This morning yields are down again, with the 2Y at 4.96% (down ~10bps from yesterday morning) and the 10Y at 4.72% (down almost 20bps from yesterday morning). Equities have also rejoiced. The Treasury Refunding Announcement and FOMC/Powell lead to a big move lower in yields yesterday. Fixed income investors responded to smaller than anticipated sales of 10Y, 20Y and 30Y auction sizes as well as the Treasury indicating that increased auction sizes are likely not going to be persist past another quarter. As it relates to the FOMC, the release and press conference were generally viewed as "dovish" in the sense that there was no clear commitment to further hikes as the tightening of financial conditions may be doing the job of rate hikes. Otherwise on the day, data was generally ok, with JOLTS data showing continued tightness in the labor market. The Atlanta Fed GDPNow is estimating 1.2% growth for 4Q, a pretty sharp drop from 3Q, and traders are estimating a very low probability that the Fed hikes again this December.
On the day ahead we get the Bank of England, jobless claims and Apple earnings.
XTOD: QRA synthesis BUY ALL ASSETs. Janet saved Christmas. Letsssssss gooooooo $TLT $SPY
I am not being sarcastic. I am bullish bonds and stocks and covered all my shorts and am buying dips
XTOD: US Treasury officials may not be gaming the market, but they are listening to it. That's one of the biggest takeaways from today's refunding announcement, in which the Treasury refrained from boosting long-term bond sales as much as markets expected.
XTOD: Launching on Nov 6th, a listed investment "strategy" that owns only newly issued MBS https://convexitymaven.com/wp-content/uploads/2023/10/Convexity-Maven-The-Center-Cut.pdf
As chatted with: @EconguyRosie @ErikTownsend @GrantsPub @profplum99 @biancoresearch
Yields ~100bps over similar duration Corporate (IG) bonds with NO CREDIT RISK
XTOD: I think the key to this Powell presser is that he has done little to reset market expectations towards a greater chance of a rate hike. He's not taking it off the table, and he's confirming there is a bias to hike, but Powell seems very comfortable with the market pricing in that it's unlikely.
XTOD: He means "higher forever." he just needs "traders" to swallow it in bite sized pieces.
XTOD: With Bob Knight passing away it’s almost a must to watch his speech where he talks about trying get on Michael Jordan’s ass in the locker room. An absolute classic! RIP https://x.com/SportsGuyLance/status/1719854705008939351?s=20
https://x.com/dampedspring/status/1719702016325210601?s=20
https://x.com/lisaabramowicz1/status/1719730908041781440?s=20
https://x.com/ConvexityMaven/status/1719722480267407697?s=20
https://x.com/steveliesman/status/1719794408093004163?s=20
https://x.com/Stimpyz1/status/1719807150338482635?s=20
https://x.com/SportsGuyLance/status/1719854705008939351?s=20
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