6-8

Per Citi’s Panic/Euphoria Model, Sentiment is at the Most Euphoric level since 2002, “positioning may be overly Extended, and investors may not be factoring all the potential risks” (BBG)

News:

 OPEC + agreed to extended production cuts by 1 Month, But Saudi Arabia would not extend her deeper cuts beyond June. A volatile night in the Oil Complex Crude down 1% after a big drop in prices at 8:00 PM CST.  U.S. Shale producers coming back online as Oil Prices Move above $40

   Comments about Fridays Jobs Number… the Bureau of Labor Statistics says that proper classification could have made May’s jobless rate 16.3% — still lower than April is on the same basis. And the “underemployment” rate (U6) was 21.2%, down from 22.8% in April but still three times the rate in February (Pro farmer) … PPP partially behind better-than-expected employment report… The federal Paycheck Protection Program (PPP) seems to have succeeded in its main goal of getting small businesses to retain workers, especially given its roughly $659 billion cost More than half of the month’s job gains — 1.4 million — were in restaurants and bars, many of which received assistance under the PPP. And Congress passed a useful PPP fix last week that will let businesses take up to six months to spend the loan money, instead of two, and spend more of the loan on costs other than payroll

Phase One Reopening goes into effect today in New York City

Brazil now has the Second Most Covid cases in the World, A reminder Brazil is one of the leaders of Agriculture Exports so any problems in brazil may impact said Exports

Emerging market Assets posted best weekly gains in more than four years (BBG) as EM assets rally, =Risk rally

 JPM says Buy 5-year Treasuries as Fed likely to signal no rate hikes through 2022(BBG)

From Mizuho Short covering in stocks readily apparent in the latest Commitment of Traders report. As of June 2, hedge funds’ net shorts in e-mini S&P 500 futures (225.8k) fell 18.4% (50.9k) w/w from the highest short level since October 2015. • “There is an expression that you should never fight the Fed. But what the market has learned is that you do front run them.” The biggest US junk-bond ETF saw its largest-ever inflow last week, of $3.5 billion – Bloomberg      

 • WSJ economics correspondent Nick Timiraos, often a mouthpiece for the Federal Reserve, wrote in a Sunday piece that although it is not expected to be implemented at this week’s FOMC meeting, Fed officials are studying Australia’s program to buy government securities in unlimited quantities to peg some yields at low levels as they debate whether to reinforce low-rate pledge with yield caps (i.e., yield curve control

Markets:

 Long end treasuries down and Yield curve steepening   again. Spoos +21 handles   Nasdaq steady to lower, Russel +2% European Stocks Mixed, Buns and BPS both a bit higher European long end yields a bit lower, Buy Japan’s 30-year yields closed +1.4 Bps.  Dollar steady to lower   as FOMC decisions on Wednesday has caused traders to pull back a bit today

ECO Calendar:

 A Busy week but no action Today FOMC meeting Wednesday, do they mention strong job report will it change current Fed thinking/ projections?  I doubt it. CPI on Wednesday, PPi Thursday, Crop report Thursday. Senate in session bit House still out. A 3,10 and 30 year auction this week always interesting.

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