SPX EOD gamma update
Surprisingly this was quite a dull session. The market tried to escape the gravity of the 4700 put strike, but was not successful in it's attempts.
Total gamma decreased slightly by 19M to -490M which was reflected by the elevated volatility compared to a couple days ago, but in general trends were pretty stable as yields went nowhere and the growth sector was stabilized as a result.
Interesting was the ISM Service Reports or particularly the qualitative aspects of it and what respondents at the grass roots level had to say:
“We continue to experience supply chain disruptions across the nation and around the globe, resulting in raw material and subcomponent shortages, longer manufacturer lead times, transportation resource constraints, labor pool issues and significant price increases. Supply management continues to recommend pulling in demand, placing orders earlier than historical lead times for long lead-time materials, and qualifying secondary sources of supply (if applicable).”
“Demand is good, but supply chain issues continue to get worse. Trucking availability is worsening. Labor shortages are causing issues. We could do much more business if we had more people and access to more products.”
“Most upstream production materials are being pressured by constrained supply chains as well as domestic transportation challenges. Vendors are trying not to pass on expenses, but their margins are such that they will need to raise prices. While we have done a good job holding prices down, we will not be able to hold the vendors at bay. All (cost of goods) will be impacted.”
Overall this does not feel like there is much light at the end of the tunnel. Also Goldman came out with a piece that pretty much said inflation will never return to normal again thanks to "Net Zero". Who could have thought..
As if we needed further confirmation it was Bullard that came in late in the trade just to bless us with the insight that he has three hikes penciled in, and that he thinks that inflation will remain above 3% for the rest of the year. Thank you.
Apropos: The Fed funds future contract for April was again heavily traded and the market now attach a probability of 71% to a 25 bps hike in March (see chart within the chart).
I'll post an update tomorrow morning, cheers!
Total gamma decreased slightly by 19M to -490M which was reflected by the elevated volatility compared to a couple days ago, but in general trends were pretty stable as yields went nowhere and the growth sector was stabilized as a result.
Interesting was the ISM Service Reports or particularly the qualitative aspects of it and what respondents at the grass roots level had to say:
“We continue to experience supply chain disruptions across the nation and around the globe, resulting in raw material and subcomponent shortages, longer manufacturer lead times, transportation resource constraints, labor pool issues and significant price increases. Supply management continues to recommend pulling in demand, placing orders earlier than historical lead times for long lead-time materials, and qualifying secondary sources of supply (if applicable).”
“Demand is good, but supply chain issues continue to get worse. Trucking availability is worsening. Labor shortages are causing issues. We could do much more business if we had more people and access to more products.”
“Most upstream production materials are being pressured by constrained supply chains as well as domestic transportation challenges. Vendors are trying not to pass on expenses, but their margins are such that they will need to raise prices. While we have done a good job holding prices down, we will not be able to hold the vendors at bay. All (cost of goods) will be impacted.”
Overall this does not feel like there is much light at the end of the tunnel. Also Goldman came out with a piece that pretty much said inflation will never return to normal again thanks to "Net Zero". Who could have thought..
As if we needed further confirmation it was Bullard that came in late in the trade just to bless us with the insight that he has three hikes penciled in, and that he thinks that inflation will remain above 3% for the rest of the year. Thank you.
Apropos: The Fed funds future contract for April was again heavily traded and the market now attach a probability of 71% to a 25 bps hike in March (see chart within the chart).
I'll post an update tomorrow morning, cheers!
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