Rates a bit higher, pushing back ease
April 22, 2026
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–Short end of US curve reacted negatively to data. Retail Sales +1.7 headline (1.4 exp) but more importantly ex-auto and gas +0.6% vs expected +0.3. ADP weekly employment also stronger than forecast at 54.7k. 2y treasury jumped 6.5 bps to 3.777%. Curve flatter with tens only up 4 bps to 4.287%. On the SOFR strip reds (2nd year) fell 8.375 bps to just under 9655 (3.45%) while blues, the 4th year out ended -4.125 bps just under 9638. SOFR contracts from June’26 to June’29 are between 9633 and 9659.5 or 3.67% to 3.405%; tight range with only one ease potentially priced.
–There were a couple of large TY put buys on the day: TYK6 111p 8 paid 35k (8s). BLOCK: +60k TYQ6 108.5p 0’20 covered 111-14, 18d. TYQ 108.5p settled 25. vs TYM 111-095, open int up 60k.. Last week larger size buys were TYN6 109.5p. In any case, after a long slog lower in vol things perked up yesterday with many SOFR straddles up 1 to 2 bps. Just before electronic close: TY wk 5 wed 111/111.5 strangle paper pays 27 up to 28 on 10k.
–Not a lot of reaction to Warsh appearance in front of Senate Committee. However, his repeated assertions that he would rely on interest rates rather than QE is, unambiguously negative for equities at the margin. (Though a friend said Bessent will just take over the QE function, which may well be correct). Precious metals were hit yesterday with GCM6 settling -109 at 4719.60, perhaps a subtle nod to possible Fed reforms (though PMs rebounding this morning). While precious metals are somewhat tentative, copper and aluminum are in strong uptrends. Energy infrastructure re-building along with weaponry demand is likely to support base metals.
–Lagarde notes that about 1/3rd of fertilizers are shipped through Hormuz, which could lead to food rationing.
Finally, this newsflash from @market_sleuth on X:
BREAKING: There appears to be “insider trading” for numerous members of Congress who become deca-millionaires a few years into office with a job that pays $190K a year.
“Sleuth” Yes that fits. ‘WE’VE LANDED ON THE MOON!’
Interesting clip on Taiwan.
taiwan lottery
