US DATA: Consumer Credit Growth Picks Up In May, But Overall Dynamics Subdued
Jul-08 19:34
US consumer credit grew by a 4-month high $11.4B in May, above the expected $8.9B and April's $6.5B, per Federal Reserve data. That's equivalent to a 2.7% annualized growth rate (all figures seasonally adjusted).
- Revolving credit (e.g. credit cards) rebounded sharply to rise $7.0B (a +6.3% ann. rate) vs a $0.9B contraction in April, while nonrevolving credit (e.g. student loans, auto loans) softened to $4.3B (a +1.4% ann. rate) from $7.4B prior.
- While these figures are relatively robust compared to Mar/Apr, they are part of a noisy month-to-month series that suggests flat demand for credit from consumers in recent quarters, alongside rising household savings rates and softer consumption.
- Those dynamics have gone hand-in-hand with a loosening labor market, relatively high interest rates and rising delinquency rates, albeit there is little sign of an outright capitulation of consumers with household debt service ratios still at/near multi-decade lows.
- The next quarterly Fed Senior Loan Officer Survey, which gives a broad sense of underlying lending and borrowing conditions, is due out in August. The most recent report in May suggested softer demand across all main categories of consumer loans, which combined with the above factors points to higher-for-longer Fed policy rates having an impact in slowing demand.
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US TSYS: May Jobs Gain, Unemployment Rate Rise; Focus on CPI, FOMC Next Wed
Jun-07 19:50
- Broadly weaker after the bell, Treasuries have actually traded sideways since the initial gap sell-off following the higher than expected jobs gain of 272k (+180k est), offset slightly by -15k 2-month revisions.
- Amid the dip in 55+ labor market participation (0.2pp to 38.2%) which drove the overall unexpected dip in May: it was in turn driven by a drop in Male 55+ participation to 43.4% (43.7% prior), with female participation -0.1pp to 33.6%. That's the lowest 55+ male participation rate seen since 2005 - which will act as a constraint on labor supply, which may concern the FOMC.
- Treasury futures actually extended session highs briefly, Sep'24 10Y (TYU4) tapping 110-21 before falling to 109-09.5 -- the widest gap move since April's CPI release. The 10Y contract traded in a 7 tic range since the data, trades -1-02 at 109-09.5 after the bell.
- Cash yields are broadly higher: 2s +.1585 at 4.8826%, 10s +.1406 at 4.4276%, 30s +.1118 at 4.5470%, while curves are running flatter: 2s10s -1.381 at -45.498, 5s30s -4.450 at 8.974.
- Late year rate cut projections have receded vs. late Thursday levels (*): June 2024 at -1.3% w/ cumulative rate cut -.3bp at 5.328%, July'24 at -8% w/ cumulative at -2.3bp (-5.9bp) at 5.307%, Sep'24 cumulative -13.7bp (-21.3bp), Nov'24 cumulative -20.3bp (-30.7bp), Dec'24 -37.4bp (-49.7bp).
- Looking ahead, main focus is on CPI inflation data for May Wednesday morning, followed by the FOMC policy announcement at 1400ET that afternoon.
US TSYS: Late SOFR/Treasury Option Roundup: Puts Return, Rate Cut Pricing Cools
Jun-07 19:31
SOFR and Treasury option trade remained mixed Friday, downside put buying strong as underlying futures gapped lower after the higher than expected jobs gain, while calls turned two-way. In-line with the post-data sell-off, late year rate cut projections have receded vs. late Thursday levels (*): June 2024 at -1.3% w/ cumulative rate cut -.3bp at 5.328%, July'24 at -8% w/ cumulative at -2.3bp (-5.9bp) at 5.307%, Sep'24 cumulative -13.7bp (-21.3bp), Nov'24 cumulative -20.3bp (-30.7bp), Dec'24 -37.4bp (-49.7bp)
- SOFR Options:
- Block, 10,000 0QN4 95.68 puts, 15.0 vs SFRU5 95.70/0.50%
- +3,000 SFRH5 95.50 straddles, 70.0 ref 95.315
- -6,000 SFRQ4 95.00/95.12 call spds, 1.0 ref 94.82
- +5,000 SFRZ4 96.25/96.87 call spds, 2.0 ref 95.065
- 9,000 SFRU4 94.81/94.87/95.00/95.06 call condors ref 94.82
- -5,000 SFRN4/SFRQ4 95.00 call spds, 1.75
- -5,000 SFRU4 95.12/95.25 cal spds 0.75 ref 94.82
- +6,000 SFRN4 94.62/94.75 put spds vs. SFRU4 94.68/94.75 put spds 1.0/Sep over
- Block, 8,000 SFRZ4 95.56/95.68 call spds, 1.5 ref 95.07
- Block, 10,000 SFRV4 95.50/95.75 call spds 3.75 ref 95.17
- +4,000 SFRZ5 97.50/98.50 call spds vs. 94.62 puts, 8 vs
- 12,000 0QM4 95.75/95.87/95.93 broken call flys ref 95.665- to -.67
- 3,000 SFRN4 95.12/95.37 1x2 call spds ref 94.885
- 5,000 SFRN4 95.00/95.06 call spds ref 94.885
- 3,300 SFRM4 94.68/94.75 call spds ref 94.675
- Block, 2,500 SFRZ5/SFRH6 93.75/94.25/94.75 put fly strip, 9.0 total
- 3,000 SFRZ5 96.50/97.50 call spds ref 96.015
- 6,500 0QM4 95.87/96.00 call spds ref 95.67
- Treasury Options:
- 6,000 TYQ4 107 puts, 15 ref 109-13.5
- 9,275 USQ4 124/130 1x2 call spds ref 117-16
- 20,000 wk2 5Y 106.75/107/107.5/107.75 call condors ref 106-03.5
- 8,000 TYN4 107.5/108.5 put spds, 9 ref 109-12
- 4,000 TYN4 107.5 puts, 3 ref 109-10
- 3,200 wk2 TY 108/108.75 2x1 put spds, 5 ref 109-14
- 2,000 TYU4 111/113.5 call sapds, 17 ref 109-14
- 5,000 FVQ4 105/105.5/106/106.5 put condors ref 106-05.5
- 2,500 TYN4 108/109 2x1 put spds 10 ref 109-14
- Block, -7,500 wk2 FV 106.25 calls, 19 vs. 106-06/0.47%
- -10,000 TYN4 109.25/111.25 strangles, 32
- 2,500 TYN4 108/109 put spds
- 3,150 FVN4 107.5/108.5 call spds ref 106-23
- 1,500 TYQ4 108.5 puts, 24 ref 110-09
- 1,500 USN4 116.5/118 put spds, 27 ref 119-05
- 2,500 TYN4 109.25/111.25 strangles, ref 110-09
- 1,100 FQV4 107.75 calls, ref 106-23
US STOCKS: Late Equities Roundup: Eminis Off New All-Time High, Financials Lead
Jun-07 19:20
- Off post-NFP lows, stocks marched higher in the second half before profit taking tempered support with indexes mildly lower after the bell. S&P Eminis made new all-time high of 5385.5 while the DJIA remains well off mid-May all time high of 40,065.18. Currently, the DJIA is down 24.63 points (-0.06%) at 38889.44, S&P E-Minis down 6.5 points (-0.12%) at 5363, Nasdaq down 52.1 points (-0.3%) at 17138.41.
- Financial and Industrial sector shares continued to lead gainers in late trade, banks and insurance providers supported the former: Capital One +3.15%, Discover Financial Services +2.49%, Travelers +2.07% while JP Morgan gained 1.85%. Industrials sector led by 3M Co +3.48%, United Rentals +2.27%, WW Grainger +2.05%.
- On the flipside, Real Estate and Materials sectors continued to underperform, investment trusts, particularly office and hotel REITs weighed on the former: Boston Properties -2.42%, American Tower -2.19%, Alexandria Real Estate -1.58%. Metals and mining shares weighed on the Materials sector - partially due to Gold falling over $75.0 amid reports China has curbed their 18-month buying program: Newmont -4.92%, Freeport-McMoRan -3.38% while Steel Dynamics declined 1.75%.
- Looking ahead to next week's notable earnings releases: Autodesk, Casey's General Store, Oracle, Broadcom, and Adobe.
