NZ+China TECH regs=risk off bull flattening of USTs
Reopening GUIDING RATES and ReSale TALES RE-trending (both downward)
Good morning. Today’s PDF greets you with a reopening (airlines, hotels, cruise and 10yy following along) visual as well as a few topical bullets
Chinese TECH SHARES HIT overnight (see why) and there was a single case in Auckland (New Zealand) setting off a chain reaction of CB hike DOUBTS, general risk OFF and flattening BOND BID.
This bond BID does NOT bode well for those who continue to be short. Read on for more and note:
Technicals: 10yy levels I’m watching as they’ve taken baton of OUTPERFORMANCE from 7yy (yest) -- outright, vs 5s30s wings and maybe its as simple as the virus // reopening as 10s following along. Specifically highlighted today is CSFB example of stop HUNT -- stopped OUT of short 5s, 10s BUT STILL SHORT 30s -- we’re close to THAT stop level -- Mr Market knows … read on to see what it is.
My Views: Technicals and the virus matter. Even Tracy Alloway of BBG leans back on the longer-term TREND noting the recent blip higher was in context of longer-term TREND. Think BLIPortunity. Yesterday’s FUNduhmentals -- Empire in a NATIONAL context (see ISM adj Empire which LEADS ISM) and finally, I’ve pulled forward BAMLS CC spending data to consider AHEAD OF ReSale TALES.
Sell Side Observations Barclays stock jockeys latest equity risk pulse -- positioning for limited upside and they say BUT ATM CALLS on SPX hedged with selling OTM calls on RTY). DBs watching RENTS. Natixis (Lavorgna) shows GAP (UoMISS, Empire) saying econ will slow ‘significantly’ but recession HIGHLY unlikely. Nuveen’s SOLVED THE RATES RALLY PUZZLE (fundamentals BUT still calling for 1.80) and TS Lombard got nothing other than EQUITIES -- only game in town -- TINA -- and says BOND MKT WRONG. Finally, I’ve got a note from UBS you’ll want to read and it’s got data of how / why HOUSING TO SLOW (pandemic moving OVER and inventory to come back online…)
Positions UPDATED with latest data, charts and narrative from TICS -- YES China sold again, Japan (quarterly, too and BIGLY) but HFs (CAYMANS) buying -- let the short covering begin (back in JUNE when 10s dropped 13bps to 1.47) and foreign PRIVATES BOUGHT … important.
And … now, in the fullness of time, we’ve got a re-trending ReSale TALES (3moMA, YoY):