Dramatic shift in Fed's anticipated rate path now vs before the war using 3-month SOFR futures

S&P global PMI color

LPL via Dave Lutz

Should be a boring day unless you own quantum stocks

Fed minutes: Majority saw hike likely warranted if inflation persists

"1Q EPS growth is tracking 26% YoY, or 18% excluding one-time gains recognized by Amazon, Meta and Google." - BofA

Pakistani Army chief's travel schedule is the new Greenspan briefcase

Should be an easy new 20y auction today with the backup in yields which will set up an interesting futures roll next week where the TU finally has a positive roll (2.5). Also, TU and FV could still see an early deliver but the rest (TY, UXY, US and UL) won't.

UST 5y yield back above 4.30... first since early '25

2s3s is a good proxy for the 2yr's roll and points to continuing improvement in it's carry profile... now best of the cycle

Soft overnight rates helping 2y swap spreads. Best levels since early '25

Round trip done

SpaceX IPO talk June 10-12

5y UST cheapest on the broad curve since middle of last year 2s5s30s 'fly

A few firsts this morning. One of the more notable: real 30s at cycle high yields

Fed's Reserve Management Purchases having the desired effect as SOFR fix of 3.56 yest

Nasty UST Whoop-Ass

You probably couldn't script this any better. Warsh becomes Fed chair in time for a hike cycle.

Back end of UST curve is too steep for a tightening cycle. Not there yet but 5s30s is feeling the pressure

Not too soon to start thinking of futures rolls. One interesting change with this M-U roll is that the TU calendar spread is trading positive for the first time since 2022 (I think).

FWIW Kevin Warsh is slightly taller than Jerome Powell

Today's brand new 30y long bond auction is the largest duration dump of the quarter. With yields north of 5% and duration risk a real concern globally, this is an auction to watch. Hard to handicap the results but I am leaning more positive

Head of research at Fake Social will have a difficult time spinning this ugly PPI

The war better end quickly for Warsh's preferred measure !

PCE components PPI

US Senate confirms Kevin Warsh to be Federal Reserve Governor.

SpaceX, Google in talks to explore data centers in orbit via WSJ

Looks like USTs are past denial, anger and bargaining, and well on their way to depression and acceptance of the possibility of a hike cycle.

Looks like 0.38 core

NB that tomorrow's April CPI will fix the "error" from last Oct that understated rent inflation because of the government shutdown. So monthly core will overstate things while yearly will get adjusted back to its correct level

Tough 3y UST auction with CPI tomorrow. Front end hovering at day's low

Silver up 6.5% and outpacing Gold. AI and tech demand seems to be picking up helping more industrial (ish) metals

Midterm election and Iran getting to him apparently. Trump even more unhinged than normal tonight

Relatively sedate opening despite Iran agita. Equities underpinned by solid earnings and Ts already on the cheap side.

I wish Trump would cease firing off these posts, even if only for a few days. That's a ceasefire we all deserve

Space stocks having a nice day. #$RKLB #$ASTS #$PL #$LUNR

UMich longer term inflation exp remain tame. Another Fed friendly print

USTs keying on soft wages and steady UER and shaking off headline beat. It seems

I don't remember the last time if ever that CPI (coming Tues) and NFP were releaseed so closely bunched up.

April payrolls tomorrow and median expectations are for a gain of 65K. With inflation a problem for the Fed, any sign of strength in the labor market will weigh on the rate path and increase the odds of hikes.

No surprise NY Fed's year ahead inflation expectation perking up again

“.. hyperscalers’ earnings growth this quarter was boosted by an unusually large contribution from equity stakes in private companies .. another sign of just how comically codependent the AI tech industry has become.” @financialtimes.com www.ft.com/content/be97...

Seems like swap spreads the main beneficiary of steady QRA

RIP Ted Turner

Bond trader friendly moves this morning: '27 hike odds lower, swap spreads wider, long-end bid.... Y'all should be happy now.

QRA steady home.treasury.gov/news/press-r...

Bond market betting there will be no QRA surprise tomorrow morning. 5s30s continues to flatten and now eyeballing 90 bps

Should the Fed in the next 12 months decide that it needs to hike rates, high odds it will need to hike more than once and more than 25 bps. UST and SOFR curves offering interesting opportunities

USTs tend to react to the ISM employment gauge esp when it prints before NFP

Alphabet touring the world and selling debt. Now a Canadian dollar bond sale