technicals, positions and NFIB

Good morning. In light of the NFIB out a short while ago, I thought I’d offer a ‘quick hit’ here with some details as well as a link thru to some TECHNICALS to consider ahead of this afternoons 3yr auction. First, NFIB:

Yes it was better than ‘consensus’ compiled/offered by Bloomberg but ‘up a tenth’ doesn’t seem like too much to get excited about. Then again, a few quotes FROM the NFIB

“Never in the history of this survey have we seen profit trends so high”, said NFIB President and CEO Juanita Duggan. “The optimism small businesses owners have about the economy is turning into new job creation, increased wages and benefits, and investment.”

AND

“There is no question that small business is booming,” said NFIB Chief Economist Bill Dunkelberg. “Consumer spending, the new tax law, and lower regulatory barriers are all supporting the surge in optimism across all small business industry sectors.”

Click, read and decide for yourself. There’s NO DOUBT ‘profit trends’ are movin’ on UP like The Jeffersons … Here’s THAT visual and you can clearly see they are ALMOST OUT OF NEGATIVE TERRITORY:

The frequency of reports of positive profit trends improved 3 percentage points to a net negative 1 percent reporting quarter on quarter profit improvements, the best reading in the survey’s 45 year history. Although the new tax law will impact profits this year, much of the current improvement is due to gains in operating profits and stronger sales. Sales gains from stronger growth fall to the bottom line before costs such as rising labor costs catch up. Overall, the new tax law and the strong economy are very supportive of profit improvements.

Next, HERE IS A LINK thru to technicals.pdf where you’ll note 3s vs 2s5s suggest there’s been a concession on the curve — whether or not this will be enough, well, remains to be seen. What ALSO remains to be seen is IF Dealers have any capacity left in the tank to help if needed. They are quite LONG 3yrs and in:

(for MORE position-related visuals SEE HERE)

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BTPs +10bps (most in 2mos) on election worries

First the RED HEADLINE WRITERS,

*ITALIAN 10-YEAR YIELD RISES 10 BASIS POINTS, MOST IN TWO MONTHS”

Next the VISUAL

Finally, from RTRS

RPT-Italian snap election worries knock Italian bonds, stocks

(note to self. do NOT take the month of JULY off …)

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ahead of today’s **breaking (NPF) news** …’May the Fourth Be With You’

Mr. Market doing what it does best and specifically, figuring out wherein the most PAIN is, and then heading there … As is always the case, doing so ahead of this mornings NFP, well, makes all the more sense. Here’s a visual of The Belly (5s vs 2s10s) I’ve been following. 5s are clearly related TO whatever whim the Fed chooses to express (note via EconoDay Dudley @ 1245p, Williams @ 3p, Quarles @ 530p and more over the weekend). So when the NFP-data dust finally settles and the ‘Hamptons Hedge’ goes into full effect for the 1st time this year (it’s gonna be another scorcher here in the NE), lets consider where this ENDS the day:

Now, I mention this here and now and in context of pain trade as I recently read update of what seemed to be a good idea at the time:

…Finally, a note on our active trades. We will take off our short 5s on 2s5s10s cash at today’s close, entered at 15bp. We entered into this trade as a tactical position ahead of the May refunding, with the view that Treasury would boost 5s and 7s issuance both more than in February and more than the market anticipated. But we found Treasury’s refunding announcement to be underwhelming in terms of new coupon supply, both relative to our own (admittedly aggressive) expectation and our view of the market consensus. –NWM closing thoughts (May 3rd)

In other completely UNRELATED NEWS, ZH captures this spirit even better than I could SO

Bill Gross Throws In Towel On Bond Bear Market

Where ZH points out the following GROSS TWEET:

Maybe the LOWER FOR LONGER concept and theme is not quite dead yet!

Here’s one — check out “A History Of US Inflation, Real 10y Rates and Fed Chairs” via Christian Thwaites and Linked IN

And so, I ask you Clubber. Any predictions for the fight??

Stay tuned for even MORE **BREAKING NEWS** and a more complete recap of today’s NFP along with some thoughts over the weekend as you prepare for the week AHEAD …

May the Fourth Be With You…

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