What’s in YOUR private credit book?
October 16, 2025
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–It’s sort of like a Samuel L Jackson Capital One credit card ad: “What’s in YOUR wallet?” Except that it’s Jamie Dimon asking “What’s in YOUR private credit portfolio?” And his answer is, when you see one cockroach, there’s usually more. From Dimon: “These are very smart players: they know what they’re doing, they’ve been around a long time. But they’re not all very smart. And we don’t even know the standards of other banks [that] are underwriting to some of these entities. And I would suspect that some of those won’t be as good as you think.”
–US yields pushed a bit higher yesterday with tens +2.5 bps to 4.044%. Implied vol smothered. The big covered call buyer’s last synthetic straddle buys at the end of September were 113 strike for 1’54 (bought 113c for 46 vs 112-19). Yesterday TYZ5 113^ settled 1’27 vs 113-075. On Friday TYZ 113^ was 1’41. Almost certainly there have been some adjustments, for example a seller yesterday (roll) of TYZ 113.5/115c 1×2, settled 12. The theme, in my opinion, is to bring markets back to a more normal and stable state (lower vol, ten year yield hugging the Fed Effective rate, stocks shaking off weakness and trying to press VIX down) but the underlying foundation is riddled with fault lines. Bitcoin is the latest tremblor.
–Ten year treasury vs TIP breakeven continues to slip, notching a new recent low 230 bps. CLZ5 settled 57.84 its lowest close since May. (Time to fill up the SPR). Focus now shifting to Venezuela and Maduro. Bessent comments yesterday indicate serious issues continue with China. A Doomberg piece this morning warns that China’s rare earth clampdown is likely to reverberate through supply chains; a bigger deal than is being generally acknowledged.
–Several Fed spreakers today. Miran continues to argue for lower rates, and certainly the market is signaling acceptance. I believe Philly Fed Mfg will be released, expected 10 from 23.2.
