Selling to willing buyers…
June 4, 2026
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“We are selling to willing buyers at the current fair market price.” -John Tuld in Margin Call
–SpaceX ready to go at $1.78T valuation according to FT. End-of-the-day news was Broadcom’s call, which is pressuring Nasdaq; AVGO currently down 12.7% in post-trade slide. The difference in ‘Margin Call’ is that willing (and passive) buyers are currently active at sky high valuations. However, several former high fliers were hit yesterday before Broadcom results (even as chips made new highs):
MSFT -3.1%
AMZN -2.5%
PLTR -6.5%
NVDA -3.6%
CRM -5.1%
–Note that bitcoin has been leading the way lower, now just above 63k with market cap down to $1.26T.
–Rates ended higher on the day with tens +3.8 bps at 4.491%. Curve remains biased to flatter levels, with 5/30 at a new low 77.6 (4.214, +3.8 and 4.99, +2.5 bps). Late in the day Dallas Fed President Lorie Logan said the Fed may need to hike.
–On the SOFR strip, red/green pack spread made a new low -9.5 with red pack -4.375 at 9603.625 and greens -3.625 at 9613.125. 10/30 spread around 50, with 10s at 4.5 and 30s 5.0. Early new buyer of 42k TYQ 108p for 23 (22s vs TYU6 109-145, 25d). Active call trade in SFRZ6: 9700/9762.5c 1×2 -1 (took credit) paid 30k, settled 4.0 and 2.5. Also about 50k SFRZ6 9800c 2.0 paid (1.75s). SFRZ6 9611settle.
Not uncommon to see large TY put buyers in front of NFP, though usually shorter date hedges.
–Today’s news includes Jobless Claims, expected, as always, 215k. Non-farm Productivity expected +0.4%
This summary from the start of the Beige Book says it all (yes, the Fed is well aware of income/spending disparities):
Consumer spending remained mixed across Districts and increasingly bifurcated across income groups amid affordability pressures. Higher-income households remained resilient and less sensitive to price increase, while middle-income households were described as “squeezing more life out of every dollar before deciding to spend it,” and low-income consumers showed greater financial strain. Overall, there were reports of increased credit card usage, fewer retail visits, and stronger demand for necessities. Auto dealers reported softer new vehicle demand tied to affordability and fuel costs, alongside substitution toward used and hybrid vehicles. By contrast, manufacturing activity increased at a modest to strong pace for nine of the Districts and only one noted a slight decline from the previous period. Banking conditions were stable across most Districts; however, residential mortgages, consumer, and agricultural loan delinquencies were noted as rising in several of the Districts.
And this from Dollar Tree’s Q1 report at the end of May:
Comparable store net sales increased 3.5%, driven by a 4.5% increase in average ticket, partially offset by a 1.0% decline in traffic.
Sounds stagflationary to me: +4.5 due to inflation, but traffic is down!
And then this from Realtor.com
Home Listing Prices Post Sharpest Drop in 9 Years as Sellers Face Reality Check
realtor.com
–The high end is supported by equity valuations, and equity valuations are supported by the chip stocks. If that changes it’ll turn very quickly into negative GDP prints. Atlanta Fed GDP Now currently +3.0 for Q2.
