We can finance it… over time

April 13, 2021

–Little reaction to three and ten year auctions, the latter of which came at 1.68% with bid to cover 2.36.  Today features NFIB small business optimism, expected to rise to 98.3 from 95.8 last.  CPI expected yoy Core of 1.5% from 1.3.  Thirty year auction, with a small concession being built in this morning.  

–NFIB and the Russell 2000 index were correlated in terms of overall direction through the Trump years, however since the election, NFIB was fallen from  104 to 95 while small caps have ramped higher due to stimulus. I had held the idea that core catalysts for small caps were lower taxes and regulations which spurred growth and business confidence.  However, the surge in R2K currently seems more related to outright government stimulus.  In that regard, it is interesting to glance through the US Gov’t budget release.  March of 2021 compared to March 2020:  Receipts, $268 billion vs $237b, an increase of 13%.  That’s positive, right?  Outlays, $927b vs $356b, an increase of $571 billion or 161%.  GO BIG.  A deficit of $500 billion used to big… FOR A YEAR!  And you wonder why there is a move into crypto?  The aftermath of the GFC housing bust was quaintly summarized as private debt being transferred to the balance sheet of the Federal Government.  Now it’s not just some unsightly debt being swept under the carpet, the government’s influence has become pervasive.  Still want to bid for 30’s today?  

Posted on April 13, 2021 at 5:51 am by alexmanzara · Permalink
In: Eurodollar Options

Leave a Reply