Syz the moment

Source: HolgerZ, Bloomberg

It has now increased for 12 consecutive weeks, reaching its highest level since early 2022. Source: MacroMicro

Clogged bank balance sheets are behind the spike of this key repo funding rate. This move is similar to funding market pressures seen in late-2023. The Secured Overnight Financing Rate spiked seven basis points to 5.40% on July 1, according to Federal Reserve Bank of New York data published Tuesday. The return of such swings in SOFR is largely thanks to the Federal Reserve, which is still removing liquidity from the system via quantitative tightening, or QT, albeit at a slower pace with the intention to reduce potential strains on the market. Still, that’s reawakened volatility around key quarter-end funding periods as seen last week, when banks tend to pare repo activity to shore up balance sheets for regulatory purposes and borrowers either find alternatives or pay up. At the same time, the glut of government debt sales means more collateral needs financing from the repo market.

The iShares Large Cap Max Buffer Jun ETF started trading on Monday under the ticker symbol $MAXJ What’s a buffer fund? These funds offer hedged exposure to stocks by limiting losses while also capping gains, and they’re not exactly a new concept. Since their inception, they’ve attracted industry giants like BlackRock, and they’ve drawn about $5 billion in inflows so far this year. But even before they came around, investment banks were offering their clients “structured notes” – a hybrid product that combines bits and pieces of different financial instruments into one to create customized risk-reward profiles. While there are many different types of structured notes out there, “buffer participation notes” are among the most popular. The notes and buffer funds work in the exact same way – they’re just packaged as different investment vehicles. Having said that, buffer funds are a lot more accessible for retail investors. Buffer participation notes, like most structured notes, are typically offered by investment banks only to sophisticated, high-net-worth clients. Buffer ETFs, by contrast, can be bought and sold just like any ordinary stock. Source: Finimize

$AAPL Source: Charlie Bilello

1. The trend of disinflation appears to be resuming 2. Need to be more confident before reducing rates 3. Fed doesn't see 2% inflation "this year or next year" 4. Budget deficit is very large and unsustainable 5. 4% unemployment is still a very low unemployment rate 6. Moving too fast creates risk of inflation returning The Fed needs more data before rate cuts can begin. Source: The Kobeissi Letter

Source: Massimo @Rainmaker73

What's going on? Source: Bloomberg, Lawrence McDonald