…you better take your diamond ring, you better pawn it babe
November 4, 2025
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–Not a lot to talk about regarding price action in rates yesterday, but this morning the story is equity index weakness post Palantir’s results yesterday afternoon. Current ESZ -75 at 6888 and NQZ -369 at 25374 (down 1.4%). [I don’t know if this is necessary or not in today’s compliance world, but I do happen to be long some PLTR puts]
–Since we’re in a world financed by repo, I thought I would start with charts inspired by friend RC, who mentioned a couple of pawn shop stocks. EZPW (EZ pawn) is up 50% ytd. FCFS (FirstCash Holdings) is up 55% ytd. It’s a good business, and I doubt they’re borrowing to invest in AI data centers. “In Philadelphia, it’s worth fifty bucks.” [I couldn’t help myself]
–In the US repo rates are still under pressure; I am just watching SERX5/FFX5 spread as a reflection, which settled at a new low -13.0. FFX5 (Nov Fed Funds) settled 9612 while one-month SOFR settled 9599. So the SER contract settled over 4%, or above the Standing Repo 4%. A friend mentioned that FFX seems a bit cheap given the 3.86 EFFR setting on Friday which covered the first three days of the Nov FF contract. I think between morning and afternoon ops, repo facility usage yesterday was only around $22b.
https://www.newyorkfed.org/markets/desk-operations/repo
–TBAC estimates for quarterly borrowing were released yesterday afternoon. “During the October–December 2025 quarter, Treasury expects to borrow $569 billion in privately-held net marketable debt, assuming an end-of-December cash balance of $850 billion.[2] The borrowing estimate is $21 billion lower than announced in July 2025…”
I also skimmed the related Economic Summary, but the conclusion must have been written by someone shamelessly lobbying to be next Fed Chair or a related office:
“Thus far in President Trump’s second term, the Administration has successfully stewarded major fiscal legislation to prevent a historic tax increase, and it continues to seek further cuts to federal spending and incentivize productive business investment. Ongoing trade negotiations are transforming trade relationships, which will put American citizens first and prevent other countries from taking advantage of the openness of our economy.” Sort of made the previous recap worthless. C’mon, TBAC.
–I don’t follow crypto much, but friend JW alerted me to new hack related a key ethereum mainnet. From Yahoo Finance:
“DeFi protocol Balancer suffered a major breach on Monday, affecting Balancer V2 Composable Stable Pools. Total losses across multiple chains reached over $128 million, per PeckShieldAlert.”
Apparently some of the funds have already been recovered and the total amount is relatively small, but it’s perhaps a small cloud relating to stablecoins, etc.
–Composition of debt issuance released on Wednesday at 8:30 EST. From BBG: “[Dealers] also see officials repeating language from July that they’ll hold sales of nominal interest-bearing securities steady “for at least the next several quarters.” Next week’s auctions expected $125b: $58b 3s, $42b 10s, $25b 30s. Here come the t-bills…
–PLTR ended the day at 207.18. Immediately after results were posted, it made a new all-time high just shy of 218. Current pre-market 192. Quite bearish considering earnings were expected 17 cents and actually came in at 21 cents, more than double last quarter’s 0.10. Big enough to cause broader profit taking? The market cap is a bit less than $500b, which seems modest relative to the tech giants but still worth more than 10% of the entire Russell 2k mkt cap.
–Tens ended yesterday at 4.105%, up 0.6 bp. SOFR strip +1 to -1 bps out five years. New low in treasury vol. TYF6 112.5^ settled 1’37 or 4.6. That stops TODAY!
