Bitsky retweeted
More bad news for Neoclouds $NCLD. It should be a stark reminder of how easily these contracts can be terminated. 85% of Nscale contracts depend on Microsoft and Anthropic and it was trying to raise $3 billion from IPO.
bloomberg.com/news/articles/…
Bitsky retweeted
Microsoft has pulled out of a UK data center deal with British neocloud Nscale at a critical time for the startup’s initial public offering hopes, the Telegraph reported. bloomberg.com/news/articles/…
Bitsky retweeted
Despite the softening in yields, BofA says CTA bond shorts remain "stretched," although "CTAs have begun covering at the back end" meaning 20+ years but still with "substantial covering risk if the rally extends," with 2-year and 10-year futures "just off our first trigger levels".
"Industry positioning may have reached about $280B in 10yr equivalents, implying approximately $170M of buying per basis point during an unwind,"
Bitsky retweeted
Control group retail sales (headline sales minus food services, auto dealers, building materials and gasoline stations), which feed into GDP as the goods consumption component, rose just 0.14%, the least since July, versus the 0.3% estimate. Still it was the 14th gain in the past 17 months.
August was revised lower to a still very solid 1.19% (initially reported as +1.4%), and the control group is up 4.64% year-over-year, from +4.54% in August.
Bitsky retweeted
CCCs are now wider than the April 2025 tariff panic
CCC OAS: 12.78% vs 11.37% then
Single-B: 3.26% vs 4.86%
BB: 1.97% vs 3.06%
Is it a credit cycle, or a CCC cycle?
Bitsky retweeted
New blog on the Treasury cash-futs basis: Contract design, higher yields make basis trade alternatives attractive
1/n
As many of you are already aware, the basis trade has plateaued over the past year (CFTC data and sponsored repo volumes show it). Two most common explanations offered:
(i) trade has become too crowded competing returns down.
(ii) SLR relief has allowed dealers to warehouse more Tsys, which they hedge by shorting futures - displacing HFs/reducing returns available
We argue both fall short: (i) might explain which HFs might be in the trade but not aggregate positioning and (ii) does little to explain why asset managers (AM) longs plateaued. Instead we argue the long-end basis has narrowed for reasons tied to the mechanics of the futures contract and the level of yields, and HFs now have a comparable alternative.
According to new analysis asset managers have increasingly found the cash-futures basis trade less attractive relative to alternatives, including swaps linked to new debt issuance tied to data center construction in support of artificial intelligence (AI). dallasfed.org/research/econo…
Bitsky retweeted
Going strong. The Iranian attacks on tankers are actually not having too much of a negative effect on what is coming out of the region. Crude oil exports are highest since February, but now the priority is shifting towards LNG and refined products.
Bitsky retweeted
AI investment is surging and reshaping prices. In the latest SF FedViews, EVP and Director of Research Sylvain Leduc examines how the AI buildout, energy prices, and tariffs are shaping the outlook for growth, inflation, and interest rates. sffed.us/4zzr39u
Bitsky retweeted
NEW: Nscale has a massive $103 billion data center pipeline but only has a tiny fraction online. We set out to investigate how its buildout is going and found delays and setbacks including equipment failures, power constraints & alleged labor violations.
bloomberg.com/news/features/…
Bitsky retweeted
Some slippage in nominal consumers' spending. Ex gasoline stations, retail sales and food services rose just 3.5% SAAR over the last three months, about 1ppt slower than the pace seen over the last year. We're probably beyond the high-water mark for consumption this year.
Bitsky retweeted
Demand - a very important factor for resiliency in prices
Seeing some terrible takes that demand doesn’t matter for oil prices, backed by a chart of inventory vs price. Ma’am, inventory deltas reflect balances, one side of which is demand.
And people still self snitching on their inability to understand basics by saying "So why aren't prices at X if you say supply is back?" 😱
Imagine if demand had stayed in the gutter at June 2026 levels, and supply recovered, what do you think prices would do? A lot of variables go into price (I have a dedicated post on this). Dismissing some factors and cherry-picking others is just fitting the data to your narrative, and it never works in the end.
Refined product prices are where they are not just because of supply losses or geopolitical risk, but also because of the strong recovery in demand from the trough to now.
We are talking about liquid product demand here, rather than oil demand, they are different.
@UrbanKaoboy
Bitsky retweeted
Past recessions have historically occurred as the Federal Reserve hikes interest rates (blue line) above nominal growth (gold line). With nominal growth nearly 3% above policy rate, the Fed appears to have room to hike before meaningfully impacting growth.
Bitsky retweeted
Funny thing that yesterday we were talking about the hedges for the 2s and how payers are directly affecting this tenor for SOFR, is like we were writing the script for today’s price action my friend 🤣
Bitsky retweeted
Thanks in part to 100% expensing on data center investment, corporate tax revenues are plunging, even as profit margins reach record high levels.
