Stocks Rallied Through the 10-Year's Highest Close Since 2002

The 10-year closed at its highest since 2002 on Monday. It settled at 5.31%, up 3 basis points on the day ISM services prices paid rose to 74.0. Stocks rallied through it. SPX gained 0.7% to 7,773.95 and the Nasdaq closed at a record, so since Sep 22 the 10-year has added 34 basis points and SPX is up 9 points. Premarket 7,801, right on the record close.

Oil is the part that doesn't fit. WTI is down a third straight session this morning, near $87 and the lowest since early September, and JPMorgan has Middle East crude exports back at 98% of pre-war levels. If the long end were still trading the barrel, that would be pulling the 10-year down hard, and it's only given back a few basis points to 5.27%. The same JPMorgan note has diesel and gasoline shipments at just 58% of pre-war, and refined fuel is what feeds freight and services costs, which is the line ISM just pushed to 74. Treasury sells $58 billion of 3-year notes at 1:00 and Logan speaks tonight.

Premarket is 9 under the call wall at 7,810, the largest node on the profile, and 7,800 right below it is the second largest, so price sits in the heaviest block of the day. Above the wall the gamma stays positive at every strike to 7,860, more than three times the wall's size spread over ten strikes, which makes it a doorway by the usual test, and the 7,817 record high sits inside it. Past 7,860 it's nearly empty. Underneath, it's positive all the way down to the flip at 7,765 with prior demand at 7,763 on it, and the put wall at 7,740 is about a ninth of the call wall. It's the Sep 21 shape again, price on the wall with very little under the flip.

Monday also made its gain during the session, 43 points from the open to the close, after last week gave back about 107 that way. With positive gamma under price at every strike to 7,770, dips are where dealers buy. The lean is long on a pullback to 7,794, Monday's high, for 7,817 and 7,830, and chasing the open into the wall isn't the trade. A close under 7,763 ends it, because that's where the positive gamma runs out.