Tight now, easy later
May 7, 2024
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–Yields were nearly unchanged Monday, although near SOFR contracts were under slight pressure in front of today’s 3-year auction. Tens down 0.6 bp to 4.489%.
–May midcurve straddles expire Friday. On Thursday (pre-NFP) the atm short May straddle (9550) was 19.0. On Friday the atm 9562.5^ settled 14.0 vs 9562 and yesterday it settled 10.5.
–No surprises in SLOOS yesterday:
Over the first quarter, significant net shares of banks reported tightening standards for all types of CRE loans.
Over the first quarter, banks reported having tightened lending standards for some RRE loan categories.
Over the first quarter, banks reported tightening lending standards and most terms, on net, for all consumer loan categories.
Stocks took it as a positive sign. Obviously.
–Silver had a nice pop yesterday, up 92 cents to 27.615.
–Not quite sure how I missed the news that Herbert Hunt died on April 9. He and his brothers Bunker and Lamar tried to corner the silver market in late 1979 to 1980. According to the high price on BBG, at the end of March 1980 the price hit 49.45. It finally re-visited that level in June 2011 as it reached 49.80. Now it’s 27.44 (spot). An article in Time magazine highlighting the episode has some parallels to today: “Inflation had destroyed their faith in the dollar, so they began putting their wealth into a ‘harder’ currency: silver.”
https://content.time.com/time/subscriber/article/0,33009,920875-1,00.html
We can all relate to this:
As the brothers told the tale, they were just worrying, like most Americans, about the worsening economy. As Bunker Hunt has reportedly said, “A billion dollars is not what it used to be.” Inflation had destroyed their faith in the dollar, so early in 1979 they began putting even more of their wealth into a “harder” currency: silver. By late March they allegedly controlled almost two-thirds of the world’s privately held supply of the shiny metal, but “artificial factors,” like higher margin requirements and limits on the amount of silver futures contracts they could hold, spoiled all the fun.
https://www.federalreserve.gov/data/sloos/sloos-202404.htm
