April 10. So why invest?

–Little change in the short end of the dollar curve.  Longer dated treasuries crept to higher yields in front of auctions (10’s today and 30’s tomorrow). Ten year yield closed just under 175. Implied vol continues to rot.  For example, TYK 133 straddle settled at 1’06 last Thursday (ref 132-28), and yesterday at 0’52 (ref 132-26), a 25% loss in value in 3 trading days.  TYM went from 1’38 to 1’24.  EDZ4 9950^ was 43 last week, now 39.  EDM5 closed at 9937.5, the atm April straddle which expires Friday is 3.0!  For volatility, go to Japan, where trading halts in the bond market are becoming commonplace and tens rose 6 bps to 58.
–Besides the 10 yr auction, Dallas’ Fisher speaks at 1:00 NY time, followed by Fed minutes at 2:00.
–Stocks press to new highs, though transports are lagging, as are bond etf’s.  A zerohedge piece notes similar divergences in early 2012.
–While CNBC economists appear mixed to leaning positive about growth prospects, the NFIB (Nat’l Federation of Independent Business) is telling a different story: “After another false start, small business confidence has sputtered and stalled again. For the sector that produces half the private GDP and employs half the private sector workforce -— the fact that they are not growing, not hiring, not borrowing and not expanding like they should be, is evidence enough that uncertainty is slowing the economy. Virtually no owners think the current period is a good time to expand, because they simply don’t know what the future holds. So why invest? And with the lack of any sustainable fiscal policy or a federal budget, no one’s banking that Washington will be at forefront of any meaningful change. Overall, it appears that there will be little growth coming from the small business half of the economy; as the world economy slows, even big business may suffer.” — NFIB chief economist Bill Dunkelberg

Posted on April 10, 2013 at 5:23 am by alexmanzara · Permalink
In: Eurodollar Options

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