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October 20, 2025
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–Nikkei at new high this morning, +1600 at 49185. Since the low close in April it’s up 58%. Perhaps partially due to new PM Takaichi, but other markets also strong. KOSPI, new high and up 67% since the April low. Gold and Silver futures (GCZ5 and SIZ5) had key reversals Friday: new contract highs, outside day ranges, good volume, lower settles. I used to consider these formations as actual reversals, now I simply wait for the high to be taken out before buying more.
–China’s Fourth Plenum started today. Probably won’t yield solid news until the end of the week.
–France downgraded by S&P, though German to French 10y spread, while wider, is still only about 79 bps vs high of 86 earlier in the month. Guys that robbed the Louvre were probably creditors of the French gov’t that wanted some collateral. Hard assets. “We already got one.”
–Luke Gromen sees China’s rare earth directives as being squarely aimed at the US defense industry. Oh, so now it’s the Dept of War and not Defense? Good luck making high tech weaponry without rare earth magnets. That’s likely to be the next big US push. Anduril’s Palmer Luckey recently said the company has completely sidestepped all inputs from China.
–Friday featured higher US yields with 10s up 3.2 bps; back above 4% to 4.007. SOFR contracts from SFRH’26 to SFRH’29 were all -3.5 to -4.5. Interesting roll in TY call options out to FEB expiry:
TYG 116c paper pays 28 on 30k vs
TYZ 115c paper sells 17,250 at 16 while selling 1300 tyz futs at 113-17
Feb treasury options expire Jan 23, the week before the FOMC. There is now more open interest in Feb TY calls than Jan: 209k vs 119k with TYG 116c the peak at 58k. By comparison there are 1.46m TYZ calls open with peak strike TYZ 114c, 291k open, 0.39d.
–Here’s sort of a fun ‘not-AI’ manufacturing process for cool cars:
