Catchup ... before and after weekend
A couple of things on my mind, sent to clients before 9/11 and after
First what was sent out Friday morning 10 Sept:
a phone call, PPI, an anniversary, a monthly missiv, the belly and transports
Good morning. I wanted to pass along a few OBSERVATIONS ahead of the weekend and the 20yr anniversary of the 9/11 tragedy. I will not be sending anything else along.
This morning's early risk ON due to a US/China phone call has now been erased.
A block BUY of 5yr notes reported shortly after WSJ wrote of SepTAPER
Trannie's NOT buyin' the HOPE while PPI pinned to 40yr highs
"That Was Then. This Is Now" -Lavorgna (Team Inflation'ista now?)
Z2Z4 (aka the WIN WIN) gotta take out 97bps (see WSJ story for what may take)
CitiFX: 10yy heading DOWN TO 1.20 (then 1.05)
DB on labor mkt: Fall taper on track despite August STALL
DB: It all makes sense (consumer demand DESTRUCTION, see consumer chart -- use as roadmap for global macro, still thinking WEAKER USD)
And finally, our latest MONTHLY MISSIVE, A STANO is ready for your dining and dancing pleasure. Any / all feedback (and submissions for next month) welcome.
Trannies and DOW — ETFs:
AND from earlier today, Monday 13 Sept:
crushed RATES vol; 'NO WAY' to pass stimmy; scarce commods; 5yy to 1.40% ... ?
Good morning. HERE are a few updated observations from past 48hrs. I'll attempt another updated between CPI and ReSale Tales. This mornings price levels and movement are by and large a product of Evergrande (denying rumors of their demise -- again), Manchin sayin’ NO WAY and corp tax hike plans revealed (not as HIGH as feared but…)
30yr yield (and ULTRA) levels (despite/because) CRUSHED RATES VOL
Bond sell-off mostly outside N.A. (? GS-ALSO on Fri WSJ story = NovTAPER 70% probs)
Meanwhile, Low Rates Are LESS STIMULATIVE Than We Think (BBG)
EPB Macro on Atlanta FED GDPNow Confirming econ slowdown (watch for flattening curve and firm USD)
A few Sell Side Observations: (debt ceiling last hurdle b/4 HIGHER rates -DB; commodity SCARCITY -GS; OPTIONS expiry impact on STOCKS -BNP; 5yy **could** see 1.40 over the coming 12mos -BMO; stay SHORT 10s and in Z2Z4 steepener -MS)
And finally today again you’ll note our latest MONTHLY MISSIVE,A STANO is ready for your dining and dancing pleasure. Any / all feedback, complaints, concerns, criticisms AND submissions for next month) would be welcome. Here if you need ANYTHING at all.
Best, Feiss
Here’s how 5yy COULD entertain 1.40% over next 12mos as BMO puts it:
…We've been especially focused on the belly of the curve as September gets underway and the tapering narrative has been incorporated into pricing without the tantrum reaction that accompanied last cycle's announcement of the wind down of asset purchases. Late 2022 or early 2023 has emerged as the focus of the debate on liftoff. This leaves open the potential for the data covering September and October to once again provide a tradable impulse even if it will be a function of the implications for the Fed's perceived urgency in normalizing rates. For context, the past 52 weeks' range in 5s is now 73 bp and using a departure level of 80 bp, that implies a 5-year yield range top at roughly 115 bp. The critical nuance is that given the next move from the FOMC will be removing, not adding, accommodation, the range need not be symmetrical around 80 bp. Said differently, we suspect 5s are currently closer to the bottom of their next year's range than the top, which puts 5-year yields back within striking distance of 1.40% on the table over the next 12 months.
Next update between CPI and ReSale TALES …