The BondBeat

THURSDAY July 9, 2020

Steven J. Feiss
Managing Director, Fixed Income
FEISS@bloomberg.net
732.683.9222
See Etico Disclosures HERE

NEWS & VIEWS you can USE:

● Reuters: GLOBAL Cases hit 12mil as Worsening US Outbreaks Prompts Tough Actions 
● JGBs gain after solid five-year debt auction (Reuters) 
● China shares' bull run hits 8d even as state media flags MARGIN risks (Reuters) 
● China's producer prices extend declines but recovery signs emerge (Reuters) 
● BOJ offers bleakest view on Japan's regions in over a decade (Reuters) 
● German exports rebound less than expected in May (Reuters) 
● JPMorgan’s Kolanovic Says S&P 500 Could ‘Easily’ Reclaim Record (bloomberg) 
● Manhattan RENTS PLUNGE After Exodus EMPTIES BUILDINGS (bloomberg) 
● Plunge In Consumer Credit Continues As Americans Repay Record Amounts Of Credit Card Debt (ZH) 
● JPMorgan Says Liquidity Conditions Are Making Markets Vulnerable (bloomberg) 
● NY Fed DESK HEAD: IF Mkts Continue Improving, "Fed's Purchases May Stop Entirely" (ZH) 
● OECD: Composite Leading Indicator (CLI) point to SIGNIFICANT IMPROVEMENT BUT... 
Want MORE? Have a point/click of TODAY’S PRESS PICKS (9 July 2020) by IGM
MY VIEWS (JULY 9): I’ve LITTLE TO ADD TO the DEATH OF A BOND SALESMAN as UST yields get
JAPANIFIED (yesterdays comments left largely as they were) so I LEAD WITH 30yy levels I’m watching
throughout the day and yes, I’ve added links back to what I was saying middle of October. 2018. As
global Wall Street was selling HIGHER YIELDS COMING along with four or five HIKES in 2019. Gundlach
(10s to 3.50/60%, 30s TO 4.00% via CNBC)...Back THEN I was thinking about the UPCOMING BOND
BULL and the NEXT RECESSION and yet today, here we are talking about THE DEATH OF A BOND
SALESMAN. Alrighty then! I’ve UPDATED press links for WSJ on CHINA TRYING TO KEEP MKT
EXUBERANCE UNDER CONTROL (wait, what? They just lit that fire??). NYT on BIG BANKS NOT
PLAYING BALL with Fed Main St LENDING
TECHNICAL LEVELS (JULY 9): 30yy (March fibo)RANGE PERSISTS with series of levels (fibo,
50, 100dMA) to WATCH as triangulation BREAKS bringing focus on 1.41 (TLINE) now as support.
Separately note spec short base JUMPED; ALSO NOTE: theCHARTreport:TIP (etf) all time high
even THO INFLATION A DISTANT DREAM; CitiFX: BULLISH STOCKS, S&P looks like it did into
May 14 corrective low, followed by 17% rally next 3wks, BEARISH DXY, watch 96.385, close
BELOW think 28 May and further losses (94.65-94.75); CSFB: 2s30s on verge of MORE BULL
FLATTENING, watch 119bps (55dMA), break and 111bps next, stay LONG 10s, 30s bonds
headed TO 1.12% (BUT above 1.525% SUPPORT and OUT); RBC on SPX: “SHORT TERM
PEAK”, rolling over, soon to test SUPPORT (2950-3000)
Sellside Observations (JULY 9):

➢ ABNAmro: Is the US economy heading for a dip? (answer: YES see OpenTable data)
➢ Barclays on MUNI SUPPLY: Taxable Munis RULE where issuance in H2 driven by taxables of 105-115bb and
additional 40-50bb bonds w/corp cusips (beware IF tax exempt advance refundings resurrected in Phase 4
stimulus bill)
➢ BNPs corp and FX monthly -- section on CREDIT: Bond Scarcity … US IG investors are about to face an
extended period of bond scarcity not seen since 2008. We expect this for different reasons: zero net issuance,
Fallen Angels and Fed buying. In addition, the economic activity normalization after the unlocking period,
moderates the need for corporates to hold such elevated cash levels. As such bond buybacks should increase
in the second half of 2020 as companies deleverage and shrink their balance sheets…
➢ CSFB Q3 FX outlook: EURUSD to 1.15 then 1.20. USDJPY to 105
➢ DB: Rates are lagging other asset classes and the data basically, BONDS ARE WRONG (10s ~50bps
TOO LOW)

And more. MUCH, much more …

The FUNdamental data ahead: THURS: Claims (830a), 30yr auction (1p); FRI: PPI (830a). Want MORE:
GLOBAL EconOday HERE, US ONLY HERE. For a different type/level of data, see TradingEconomics
HERE, and just ONE MORE THING, ok Investing.com’s top 5 things to watch this week HERE. AND
HERE’S the UPDATED POMO SCHEDULE covering June 26th thru July 13th (ZH summary HERE for
FUNtertainment, visuals)
POSITIONS (06.29.20): real$ BULLISH LONGER END, specs FLIPPED NET LONG (10s), too (most
bullish since ‘17), spec CURVE STEEPENING impulse FADES; Fed CUSTODY HOLDINGS UP (look on
p2 and spot THE “V”); ICI (mutual fund flows) taxable bond INFLOWS (moderating but 9wks in a row),
muni, equity OUTFLOWS; weekly MoF data shows Japan BUYS (foreign debt) AGAIN; JPM Clients
(all/ACTIVE) flip from SHORT TO LONG; Dealers FLIPPED NET LONG 7-11yr coups too; H41 UDPATE
(JULY 2): Fed A$$ETS -1% AGAIN, still NO MAIN STREET LENDING (Reuters), Balance sheet shrinks
THIRD WEEK IN ROW again due to DECLINE IN LIQUIDITY SWAPS, (ZH); TICS: selling MODERATED,
Japans holdings FELL to lowest in a year (bloomberg), Saudis DUMPED RECORD amt USTs (ZH).

Best
Steve

Before electronic trading, it was all about the people. At Etico Partners, it still is ...
Steven J. Feiss
Managing Director, Fixed Income
Etico Partners, LLC
110 East 40th Street
New York, NY 10016
732.683.9222 (office)
914.450.9668 (mobile)
feiss@bloomberg.net
sfeiss@eticony.com
http://eticony.com
Disclaimer: This material has been prepared for and
distributed to institutional investors only … This is not
official research of Etico Partners. Opinions and views
expressed are my own.