November 24, 2021


–WIN was a 1974 slogan which stood for Whip Inflation Now.  The current administration is also trying to whip inflation, by announcing yesterday a tap of the Strategic Petroleum Reserve.  The market obliged (having already sold the rumor) and bought the fact.  Yesterday CLF2 settled 78.50, up 1.75 on the day.  Dan Aykroyd parodied Jimmy Carter’s fight against inflation in 1978 in the clip below.  The 1974 slogan to 1978 skit indicates that inflation isn’t always transitory.  Today the Fed’s preferred measure is released, PCE Core Prices, expected +4.1% from 3.6% last. 
–The eurodollar curve finally steepened, with reds rebounding by 3 bps and golds declining by 5.125, more than an 8 bp swing in the spread.  In treasuries the five year note rose 1 bp to 1.33% while 30s finally closed above 2%, up 4 bps to 2.02%.  The 3 month libor setting was 17.8 bps yesterday, the highest since May.  In recent weeks it had been anchored at 12.5 to 13 bps. leading to trades like a buy of EDM2 9981.25/9987.5 call 1×2 (a few weeks ago).  At a libor rate of 12.5, this trade nails it, but the current setting pegs the lower strike. 

–On Tuesday, Nov 30, Yellen and Powell will testify before the Senate and again argue that inflation expectations are securely low, centered right around the Fed’s 2% goal.  This afternoon Fed minutes from the last meeting are released.

Posted on November 24, 2021 at 4:57 am by alexmanzara · Permalink
In: Eurodollar Options

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