Yes, We’re Open
November 13, 2025
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–Continued build of long TYF6 114.0c covered. Yesterday paid 27 for 28k covered 112-28, 29d (1’62^). There are also some sellers coming in, for example an early buyer 15k TYF 113/114/114.5c tree covered 112-255, 3 paid 15k. In any case, I believe total position is ~200k TYF 113.5c and 120k 114c. Highest price paid in 114 straddle equivalent 1’62.
Yesteday:
TYH6 112-30s OI 206k, +32k
TYF 113.5c 0’36s OI 261k
TYF 114.0c 0’26s OI 192k (+53.7 yesterday)
–Gov’t re-opens. 30y auction today. TY held its bid through the auction yesterday with TYZ settling 113-00, +1 on the day. 10y cash yield 4.065% (4.079 wi). Bessent said treasuries are more liquid and robust than ever, and repeated a call for enhanced SLR [so domestic banks can absorb the supply]
–Though gov’t is re-opening, October Jobs and CPI reports will not be released.
–Bostic says he’s resigning at the end of his term in February…all of the Fed Presidents are up for appointment at that time, and I suspect there will be significant turnover. Collins said she favors the Fed holding rates steady. With the potential of a more dovish Fed, some had speculated on aggressive easing at the end of Powell’s term in May. Yet SFRH6/M6 has barely deviated; for the last two months the entire range is -24.5 to -20.5 (-23.0s). Same thing with SFRH6/U6, just sideways from -41 to -33.5, (-38.5s). It wouldn’t be impossible to see 100 bp of cuts in that six month window.
–Interesting comment from Miran: he said that current end of QT isn’t particularly stimulative as MBS roll-off will now be replaced with bill purchases. That is, the private market will need to absorb new mortgage paper even as the Fed’s total balance sheet remains constant.
–Oil was crushed yesterday, with CLZ5 -2.55 at 58.49. However precious metals soared. This morning, SIZ5 is 54.05 at new ath, having exceeded the mid-Oct high. GCZ5 is 4243 this morning, +29.4. The mid Oct-high print is 4398.
–Somewhat funny SBUX notes: Yesterday SBUX stock jumped on news that coffee (and other) tariffs might be relaxed. I don’t know where the stock is this morning, but a BBG headline blares: SBUX workers to strike in 40 cities targeting ‘red cup day’.
–The problem isn’t the price of the coffee input, it’s the price of labor, both specifically in SBUX and in general, as specialty coffee drinks become an unaffordable luxury.
Nov 11
TYH6 112-31
TYF6 113.0^ 1’42s
TYF6 113.5^ 1’48s
TYF6 114.0^ 1’60s
Nov 12
TYH6 112-30
TYF6 113.0^ 1’38s
TYF6 113.5^ 1’44s
TYF6 114.0^ 1’56s
