 vs sold on SFRU9…these are midcurves, both expire on the same day, 11-Sept 2026.
I would note that the calendar spread SFRU7/U9 settled +3.5 which is near the low for the flattening move. In mid Feb the spread was +40. (2/13 prices 9696 and 9654.5). On hedged basis a sharp rebound in the curve would benefit this trade. If unhedged it seems like the location isn’t that great, however, I would note in late 2022 as the Fed was hiking, the second red to second blue spread traded below -100 bps
The atm straddles:
0QU6 9637.5^ 52.5 vs 9633.5
3QU6 9625.0^ 42.0 vs 9630.0
On a relative nominal basis red straddles are most expensive as sentiment has shifted toward hikes.
Big Fights loom aside from Iran: Fed, Data Centers, Private Credit
April 30, 2026
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–I missed the afternoon price action so just a couple of brief comments. First, Powell staying on as Governor and the 3 dissents leaning against easing bias are a clear Trump snub. From the statement: “Beth M. Hammack, Neel Kashkari, and Lorie K. Logan, who supported maintaining the target range for the federal funds rate but did not support inclusion of an easing bias in the statement at this time.” [I didn’t even see an overt easing bias] Powell said that its clear the market is convinced inflation is going back to 2%. Sets up a tough start for Warsh.
–Some interesting comments by Gundlach post-Fed. “Odds of a hike this year are greater than odds of an ease.” Also warned that we’re going to shortly see inflation prints >4%. Today we get PCE prices, expected yoy 3.5% with Core +3.2% (for March). I looked at CL1 (front month WTI crude) from end of March ’25 to end of March ’26, went from about 70 to 102. But in April oil dipped, so from end of April 2025 to now the change is 60 to 107 (77% annualized). Ford earnings call warned that commodity inputs (aluminum) would cost the company about $1 bllion this year. P&G also just warned about input costs. US 10y currently has a double top 4.43%; the high last May was 4.60 and in 2023 the high was 4.99. 30y is around 5%, the high in May was 5.09% and high in 2023 was 5.11%. Everything pointing to higher yields for now.
One last comment from Gundlach: ‘beware the ides of June (June 23)’ because he thinks there could be “humongous withdrawals” from private credit funds.
–From NYT re big tech earnings calls: “All of the companies said they would be spending even more, totaling roughly $700 billion this year. Meta, for one, raised its spending forecast for 2026 to between $125 billion and $145 billion, up from its previous prediction of $115 billion to $135 billion. Google also boosted its projection, to at least $180 billion, and said its spending would be “significantly” higher next year.” So $700 billion from 4 companies in an estimated $32.5T GDP for 2026, around 2%. However the public backlash against data centers is growing: Compass/Brookfield is abandoning a data center investment in Northern Virginia due to public opposition.
–Chipoltle (CMG), up after hours on beat (7% growth), but it’s mostly because of new locations opening. But same store sales are 0 to +0.5%. How do you open new stores given no nominal sales growth in an inflationary economy? Is it me?
Treasury puts for FOMC and tech earnings
April 29, 2026
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–Dominant factors on Tuesday were OpenAI warnings that sales might not grow fast enough to meet costs. (And Musk now suing OpenAI) Additionally, CLM6 (WTI) rose above $100/bbl. and the sentiment in bonds has shifted more towards the idea of inflation rather than slower growth as a result. CLM6 settled 99.93, new high settle for this contract month, and is currently 103.48 (early Wed morning).
–As has been mentioned recently, the sentiment shift is quite apparent on the SOFR futures strip. The peak contract is SFRH8 which is now 9648.5 (settle). So, there is little priced in for possible easing as the first 4 contracts settled 9633.5 to 9635 – which are tied to the current funding rate. Worth mention is a buy of 35k 0QM6 9600p for 5.0, delta neutral (0.18) covered 9634 to 9635.5. Settled 5 vs 9635.5 in SFRM7. That strike is 36 bps above current EFFR of 3.64%.
–Also worth repeating is that JGB, Gilts and Bunds are at or near new yield highs. 10y bund this morning right at the high of move, 3.09% and UK 10y gilt has blown through the high, now 5.03%. The Sept 2022 high associated with the Liz Truss moment was 4.50%. Good times.
–Paul Tudor Jones warned of historic overvaluation of US equities: “We’re clearly so leveraged in equities in this country. We’re 252% of stock market cap to GDP. In 1929, we were at 65%. In 1987, about 85%. In 2000, we got to 170%. And now we’re at 252.”
–A couple of treasury put trades worth noting: new buy 33k TY THUR110.5p for 5 (5s ref 110-27+). On Monday he bought 50k TY THUR 110.75p (10s). Also, +50k FV THUR 107.75p for 5. These all expire tomorrow. Today we have the FOMC and tech earnings. Tomorrow morning PCE prices. Enough to cause a gamma event if these strikes go in the money? TY futures open interest is 5.4 million but a downside panic can’t be ruled out.
–META, AMZN, GOOGL, and MSFT report today. From BBG: Big techs representing about a quarter of the S&P 500’s value are set to release their earnings, with any misstep involving AI-related demand or capital budget expenditures potentially giving the market second thoughts.
