Life After Default -WH; USTs oversold? -DataTrek, DIPportunity; 2yr BEs; Oct 14
sent Wed, Oct 6, 8:32 AM
Good morning.
I realize it’s been awhile and I’ve got a few updated observations for you HERE.
Today is very similar to the past few days where stocks, {WB<GO>}, nat gas and debt ceiling headlines are driving rates action.
On that note, White House.gov blog on Life After Default is worth a click. Rest assured, all the cool kids are going to point to it in (another)effort to scare DC into action … before too late?
Today you’ll find 2yr breakevens, 30yy DIPportunity approaching, more talk of STAGFLATION (or as Authers of BBG notes, INflation is showing some staying power).
I would also suggest continuing to watch Biden and JayPOW h’lines after Friday’s NFP (ADPs upside MISS maybe instructive -- 568k vs 430k exp BUT last month revised down a touch) and suggest we watch FRBNYs updated POMO scheduled for release on Thursday, October 14th (3p). SEE WHY and as you do, you’ll ALSO NOTE bond managers braced for worst year in DECADES as rates converge on consensus f’casts (of higher yields).
Some ask if USTs are oversold yet? Nick Colas answered a resounding NO! See why (and my visual which suggests a bit of disagreement)
Finally, I’ve ripped through my inbox and have some sell side observations / excerpts / LINKS which can be summarized as follows: haters gonna hate.
Citi offered a bond bear analog (1998, 2001 and modern day) and BMO remains short 5s for example. Most everyone is bearish BUT some actually bold (stoopid?) enough to remain LONG the front end (Barclays staying long 3s).
Clearly a Fed bet for every narrative. Go ahead and pick one and again, let me know however I can help.