PPI and CPI this week

May 13, 2024

–Tomorrow we get NFIB small business optimism, PPI and the NY Fed’s Household finance report.  All likely to indicate economic malaise.  NFIB has been sinking like a stone.  One month ago, on April 12, CLM4 was 85.08.  Currently it’s 78.40, down nearly 8%.  Two months ago on March 13 it was 78.84 about where it is now.  Many indicators suggest that lower-end US consumers are struggling, which will likely be reflected in the NY Fed report.  CPI on Wednesday.

–This morning gold and silver are pulling back from Friday’s rally, but copper is powering higher, now over 4.71.  At the start of March it was around 3.87.  There’s a lot of press about China buying gold.  Copper too?  Or is that just a US power generation story?  China is selling $138 billion of sovereign long-dated bonds, with a 30-yr tranche on Friday.  Selling bonds, buying gold and base metals; the key to global finance. 

–US treasuries little changed this morning, edging slightly higher.   Late Friday there were large buys of otm puts in TY and FV:
TYN4 105.5p 6 paid for 35k, settled 7
TYN4 104.5p 3 paid for 35k, settled 4 
(TYU4 settled 108-305 ref 10y year 4.644%.  One point in TY futures is 15-16 bps, so 3.5 points, the 105.5 strike, is around 50 bps away.

FVN4 104.0p 6.5 paid for 35k, settled 6.5
FVN4 103.25p 3 paid for 45k, settled 3.0
FVU4 settled 105-3025 ref 5y at 4.516%.  One point in FV futures is 23-24 bps, so 2 points to the 104 strike is also around 50 bps away.

Posted on May 13, 2024 at 5:20 am by alexmanzara · Permalink
In: Eurodollar Options

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