The Week Ahead

Volume 45

I hope you’ve all had a lovely Sunday.

Yet another interesting week for markets. A lot went on in the past week, Jerome Powell’s comments which lead to a rapid repricing for 50bps at the next FOMC meeting, NFP on Friday, and of course the SIVB 0.00%↑ blow-up. Payrolls remain too strong, not sure they settle the 25/50 bps debate with CPI around the corner but labor participation and wage growth were at least a step in the right direction. With what is in front of me and given SIVB, I remain on the 25bps side of the debate - I am sure Jay will say 50bps was discussed though.

Markets in a nutshell

How those SPX (spot) levels are playing out…

I found stocks and indices difficult to trade, trade of the week/year was a Eurodollar (Dec 23 - GEZ3) long from 94.2 to 94.815. Followed by long 10yr futures at 110’30 (still open, but, trimmed) and a 03/17 112/113 ZN bull call which cost 12/64 not long ago. Equity trade of the week was a GE 0.00%↑ 03/17 86 straddle ahead of its analyst day which cost 3.6 and was sold for ~8. The worst performer for me was BAC 0.00%↑.

Only took systemic concerns to get a real bid on 10yr and get the overcrowded short trade to begin unwinding

2yr with an even more impressive move, 28 bps

And how that trade of the year (for me) looked

A lot of noise for equities and more to come, CTAs are now heavily short S&P with yet another flip on flat tape flows from buy to sell. Further supply to come from that community. Will discuss more in-depth about this later on.

I must say stocks baited me into expecting a move upward last week. So overall stocks were a drag on my book this week but with my beloved Eurodollar trade, ETF shorts, as well as 10yr and some VIX call spreads, I ended the week green.

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Today’s post won’t be too long as sadly one of my cats passed away this weekend and I have also been moving.