Thursday Paper Charts
September 7, 2023
A very happy Thursday morning to all and a warm welcome to all new followers and subscribers. This week, Paper Alfa managed to climb above the 1,000 subscriber mark, something I did not see coming so quickly. A heartfelt thank you to everyone who has supported me; this gives me the confidence and fire to give and post more. Stay tuned, as there is more to come.
Please note that today’s charts are as of Wednesday evening, as I will be travelling for the next ten days. Hence the name change. Don’t worry, I will still keep posting and updating everyone as usual.
Several Fed speakers came out, although not leaving much of a trace on front-end pricing, which is still firmly looking at a 5.5% terminal rate so far. September seems off the cards at the moment, with some decent probability of another hike priced (50%) into year-end.
The fight for how many appropriate cuts in 2024 and 2025 are reasonable, given the current trajectory, continues. That’s basically what bond markets have to grapple with currently. Issuance, in my view, is not as important. End-of-cycle rate plateaus, while theoretically the most stable, are practically a very unstable environment for rates as volatility increases. It will be a stop-start range-bound market for a while, with many false signals along the way. It’s the most likely scenario in my book.
US credit is still trading particularly tight. Trading desks I speak to report still solid buying from institutional clients. What yields and spreads are currently on offer? I will make a separate post on it, but in a nutshell, you can get those things in the US and Europe, respectively.
US
EUROPE
Now, let’s examine the ~ 70 charts that I have on offer today.