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Rates backed up a touch and we saw some movement on NDX futs as the Fed announced it will let the SLR exemption expire as planned on Mar 31st. Following yesterday’s spike there was not a lot of bid coming back in bonds. There is some debate about whether ending the SLR exemption will lead to selling of Treasuries by banks, but what is obvious is that the Fed is confident to let things move now and this means we should be seeing higher yields still. It’s a good sign that the Fed is confident in the way some of the market plumbing like repo markets are functioning well and some of the supports for banks can be removed. 


Remember it’s quad witching today so expect added volatility in addition to the whole yield freak out – US stock options, stock futures, market index futures and market index options all expire. NDX tested 12,760 ahead of the cash open as the SLR news broke – bearing in mind these expiries it will be choppy again if investors decide to take risk off table ahead of the weekend. 12,730 looks to be the area of interest today and a breach to the downside at this level could open further selling towards the March lows around 12,200.


Banks slipped pre-market with JPMorgan down 2% on the leverage ratio change. 


Nike fell in the pre-market after it said congested ports in the US meant sales fell short, although it delivered EPS of $0.90 – 14 cents ahead of forecast. FedEx shares rose 5% in pre-mkt as it reported a bumper holiday season. EPS came in at $3.47 vs $3.23 expected. Revenue rose 23% to $21.51bn from $17.49bn a year ago. Tesla shares are a little lower in the pre-mkt whilst Ford is up after an upgrade from Barclays. 


Elsewhere stocks are broadly lower this afternoon in Europe as the week ends on a bum note following the spike in rates and some wobbly thinking vis-a-vis vaccines.  DAX holding up ok for the week but the FTSE seems set to finish lower and is about 1% off today.


Sterling is weaker as the dollar has come back to life with the uptick in yields supportive of the greenback. GBPUSD sank to LOD around 1.3850 at pixel time to test the low of Wednesday. Breach here calls for retest of the 1.380 area, the week low. 

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