Thursday, October 19, 2023

Morning Note: Suddenly, A Little Demand for Long-Term Treasuries

Just a quick note this morning; anything more from me today would be simply redundant.. I.e., not much more to report beyond our latest written and video messaging... Not much, that is, other than yesterday's 20-year treasury bond auction, which came as quite the surprise to the market, and, given the messes that were last week's auctions (mentioned in Friday's important video update), to yours truly as well.

In a nutshell, the auction went off pretty darn well... Here's Bloomberg's Cameron Crise (emphasis mine):

Investor Demand Shows of Life at Twenty-Year Auction
"Stop the presses! Everyone’s least-favorite bond seems to have attracted some demand. After the kind of horror-show performance of last week’s Treasury auctions (where weak demand produced fat tails), today’s 20-year offering actually went well, clearing at 5.245%..."
"Duration hasn’t really responded to today’s Fed comments, but it has rallied after this result. Perhaps tentative signs that investors may finally be rousing themselves to buy could be the thing that keeps the long bond yield stuck below 5%."

Speaking of "duration," he's referring to long-term bonds, here's TLT (20+yr treasury ETF), I circled the time of the auction:

As you can see, while many (not entirely unjustifiably) remain uber-bearish "duration," it may not take much to see it rally, here and there, going forward... Ultimately, our economic thesis will likely have us adding exposure there in the months to come.

Asian stocks got hammered overnight, with 15 of the16 markets we track closing lower.

Same for Europe so far this morning, with 16 of the 19 bourses we follow trading down as I type.

US equity averages are (save for small caps and SP500 Equal Weight) slightly higher to start the session: Dow by 37 points (0.10%), SP500 up 0.05%, SP500 Equal Weight down 0.02%, Nasdaq 100 up 0.15%, Nasdaq Comp up 0.11%, Russell 2000 down 0.44%.

As for yesterday’s session, US equity averages traded lower: Dow by 1.0%, SP500 down 1.3%, SP500 Equal Weight down 1.6%, Nasdaq 100 down 1.4%, Nasdaq Comp down 1.6%, Russell 2000 down 2.1%.

This morning the VIX sits at 19.36.

Oil futures are down 0.61%, nat gas futures are up 0.36%, gold's up 0.34%, silver's up 0.01%, copper futures are down 0.16% and the ag complex (DBA) is up 0.18%.

The 10-year treasury is down (yield up) and the dollar is down 0.24%.

Among our 33 core positions (excluding options hedges, cash and money market funds), 15 -- led by AT&T, XLC (communication stocks), FEZ (Eurozone equities), PHO (water resources stocks) and XLI (industrial stocks) -- are in the green so far this morning... The losers are being led lower by VNM (Vietnam equities), REMX (rare earth miners), EWW (Mexico equities), Johnson & Johnson and XBI (Biotech stocks).

“What we call our future is the shadow that our past projects in front of us.”
--Marcel Proust

Have a great day!

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