Stocks hit record highs because you know, “sacred cow” and also because of some reassuring words from the President…

Eventually

 

Stocks

After a day in which it spent some time in double-digits, the VIX stayed at a 9-handle all day:

VIX

Oil rose to a near six-week high after the EIA report showed crude and product stockpiles fell last week with gasoline supplies falling to the lowest level since December. Of course crude production rose. U.S. crude inventories drew 4.73m bbl last week – that compares to the 1.63m bbl build API reported on Tuesday afternoon. Gasoline supplies drew to the tune of -4.45m bbl, the biggest drop since March:

OIl

“The combination of lower oil inventories, lower gasoline and diesel, that trifecta is supportive for higher prices, so that’s a good thing,” Rob Thummel, managing director and portfolio manager at Tortoise Capital Advisors, which manages $16b in energy-related assets, told Bloomberg by phone, adding that “we’re continuing to see the trend of lower inventories, not just in oil, but also gasoline as well.” We’ll see how it pans out, Rob.

This helped energy and drillers lead S&P gains. Here’s XLE and XOP:

XLE

The T-bill curve is inverted as investors are freaking out about the debt ceiling (remember this: “we’re going to do so much winning”?):

TBill

Here’s some color on that rather unfortunate state of affairs:

  • Underperformance by the Oct. 19 maturity — shorter- and longer- maturity bill yields rose less — may reflect the market’s best estimate of the drop-dead date; its 1.093% yield compares with bill yields of 1.083% for the Oct. 26 maturity and 1.059% for Nov. 30
  • “The recent three-month bill coincides with when you could see bills being affected” and comes sooner than expected, Jefferies economist Thomas Simons said. “These are the kinds of yields you’d be likely to see in late September. It doesn’t fit with the usual debt ceiling histrionics”
  • While Treasury Secretary Mnuchin has yet to inform Congress of the exact date the U.S. government will exhaust its extraordinary measures, the Congressional Budget Office projection places the drop-dead date sometime in early- to mid-October
  • Goldman Sachs lowered its FY17 borrowing estimates Wednesday, citing effect of the debt limit on Treasury’s cash balance and timing of issuance, and said it expects Treasury to exhaust its borrowing capacity in the “first few days of October”
  • Jefferies, Credit Suisse have forecast an early-October deadline, and BofA said large Social Security, Medicare and military trust-fund payments due at the beginning of October may pull the “X date” forward
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