Good afternoon. The chop continues as QQQs -20bps, Oil +1% and BTC +6%. 10 and 30 year yields sank 6 and 9bps as the treasury announced an increase in buybacks. Here’s VK explaining:
The Treasury announced this morning that it will increase the size of liquidity support buyback operations for long-end bonds by at least double (from $2B to at least $4B per operation).
What does this mean? The action is a (largely symbolic) step by the Treasury to provide support to the long-end of the curve following the recent spike in yields, although it’s fairly insignificant next the forces pushing rates higher. Keep in mind that these Treasury buybacks are significantly different than Fed QE – the Treasury is targeting pockets of illiquidity in an attempt to boost prices, but the overall stock of debt is not changing as is the case with QE (when Fed purchases are taken out of circulation and not replaced)
Despite the indexes roughly flat, a lot of factor turbulence going on under the surface, in and outside of Tech. Semis -2% and memory -3-6%. Internet +2% led by AMZN +2%. Software slightly up on the day.
MS out saying this is a “de-grossing tape, not a risk-off tape” as Momentum was down 9% while Mag 7 was +1%.
GS said that “in terms of PnL impact intraday. Systematic L/S managers down 1.4% (>3 SD on 3 years), worst day in more than 2 years.”
A couple of charts:
In AI land, OpenAI’s CFO was on CNBC putting out laying out some big numbers:
That implies y/y acceleration to ~250% y/y, a new 12 month high.
OpenAI’s Thibault Sottiaux also teased a Codex number "even more impressive" than last week's 15 million, coming by the end of the week in an appearance at CBRS’s event.
Ok, let’s get to the good stuff: