Treasury Auctions this week will be increased by $1 Billion it will be test for investors do that want to take down this additional supply and for U.S. Govt as this unlikely to be the last time the Quantity is increased. Yesterday’s 3-year auction tailed a bit but Bid to cover was higher than last month, shorter end curve auction historically does fine it is the longer end where problems sometimes arise. Today is 10 year and tomorrow 30-year auction so attention must be paid at 12:00. Another factor weighing on, our concerning to the Treasury complex is the massive amount of Corporate supply hitting the markets last 2 weeks, both of which were record setters. This week started off with a bang as well per BBG “yesterday 11 borrowers brought $19.625 Billion across 19 tranches to start the holiday shortened week” treasuries are used as a hedge against pricing this paper. Earnings season starts next week are companies trying to get a head of ugly numbers by issuing as much debt as they can, possibly but regardless this factor is having an impact on the treasury complex. Per Bloomberg (BBG) $310B of paper has priced since March 17th, dwarfing the $260B that had priced the prior 2.5 months. Toss in daily QE purchases and you realize lots of things to price into treasury complex not just gyrations in the Economy.
Gold futures continue to trade with fears of shortage of Gold bars for delivery. On yesterday 5:00 reopen Gold again marched higher trading higher by 1.5% from yesterday’s settle, but currently Gold unchanged on day and Spot Gold -.5%.Gold at 8 year highs .I mentioned yesterday that basis trade was as wide as $50 until that starts to perform rationally gold market will be on edge
Copper futures in a breakout to Upside helped by Comments by Glencore hinting that they may shut a copper mine in Zambia for 3 months due to Virus, copper having a day +4%.
Optimism continues for a second day that Worst is behind us or at a minimum the Peak is upon us. Ill-founded probably New York not out of Woods Cuomo himself said I paraphrase let’s not get too excited here we still need to social distance and lockdown. Yes, Germany said they will possibly lift Lock down rules by April 20th, but Germany has never the Outbreak as other countries cities have experienced. Who are we to argue with the market Spoos +2.8% 25 handles off highs, Stoxx +2.5 % and Dax +3.6% as again Germany may be first to lift Lockdown measures
Risk on Again today Bonds Lower, Crude oil Choppy as tape bombs continue to provide more confusion then clarity regarding production cuts. The consensus appears to be a 3-month cut of 10 mln barrels a day
Great Grid from Liz Ann Sonders