Morning Reads

Morning Reads

Open Interest Changes



Bonds and Bills

Wild swings continue to envelop the bond market, with two notable names in the industry making fresh calls on the sector. The pairs' statements also continue to come hours apart from each other, as they did on Aug. 3, when they both became growling bond bears and added to the pressure on long-term Treasuries. Since then, the yield on the 10-year Treasury (US10Y) jumped nearly an entire percentage point, climbing from 4.07% to top 5% yesterday, while the 30-year Treasury (US30Y) went from 4.16% to a high of 5.15% in just under two months.

Old tweets

Bill Ackman: "If long-term inflation is 3% instead of 2% and history holds, then we could see the 30-year T yield = 3% + 0.5% (the real rate) + 2% (term premium) or 5.5%, and it can happen soon. There are many times in history where the bond market reprices the long end of the curve in a matter of weeks, and this seems like one of those times."

Bill Gross: "10 yr yields? Overall bearish"

New outlook

Bill Ackman: "We covered our bond short. There is too much risk in the world to remain short bonds at current long-term rates. The economy is slowing faster than recent data suggests."

Bill Gross: "Regional bank carnage and recent rise in auto delinquencies to long-term historical highs indicate U.S. economy slowing significantly. Recession in 4th quarter. On bonds. Invest in the curve. Various combinations 2/10, 2/5. Should go positive before year end. I’m buying SFR h5 (SOFR futures). 'Higher for longer' is yesterday's mantra."

Remember, the last time rates were this high was pre-2008, and it seems like the Bills now feel that the rout in Treasuries seen in the aftermath of the COVID pandemic has gone too far. Markets appeared to have adopted that view on Monday, with the yield on the US10Y sinking 20 bps to a low of 4.80%, but it is too soon to tell if that sentiment will hold. Term premium is the word on Wall Street, as well as regular investors that are looking at related bond ETFs, but there are many factors at play that can have impacts on benchmark yields. Among them are forecasts and actual economic data, debt sustainability, and geopolitical developments, with eyes tightly kept on the Federal Reserve and words from the officials on financial conditions.

SA commentary: "The important question is, what is driving rates and yields at different maturity," writes analyst Adam Vincze in Inversion Analytics Suggest Bottom In Long-Term Treasuries, Points To Fed Cuts In 6 Months. "The U.S. Treasury yield curve has been inverted since 2022, signaling a potential economic downturn, and analytics suggest the ballooning budget deficit is hiding weakness in the economy." (70 comments)

Cuckoo for cocoa

As Halloween approaches, it looks like candies could become more expensive as hotter and drier weather caused by El Niño is tightening the global cocoa supply. Cocoa futures (CC1:COM) in New York jumped as much as 2.5% to $3,786 per metric ton on Monday, marking the highest level in over 44 years. The 2022/23 season has already seen a deficit of about 100K tons of cocoa, while hoarding of cocoa beans has been on the rise due to expectations of higher prices. SA analyst Weather Wealth previously forecast that higher cocoa prices can benefit large chocolate brand owners but strain retailers, restaurants, and ingredient suppliers. (2 comments)

Live traffic

Ahead of a potential ground invasion into Gaza, Alphabet's (GOOGGOOGL) Google has temporarily disabled local real-time traffic updates on its apps Google Maps and Waze. Apple (AAPL) Maps also disabled such updates in Israel, with the move reportedly implemented at the request of the Israel Defense Forces. "As we have done previously in conflict situations, we have temporarily disabled live traffic conditions and busyness information out of consideration for the safety of local communities," a Google Maps spokesperson said. Google had made a similar move last year, when it disabled real-time vehicle and foot traffic data in Ukraine after Russia invaded the country. (6 comments)

Crypto rally

Bitcoin (BTC-USDbulls are back, with the top cryptocurrency briefly touching $35K today, as traders continued to wager on the potential approval of what would be the first U.S. exchange-traded fund that invests directly in the token. "Over the past month, growing investor confidence in the imminent approval of BTC Spot ETFs has driven considerable momentum toward BTC," said Matteo Greco, analyst at Fineqia. "This, combined with the scheduled BTC halving in the latter part of April 2024 has prompted investors to favor BTC over other digital assets." The bullish price action buoyed crypto-related stocks including Coinbase (COIN), Riot Platforms (RIOT) and MicroStrategy (MSTR). (26 comments)

Today's Markets

In Asia, Japan +0.2%. Hong Kong -1.1%. China +0.8%. India closed.
In Europe, at midday, London flat. Paris +0.7%. Frankfurt +0.3%.
Futures at 7:00, Dow +0.4%. S&P +0.5%. Nasdaq +0.6%. Crude +0.4% to $85.87. Gold -0.8% to $1,972.90. Bitcoin +12.6% to $34,404.
Ten-year Treasury Yield +3 bps to 4.87%.

Today's Economic Calendar

9:45 PMI Composite Flash
10:00 Richmond Fed Mfg. Index
1:00 PM Results of $51B, 2-Year Note Auction
1:00 PM Money Supply

Companies reporting earnings today »

What else is happening...

WSB survey results: See what stock is the top 'Magnificent 7' holding.

Nvidia (NVDA), AMD making ARM-based chips to rival Intel (INTC).

Chevron (CVX) sees no antitrust issues with Hess (HES) takeover.

Tesla (TSLA): DOJ is still asking questions on Autopilot features.

Lockheed Martin (LMT) drops out of U.S. Air Force tanker bidding.

Li-Cycle (LICY) collapse seen as a potential warning for EV sector.

AGNC Investment (AGNC) sees lower Q3 earnings; stock slides.

IEA sticks to fossil fuel forecast; undercuts calls for more investment.

Redfin: New home listings tick up in September, but cancellations rise.

Occidental Petroleum (OXY) falls as megadeals remove potential buyers.

After choking exports of chi

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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